Sunday, April 28, 2013

The fifth pillar?

Loose Change posted last year on the decision by the incoming LNP Government to remove the waste levy which had been only recently introduced at the start of 2012. The Member for Barron River in particular was hyperbolic on the destruction the waste levy had caused: Queensland wasted: doing the sums for Trouty:

"The waste levy effectively brought the economy in the construction industry to a grinding halt." 

"The Labor government were blinkered to the devastating negative onflowing repercussions of this ridiculous tax." 

I pointed out at Loose Change that removal of the levy may not be a smart policy and that the laws of unintended consequences may apply. There had been a cost-benefit analysis which appeared sound and the Liberal comrades south of the border had just decided the NSW waste levy was such an effective policy that they would hike the rate.

The relevant minister at the time dismissed the possibility of interstate arbitrage. Later in the year reports started to appear of just such an arbitrage including contaminated waste: Queensland: The dump state?

"Drivers heading north on the Pacific Highway will be jostling a rising number of B-double trucks following a decision by the Queensland government earlier this year to remove a levy on waste going to landfill."

"As a result, an increasing number of trucks are taking Sydney's trash up the Pacific Highway to dump it across the northern border, with the waste industry estimating 1,000 tonnes of waste a week, or around 25 B-doubles, is now on the highway."

Apparently this arbitrage has even extended to digging up landfill in NSW and transferring it to Queensland: Beautiful one day, NSW's tip the next:

"Waste operators have been digging up landfill in Sydney and trucking it to cheaper tips in Queensland to cash in on incentives supposed to encourage recycling.

The environmental regulator has told two Sydney landfill operators to stop exhuming waste and has said it will change licence requirements to stop others doing the same.

The practice, which amounts to digging up landfill and reburying it elsewhere for no environmental benefit, has been triggered by the widening gap between the cost of dumping waste in NSW and in Queensland."

Waste not, want not: Plans for landfill.

"But Mr Khoury said the only factor limiting the flow of waste north was a finite number of trucks.

''Queensland will continue to increasingly become NSW's dumping ground unless there are some regulatory changes,'' he said.

The NSW waste levy will rise to about $108 in July"

Queensland is the only state without some kind of similar waste levy scheme and remains an inefficient high waste state reliant on regulation (red tape) rather than market based Pigovian solutions. Perhaps landfill garbage dumps can become the fifth pillar of the economy?

Note: With reference to the fifth pillar the previous post at Loose Change: How many pillars should an economy have? is currently being peer reviewed for publication in the Rogoff-Reinhart Journal of Research Excellence. Loose Change has developed patented proprietary software which automatically adjusts spreadsheet results for alcohol consumption!


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