Inconsistent regulations hindering efficient use of materials

Conflicting rules between states and territories are impeding businesses’ efforts to use materials more efficiently, according to a Productivity Commission report.

“Inconsistencies in regulations between governments are a recipe for red tape and frustration for businesses and consumers that can slow the uptake of circular practices,” commissioner Alison Roberts said.

“Getting governments on the same page will make sustainable choices cheaper and easier for everyone.”

International studies have found that circular economies support higher growth and productivity, a key focus for Australia as it lags in productivity performance.

A circular economy aims to design products that use fewer materials, extend product lifespans via reuse and repair, and recycle materials to curb waste.

Australian businesses have shown some uptake of such practices, but progress has been slow. Australia’s materials productivity rate has increased only slightly over the past decade, the report said.

Barriers preventing businesses from pursuing circular economy opportunities included high costs, outdated or inconsistent regulations, co-ordination challenges and limited practical information for businesses, the report found.

The Productivity Commission suggested the federal government work to harmonise regulatory differences between states and territories to ensure businesses can easily adopt sustainable practices. This would ensure a smoother, cheaper process for businesses seeking to innovate and adopt new sustainable practices.

There were vast opportunities for sectors to embrace circular economy practices, according to the Productivity Commission.

For example, in construction, builders could use recycled and low-carbon materials, and buildings could be designed with disassembly and modularity in mind, such as Bradfield City Center’s ‘First Building’ in NSW.

In the agricultural sector, supermarkets could provide farmers with better demand forecasts to reduce the risk of under or over-supply of food. Supermarkets typically forecast higher demand than they order because surplus food production lowers prices, the report noted.

CA ANZ called the Productivity Commission’s circular economy inquiry an important step to support and encourage businesses to consider sustainability-related risks and responsibilities.

To reap the benefits of a circular economy, it said companies’ social and environmental impacts should be measured alongside financial performance. CA ANZ praised Australia’s decision to mandate climate-related financial disclosures and noted that the government had a significant role in facilitating business participation.

The body also said that many businesses lack an understanding of a circular economy and that others did not have the time or resources to consider sustainable opportunities for innovation. They suggested government incentives be set up to encourage companies to integrate sustainable, efficient choices within their business models.

The government would also have to work to reduce regulatory barriers hindering innovation.

“Innovative sustainable practices, like prefabrication in construction, using organic waste to create energy, and repurposing old mine sites, are sometimes being stymied by out-of-date or overly complex regulation,” Roberts said.

“Governments need to ensure that rules and guidelines support a safe shift to a more circular approach.”