Is cutting red tape the key to advancing Australia's circular economy?
A new report from the Productivity Commission finds that Australia's transition to a circular economy is being slowed by inconsistent regulations and limited access to finance, but coordinated government action could help unlock economic and environmental benefits.
The Productivity Commission’s interim report, Australia’s Circular Economy: Unlocking the Opportunities, finds that while Australians are developing innovative ways to use materials more efficiently, regulatory and financial barriers are slowing progress. Released last week, the report examines how Australia can improve materials productivity across key sectors and what policy changes are needed to support a circular economy.
The circular economy aims to extend the life of materials and products through strategies such as reducing material use, increasing reuse and repair, and improving recycling and resource recovery. The Commission’s inquiry, initiated by Treasurer Jim Chalmers under the Productivity Commission Act 1998, seeks to identify opportunities for Australia to enhance economic and environmental outcomes by improving materials efficiency.
Current Challenges and Barriers
Despite increasing efforts from businesses, government, and communities, Australia lags behind other OECD nations in materials productivity. Australia generates US$1.20 of economic output per kilogram of materials consumed—less than half the OECD benchmark of US$2.50. The report identifies six priority sectors where circular economy practices could have the most impact: the built environment, food and agriculture, textiles and clothing, mining, vehicles, and electronics.
Commissioner Joanne Chong explained that many businesses and communities are already working to reduce waste and repurpose materials but are hindered by outdated or inconsistent regulations. ‘We heard from businesses, communities, and researchers who are exploring how to use materials more efficiently, convert different types of waste into valuable products and to regenerate nature,’ she said.
‘However, some face barriers such as prescriptive, outdated or inconsistent regulations, limited access to finance or insurance, and challenges accessing information and knowledge.’
Regulatory Inconsistencies and E-Waste Challenges
Differences in regulations between states and territories create additional hurdles for businesses adopting circular economy practices. Rules around e-waste disposal, the use of recycled materials in construction, and kerbside recycling differ across jurisdictions, making it harder for businesses to operate efficiently.
Commissioner Alison Roberts stressed the importance of regulatory consistency, stating, ‘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. Getting governments on the same page will make sustainable choices cheaper and easier for everyone.’
E-waste is a growing issue in Australia, with Australians generating almost three times the global average. The increasing disposal of rooftop solar panels and electric vehicle batteries presents both a challenge and an opportunity. Ms Chong explained, ‘Materials found in solar panels and electric car batteries can be valuable when recovered correctly. Government can coordinate cross-industry solutions to the e-waste issue that could benefit the economy and the environment.’
Proposed Policy Actions
The report suggests several policy actions to accelerate circular economy practices, including:
- Harmonising regulations across state and territory governments to reduce administrative barriers.
- Providing better consumer information about the durability and repairability of products. Dr Roberts compared this approach to food labelling, stating, ‘In the same way dietary information helps consumers make healthier choices, providing information on the durability and repairability of products could help consumers make more sustainable choices.’
- Encouraging place-based circular economy initiatives, such as industrial precincts designed to support materials reuse and waste reduction.
- Improving access to finance and insurance for businesses adopting circular economy models.
The interim report also acknowledges the role of collaboration in advancing circular economy practices. Localised networks, where businesses share resources and find ways to reuse materials within a region, can create cost savings and environmental benefits.
‘In cities and regions, we heard about businesses working together to develop new circular economy ideas, turn waste into wealth, and save on costs such as transport," Commissioner Chong said.
"The PC is considering ways for governments to enable these connections between organisations both close to and far from each other.’
Next Steps
The Productivity Commission is now seeking further submissions in response to its findings before finalising its recommendations. The final report, due later this year, will provide detailed policy advice for the Commonwealth, state, and local governments to help accelerate Australia’s transition to a circular economy.
