Introduction: 2026 Is the Year Packaging Rules Stop Being Optional
For most of the last decade, Australian businesses could treat sustainable packaging as a marketing choice, a way to differentiate on shelf, not a legal obligation. That’s ending. 2026 has been described by industry analysts as the most consequential year for packaging compliance in a decade, with several regulatory shifts converging at once: a formal bill to make packaging targets mandatory, a state-based compostable labelling mandate already in effect, and APCO signaling a harder line on non-compliance after years of a voluntary model.
If you sell a physical product in Australia, some or all of this will apply to your business in the next 12–24 months. This checklist walks through what’s actually changing, who it applies to, and what to do about it, separate from the marketing case for sustainable packaging, which is really a compliance case now.
Where Australia’s Packaging Regulation Stands Right Now
Australia’s packaging rules have historically run through the Australian Packaging Covenant Organisation (APCO) — a co-regulatory, largely voluntary framework businesses opted into. The original 2025 National Packaging Targets, set under that voluntary model, aimed for:
- 100% of packaging to be reusable, recyclable, or compostable
- 70% of plastic packaging to be recycled or composted
- 50% average recycled content across all packaging
- Phase-out of problematic and unnecessary single-use plastics
The most recent reporting shows the industry falling well short: 86% of packaging is reusable/recyclable/compostable (against a 100% target), only 19–20% of plastic packaging is actually recycled or composted (against a 70% target), and recycled content sits at 44% (against a 50% target). That gap is the direct reason regulation is now moving from voluntary to mandatory.
What’s Actually Changing in 2026
1. The Extended Producer Responsibility (EPR) Bill. In May 2026, the Extended Producer Responsibility Scheme for Packaging (No Time to Waste) Bill 2026 was referred to a Senate committee, a formal step toward a mandatory national EPR scheme modelled on similar schemes already operating in the EU and UK. If passed, it would place a legal duty on producers, importers, and distributors to manage packaging through its full lifecycle from design through to collection, processing, and reuse and would convert the National Packaging Targets from voluntary goals into compulsory legal requirements. Primary obligations under this scheme are expected to take effect in the 2027 financial year, with drafting and engagement continuing through 2026.
2. APCO’s eco-modulation fee structure. Starting in the 2026–27 financial year, APCO is introducing eco-modulation fees, a pricing mechanism where the cost of packaging membership and compliance scales based on how recyclable or sustainable your packaging actually is. Packaging that’s harder to recycle costs more under this structure; packaging that meets recyclability standards costs less. This is a direct financial incentive layered on top of the existing target framework.
3. State-level mandates are arriving ahead of federal law. South Australia introduced a compostable labelling mandate effective 1 March 2026, meaning state requirements are already active in some jurisdictions even before the federal EPR bill passes, a preview of how packaging compliance is likely to arrive unevenly across states before converging nationally.
4. APCO is enforcing harder on existing voluntary members. Even before the EPR bill takes effect, APCO has signaled it’s moving away from a voluntary model with “few consequences for falling short.” Its 2030 strategy includes changes to membership structure and increased pressure on non-compliant members.
Who This Actually Applies To
APCO membership (and the reporting obligations that come with it) currently applies to businesses with annual turnover above $5 million AUD that place packaging on the Australian market. If that’s your business, membership is currently the primary compliance pathway, and it comes with annual obligations: an APCO Annual Report, an APCO Action Plan, and membership fees scaled to turnover.
If your business turns over less than $5 million, you’re not currently required to be an APCO member but two things are worth noting. First, the EPR bill, if passed, could shift these thresholds and obligations as it moves from a voluntary covenant to binding legislation. Second, many smaller brands are indirectly affected anyway, because retailers, marketplaces, and larger distribution partners are increasingly requiring recyclability documentation (like Australasian Recycling Label certification) as a condition of stocking a product, regardless of the supplying business’s own turnover.
What Happens If You Don’t Comply
For current APCO members, failing to meet obligations (reporting, action plans, fees) triggers a formal Non-Compliance Procedure. This starts with restricted access to member resources and tools, and if the issue isn’t resolved by the end of the procedure, APCO will withdraw the business as a Covenant Signatory. Under the proposed EPR legislation, penalties would extend beyond covenant membership status into actual legal obligations, a materially higher-stakes environment than the current voluntary framework.
The Compliance Checklist
For businesses with turnover above $5 million placing packaging on the Australian market:
- Confirm current APCO membership status and whether your Annual Report and Action Plan are up to date
- Review your packaging materials against the National Packaging Targets (100% reusable/recyclable/compostable, 70% plastic recycled/composted, 50% recycled content)
- Understand how the 2026–27 eco-modulation fee structure will affect your specific packaging mix, and budget accordingly
- Track the EPR Bill’s progress through the Senate committee process, since primary obligations are expected from FY2027
For businesses of any size selling into South Australia, or planning to:
- Check whether your compostable packaging claims and labelling meet SA’s mandate, effective from 1 March 2026
For any business, regardless of turnover:
- Assess whether your retail, wholesale, or marketplace partners are requiring Australasian Recycling Label (ARL) certification as a condition of stocking your product
- If pursuing ARL certification, budget time for the Packaging Recyclability Evaluation Portal (PREP) assessment process, which evaluates recyclability based on material composition, size, and local recycling infrastructure
- Review packaging material choices now, since recyclable and recycled-content materials are approaching cost parity with conventional materials faster than expected switching ahead of a mandate is often cheaper than switching under one
- Build compliance-ready labeling (recyclability information, material composition) into new packaging runs from the start, rather than retrofitting it later
Why Acting Ahead of the Mandate Is Cheaper Than Waiting
There’s a real cost argument for addressing packaging compliance now rather than waiting for the EPR bill to formally pass. Material costs for genuinely sustainable options have been dropping, some material categories have fallen by nearly half in recent years meaning the price gap between “compliant” and “conventional” packaging is closing faster than many businesses assume. Businesses that switch ahead of a hard deadline get to choose their supplier, format, and timeline; businesses that wait until obligations are legally binding are more likely to be doing it under time pressure, with less negotiating room on cost or lead time.
How Carewell Group Supports Compliance-Ready Packaging
Carewell Group supplies packaging materials engineered with Australia’s tightening regulatory environment in mind:
- Recyclable, biodegradable, and recycled-content material options, aligned with the National Packaging Targets
- Compliance-ready labeling formats, including support for recyclability and material composition information
- Custom sizing and branding that doesn’t compromise on sustainability material choices
- Guidance on packaging specifications relevant to ARL/PREP assessment, so you’re not starting the certification process from zero
We’re currently at full capacity for co-packing and contract filling services, but our packaging design and material sourcing capability, which is where most of these compliance decisions actually get made — remains fully available.
Frequently Asked Questions
Does my business need to be an APCO member?
Currently, this applies to businesses with annual turnover above $5 million AUD that place packaging on the Australian market. Smaller businesses aren’t required to join but may be asked for recyclability documentation by retail or distribution partners regardless.
When does Australia’s mandatory packaging regulation actually take effect?
The Extended Producer Responsibility Scheme for Packaging (No Time to Waste) Bill 2026 was referred to a Senate committee in May 2026. If passed, primary legal obligations are expected to take effect in the 2027 financial year, though some state-level rules (like South Australia’s compostable labelling mandate) are already active in 2026.
What is the Australasian Recycling Label (ARL) and do I need it?
The ARL is an on-pack labelling system showing consumers how to correctly dispose of packaging. It’s not currently a blanket legal requirement, but many retailers and marketplaces are requiring it as a condition of stocking products, and it requires APCO membership plus a PREP assessment to obtain.
What happens if I don’t comply as an existing APCO member?
Non-compliance triggers a formal procedure starting with restricted access to member tools, and can end with APCO withdrawing the business as a Covenant Signatory if the obligation isn’t resolved.
Does Carewell Group help with ARL or PREP certification directly?
Carewell Group supplies compliance-ready materials and labeling formats that support your certification efforts; the certification process itself runs through APCO’s PREP tool once you’re a member.
Final Thoughts
Australia’s packaging regulation is moving from a voluntary framework with limited consequences to a legally binding system with real financial and operational obligations and that shift is happening in stages throughout 2026 and into 2027. Businesses that get ahead of it now, while material costs are falling and timelines are flexible, are in a materially better position than those waiting for the mandate to force the decision. Carewell Group can help you understand where your packaging currently stands against these requirements.
Contact Carewell Group Today
Phone: +61 0477 123 699
Email: sales@carewellgroup.com.au
Address: Carewell Group Pty Ltd, Unit 27/191, McCredie Road, Smithfield, NSW 2164
Sources & Further Reading
- Extended Producer Responsibility Scheme for Packaging (No Time to Waste) Bill 2026 — Parliament of Australia
- Australia Introduces Mandatory EPR Scheme for Packaging Bill 2026 — ChemLinked
- Member and Signatory Obligations — APCO
- Covenant Obligations — APCO
- Australia’s National Packaging Targets — APCO
- Australasian Recycling Label — DCCEEW
- Australia’s 2026 Packaging Regulations Decoded — Pakio