Plastic Bags - COAG Standing Council on Environment and Water

It is expected that consumers would reduce the consumption of plastic bags as they became
restricted between 2006 and 2009 and would increase consumption of reusable bags. This results in
a social benefit for both consumers (in terms of clean open spaces) and hence a benefit to the
environment, as fewer plastic bags would become litter.
5
10
15
Option J: Retailers obliged to impose a minimum charge by regulation (ACG scenario 8)
Description and assumptions
This option would apply to all retailers supplying plastic bags. Retailers would be required to
apply a minimum charge to all plastic bags supplied. The intent is to allow the retailer to keep any
revenue raised to use for whatever purpose they like.
Under this model, it is expected that any legislation may benefit from monitoring to ensure
retailers apply a fair and reasonable charge if they chose to exceed the minimum charge, however
where retailers are in competition for customers, this is expected to be managed by the market.
There is an impact on governments, retailers, and consumers by obliging retailers to impose a
minimum charge for plastic bags. In addition to the costs borne by retailers to implement such a
charge, governments would be obliged to ensure that the charge were implemented evenly across
the board – in other words, to capture the possible free riders.
Option J: assumptions
For the purposes of this cost-benefit analysis, this option is assumed to consist of
the following features: 115
Timing
• fee of $0.25 applied by retailers from 1 January 2009
Key assumptions:
• linearly interpreted from Option H (industry agreement to impose an
escalating charge, supported by complementary regulatory measure).
20
Findings
Costs and benefits (compared to ‘no further government action’ option)
25
Benefits
(NPV, $m)
Costs
(NPV, $m)
Net impact
(NPV, $m)
Required
unquantified
benefits (NPV, $m)
Reduction in
plastic bag
litter
$217.78 -$1035.12 -$817.34 $817.34 360.6 million
The ACG analysis found that the benefits of imposing a minimum charge on plastic bags would
equate to $217.78 million in net present value terms over the period from 2005 to 2016. Costs
identified would be $1035.12 million over the same period.
115 Assumptions used for modelling purposes by Allen Consulting Group in report Phasing Out Light-Weight
<strong>Plastic</strong> <strong>Bags</strong>: Costs and Benefits of Alternative Approaches, p. 61
Consultation Regulatory Impact Statement: Investigation of options to reduce the environmental impact of plastic bags January 2007 66