Audio Overview of Australian Packaging Regulation

Navigating the Transition to Mandatory Extended Producer Responsibility (EPR)

I. Executive Summary: The Australian Packaging Transition Landscape

1.1 Strategic Imperative

The Australian packaging sector is currently undergoing a non-negotiable shift from a system of voluntary co-regulation to one of mandatory Extended Producer Responsibility (EPR). This transition is directly compelled by the admitted and documented failure to achieve key objectives outlined in the 2025 National Packaging Targets (NPTs).¹ Since the Targets were established in 2018, industry and government consultation has been insufficient to enact the systemic change required through voluntary means. Consequently, the Department of Climate Change, Energy, the Environment and Water (DCCEEW) has intervened to develop national mandatory requirements and establish a formal EPR scheme, marking a complete regulatory pivot for brand owners in the Australian market.¹

1.2 Key Regulatory Challenges

The primary failure point driving this federal intervention is the recovery rate of plastic packaging. Data from 2022–23 indicates that only 19% of plastic packaging is being recycled or composted, representing a substantial 51% deficit against the 2025 goal of 70%.² This persistent, significant gap highlights the inability of the voluntary framework to compel the necessary investment in collection, sorting, and reprocessing infrastructure for complex plastic polymers. This performance deficit serves as the central justification for forthcoming mandatory design and recycled content standards aimed at reducing material complexity and securing infrastructure funding.

1.3 Imminent Risks

Brand owners operating in Australia face a landscape of rapidly accelerating regulatory risk across two critical vectors: financial exposure and legal liability.

First, financial risk is escalating with the introduction of APCO’s eco-modulated fees, which tie compliance costs to the environmental performance of packaging Placed on Market (POM).4 This mechanism is explicitly positioned as a precursor to the broader, costlier national EPR scheme, which will significantly increase the internalized cost of handling packaging waste.5

Second, legal and reputational risk stemming from aggressive enforcement by the Australian Competition and Consumer Commission (ACCC) is now quantified and critical. The ACCC has listed greenwashing as a key enforcement priority, evidenced by the civil penalty proceedings against Clorox Australia in 2024, which resulted in an agreed penalty of $8.25 million for misleading claims regarding recycled content.6 Compliance with verification tools, such as the Australasian Recycling Label (ARL) and the Packaging Recyclability Evaluation Portal (PREP), is now a foundational requirement for legal defence against false environmental claims.

II. The Current Co-Regulatory Framework: NEPM, APCO, and Brand Owner Obligations

A. The Legislative Foundation: National Environment Protection Measure (NEPM) 2011

The foundation of Australia’s packaging regulation rests on the National Environment Protection (Used Packaging Materials) Measure 2011 (NEPM).⁸ This measure serves as the overarching national regulatory framework, establishing the legal requirements for government entities and businesses to manage the environmental impacts of packaging materials throughout the supply chain.⁸

B. Co-Regulation Defined and APCO’s Role

The framework establishes a system of co-regulation, whereby the Australian Packaging Covenant Organisation (APCO) acts as the administrator of the Australian Packaging Covenant.⁸ In this capacity, APCO works in close collaboration with the Commonwealth, state, and territory governments, facilitating dialogue and action through bodies such as the Government Officials Group (GOG), the Senior Officials Group (SOG), and the Environment Ministers Meeting (EMM).⁸ This structure was intended to enable businesses and government to work together cost-effectively to deliver the 2025 National Packaging Targets and advance the circular economy.⁸

C. Brand Owner Obligations and Structural Flaws

The NEPM legislatively defines ‘Brand Owner’ and outlines the corresponding obligations. Any business in the supply chain that meets the definition of Brand Owner and has a total annual turnover of $5 million or more is mandated to comply with the measure.⁹ These obligated businesses must choose one of two compliance pathways:

1. Becoming a Signatory to the Covenant (i.e., an APCO Member) and participating in the collective national efforts to manage packaging waste.⁹
2. Meeting compliance obligations implemented through the individual laws and other arrangements of the participating states and territories where the business sells or distributes its products.⁹

The existence of this dual compliance path has been identified as a critical structural weakness that undermined the overall efficacy of the co-regulatory system. Since brand owners could choose the second path—adherence to often fragmented or less strictly enforced State/Territory requirements—many large companies were able to avoid full participation in APCO’s transparency and improvement mechanisms, such as the Annual Reporting process and the Packaging Sustainability Framework.⁸ This circumvention allowed key industry players to maintain the status quo regarding packaging design and material use, effectively insulating them from the voluntary requirements for continuous improvement. The imminent federal intervention by DCCEEW is designed to close this loophole by implementing unified, mandatory national requirements that will supersede state compliance alternatives, ensuring all significant Brand Owners are equally responsible for recovery funding and design standards.

D. Scope of Regulated Packaging

The Covenant applies broadly to Consumer Packaging, encompassing the entire hierarchy of materials used to contain and distribute products.⁹ This scope includes:

• Primary packaging: The container that directly holds the product.⁹
• Secondary packaging: Materials used to contain single or multiple primary-packed products.⁹
• Tertiary packaging (Distribution packaging): Materials used to distribute packaged and unpackaged products, such as pallets, strapping, cartons, wrapping stretch film, and shrink film.⁹

III. National Packaging Targets (NPTs): Performance Assessment and Failure Points

A. Overview of the Four 2025 Targets and Their Strategic Alignment

The National Packaging Targets (NPTs), established in 2018 and endorsed by all Australian governments, represent a key commitment to transitioning towards a circular economy.² Although initially set with a 2025 deadline, it is evident that full achievement within this timeframe is not feasible, and a revised date will be established.²

The four core 2025 Targets are:

1. 100% reusable, recyclable, or compostable packaging.²
2. 70% of plastic packaging being recycled or composted.²
3. 50% average recycled content included in packaging.² (Note: An earlier aspirational goal referenced 30% ¹⁰).
4. The phase-out of problematic and unnecessary single-use plastics packaging.²

B. Detailed Progress Review and Critical Gaps (2022-23 Data)

Annual benchmark data collected by APCO reveals where progress has been made and, critically, where significant gaps persist.²

Overall Packaging Recyclability and the Compostability Contradiction

Progress towards the 100% target for reusable, recyclable, or compostable packaging stood at 86% as of 2022–23.² This performance suggests that design improvements have been largely successful in making high-volume materials (glass, metals, and fibre) technically compatible with recovery systems. However, this success masks a critical functional complexity concerning compostable materials. While compostable packaging contributes positively to the 86% achievement, certified commercially compostable (AS4736) and home compostable (AS5810) materials are explicitly not accepted in kerbside recycling or Container Deposit Schemes (CDS) collections.¹¹ Brand owners who rely on compostable solutions to meet the 100% goal must acknowledge that the recovery pathway for these materials is entirely dependent on bespoke, non-standard infrastructure. If industrial composting facilities are unavailable to the average consumer, reliance on compostable claims introduces considerable risk of consumer confusion and potential greenwashing liability, as the packaging is functionally unrecoverable for most households.

The Plastic Packaging Crisis

The most significant regulatory challenge is the recovery rate for plastic packaging. Progress has stalled at 19% against the 70% target.² This substantial 51% deficit is the singular critical failure point of the voluntary system and is the primary justification for government-mandated reform.¹ This collective failure to significantly increase the plastic recycling rate confirms that the voluntary structure cannot overcome the high cost and systemic complexity involved in establishing national plastic waste infrastructure (collection, sortation, and reprocessing). The deficit necessitates the introduction of mandatory regulation, which will not only fund infrastructure but will likely impose mandatory minimum recycled content targets and potentially outright bans on specific low-value, hard-to-recycle plastic polymers.

Recycled Content and Material-Specific Goals

Progress towards the 50% average recycled content goal is currently 44%.² Although this gap is moderate, the 2019 framework also introduced supplementary material-specific voluntary targets to encourage targeted uptake ¹²:

• Plastic polyethylene terephthalate (PET): 30%
• Plastic high-density polyethylene (HDPE): 20%
• Plastic polypropylene (PP): 20%
• Paper: 60%
• Glass: 50%
• Metal: 35%
  The shift to mandatory regulation means these voluntary material-specific targets are highly likely to be replaced by mandated minimum thresholds under the new EPR scheme, particularly for plastics, where current recycling performance is weakest.

Table 1 provides a quantified assessment of performance against the NPTs, illustrating the magnitude of the plastic recycling crisis.

Table 1: 2025 National Packaging Targets (NPTs) Progress Assessment (2022-23)

IV. Mandatory Tools for Compliance and Verification

A. APCO’s Annual Reporting Process (ART) and Action Plan Requirements

For APCO members, the Annual Reporting Tool (ART) provides a transparent monitoring system aligned with the Packaging Sustainability Framework, designed to foster continuous enhancement.⁸ Brand Owner Members are obligated to submit the ART annually by March 31st, followed by the development and submission of an Action Plan.⁸

The reporting requirement is scaled based on corporate size: Brand Owner Members with an annual turnover less than $50 million have the option to complete an abridged SME Report, while those exceeding $50 million turnover must comply with the Full Framework.⁸ Regardless of the size threshold, the ART requires businesses to document their performance, which effectively establishes a documented history of compliance or non-compliance. Under the incoming mandatory EPR framework, this documentation will transition from a voluntary measurement mechanism to a high-risk compliance record. Brand owners who demonstrate poor performance or stagnation in their ART reports are creating evidence that may be used by future regulators or enforcement bodies (DCCEEW, ACCC) to prioritize audits or apply higher regulatory fees under the new scheme.

B. Deep Dive into the Packaging Sustainability Framework

The Packaging Sustainability Framework provides the consistent structure for assessment, ensuring that sustainability is tracked against seven key criteria.⁸ These criteria establish the expectations for best practice and pre-empt many of the mandatory design requirements expected under the federal reforms:

1. Governance & Strategy: Requires documented commitments and targets integrated across business policies, including marketing, procurement, and product development.⁸
2. Design & Procurement: Assesses the use of Sustainable Packaging Guidelines (SPGs) in evaluating and improving packaging design.⁸
3. Recycled Content: Measures actions taken to increase the volume of recycled material, including confirmation that recycled content has been ‘optimised’—meaning the current level cannot be increased without compromising product safety or quality.⁸
4. Recoverability: Tracks actions to improve end-of-life recovery, specifically recording the amount of packaging accessible through existing collection systems (e.g., kerbside recycling).⁸
5. Disposal Labelling: Measures the extent to which packaging is labelled to help consumers with disposal decisions, with the Australasian Recycling Label (ARL) being the key relevant advice.⁸
6. On-site Waste: Measures progress in diverting solid waste from landfill, expressed as the ‘diversion rate’.⁸
7. Problematic Materials: Focuses on the active phase-out of problematic and unnecessary single-use plastic packaging and the removal of hazardous materials.⁸

C. Technical Verification: The Australasian Recycling Label (ARL) Program

The Australasian Recycling Label (ARL) is an evidence-based system developed by APCO in partnership with Planet Ark and PREP Design.¹³ Its purpose is to provide consumers with clear, easy-to-understand on-pack recycling information, reducing confusion and diverting recoverable materials from landfill.¹³ The label provides specific instructions on how to correctly dispose of each component of a product’s packaging.¹⁴ The ARL categorizes packaging items as:

• Recyclable: Can be placed in kerbside recycling.¹⁴
• Conditionally Recyclable: Can be recycled only if specific instructions (e.g., compaction or alternative drop-off) are followed.¹⁴
• Not Recyclable: Must be disposed of in the general waste bin.¹⁴

D. Using the Packaging Recyclability Evaluation Portal (PREP) for Evidence-Based Claims

The Packaging Recyclability Evaluation Portal (PREP) is the mandatory verification tool required to substantiate and underpin all disposal claims made using the ARL.¹⁵ PREP provides a transparent, evidence-based link between the design attributes of packaging and its viability within the Australian and New Zealand kerbside recycling systems.¹⁵ The process aggregates information on collection availability (determined from data like recyclingnearyou.com.au), sortation efficiency, recycling, and reprocessing services.³ The integrity of PREP is maintained by a Technical Advisory Committee comprising packaging and waste management experts.¹⁶

E. Regulatory Overlap: APCO PREP vs. DCCEEW’s Proposed Grading Framework

In response to the limitations of the voluntary system, DCCEEW established an independent National Design Standard Working Group to develop a “Design for Kerbside Recyclability Grading Framework”.³ This initiative aims to define best practice design standards to improve recyclability and packaging performance.³

The DCCEEW framework is designed to “build on” existing tools like the APCO Sustainable Packaging Guidelines while incorporating international experience, particularly referencing standards seen in the European Union.¹⁷ The proposed Framework assesses recyclability based on the availability of collection, sortation, recycling, reprocessing services, and end markets, aiming to provide a high-level grading of recyclability.³

The development of a separate Grading Framework by DCCEEW, explicitly seeking to align with international mandatory standards, signals federal dissatisfaction with the voluntary uptake of PREP/ARL. This suggests that the regulatory focus is not merely on verifying claims (the PREP function) but on mandating design criteria. Brand owners must anticipate a future where packaging recyclability is no longer a choice verified by PREP but a minimum standard dictated by the DCCEEW framework. Investment in packaging redesign must proactively align with these stricter, forthcoming grading criteria. A decision on whether the DCCEEW Framework will be mandated as part of new regulations has not yet been finalized.³

V. The Regulatory Pivot: Transition to Mandatory Extended Producer Responsibility (EPR)

A. Rationale for Reform: Failure of Voluntary Benchmarks

The critical finding of the APCO interim review was that while the Covenant functioned reasonably well as a voluntary stewardship initiative, the overall regulatory arrangement was unable to deliver the desired environmental outcomes, specifically the NPTs.¹ This assessment directly led to the consensus among Environment Ministers in October 2022 to implement regulatory reform by 2025. The stated goal is to ensure that all packaging in Australia is designed for recovery, reuse, recycling, and safe reprocessing in line with circular economy principles.¹ The primary motivation is the rectification of the plastic packaging crisis (the 51% recovery gap).

B. DCCEEW Intervention and the Timeline for Mandatory EPR

DCCEEW has been formally charged with leading the development of a unified set of National Mandatory Requirements for Packaging, culminating in a National EPR Scheme.¹ This action establishes a firm deadline for systemic change, moving the regulatory environment from self-governance to direct federal oversight.

Consultation on the potential reform options concluded in late October 2024, examining the impacts on businesses, communities, regulators, and the environmental goal of transitioning to a circular packaging economy.³ The feedback from this consultation is currently being considered as the final reforms are developed, which include mechanisms for national mandatory requirements, the National EPR scheme structure, and specific requirements around reduction and reuse.³

C. Strategic Planning for Increased Costs Under National EPR

The cornerstone of the transition is the introduction of financial incentives and penalties that will internalize the cost of waste management.

Eco-Modulation as Precursor

APCO’s introduction of eco-modulated fees is a strategic move that sets the financial and operational groundwork for the full EPR scheme.⁴ These fees are calculated based on the sustainability performance of materials Placed on Market (POM).⁴ By creating a clear economic incentive to reduce and improve packaging, APCO aims to distribute the costs of achieving the NPTs more equitably.⁵ This financial structure compels companies to invest immediately in sustainable packaging solutions, improving ease of recycling and reducing environmental footprints.⁴

The Inevitability of Mandatory Funding and Investment

Mandatory EPR dictates that the responsibility for financing the end-of-life management of packaging shifts to the producers.⁴ This will result in significantly higher compliance costs, especially for poorly designed or non-recyclable materials. The revenue generated by the mandatory scheme will be used to fund the system gaps that voluntary compliance failed to bridge. APCO has already indicated that under the new system, it will procure services under contract for the collection, sorting, transport, and reprocessing of materials that would otherwise be destined for landfill.⁵ Therefore, Brand Owners must model their future compliance budgets to account for the substantial embedded cost of financing this new, necessary national recycling infrastructure, particularly for low-value plastics.

Global Harmonization of Standards

The federal government’s decision to benchmark the new DCCEEW Design Grading Framework against international best practices, specifically referencing standards established in the European Union ¹⁷, carries a significant strategic implication. This regulatory convergence suggests that the final Australian mandatory standards—encompassing design mandates and recycled content requirements—are unlikely to deviate dramatically from existing, rigorous global EPR models. For multinational Brand Owners, this represents a major advantage: compliance strategies and technical packaging designs developed for the stricter EU or UK markets should be readily transferable and compliant with Australia’s forthcoming mandatory system.

VI. Commercial and Legal Risk Mitigation: Eco-Modulation, Greenwashing, and State Bans

A. Australian Consumer Law (ACL) and the ACCC’s Focus on Greenwashing

The aggressive shift toward sustainable packaging has brought environmental claims under intense scrutiny by the Australian Competition and Consumer Commission (ACCC). Under the Australian Consumer Law (ACL), businesses are prohibited from making false or misleading claims.¹⁸ All environmental and sustainability claims must be accurate, truthful, and based on reasonable substantiation.¹⁸

The ACCC defines “greenwashing” as using any claim, or omitting key information, that creates an impression that a product or service is better or less harmful for the environment than it genuinely is.¹⁸ This scrutiny extends beyond literal text claims to include the overall impression created by visual elements, such as the use of green colours, logos representing recycling processes, or graphics that exaggerate genuine environmental benefits.¹⁸ The ACCC’s guidance emphasizes transparency, clarity in language, the explanation of conditions or qualifications, and the avoidance of broad, unqualified claims that are open to misinterpretation.⁷

B. Analysis of Key Enforcement Precedents (The Clorox Penalty)

The ACCC established a clear, high-cost benchmark for non-compliance in April 2024 when it instituted civil penalty proceedings against Clorox Australia Pty Limited.⁶ The case alleged that representations made by Clorox regarding their bags being made with “50% Ocean Plastic” or “50% Ocean Bound Plastic” were false or misleading.⁶

The severity of the resulting penalty, agreed upon by the parties at $8.25 million, underscores the ACCC’s commitment to prioritizing greenwashing enforcement.⁶ This precedent quantifies the financial risk associated with unsubstantiated environmental claims. For Brand Owners, this mandates that technical verification through mechanisms like the ARL and its underlying tool, PREP, is no longer merely a stewardship requirement but is, in fact, the essential legal defence against regulatory action.¹⁵ Any environmental or recycled content claim that lacks robust, auditable supply chain documentation validated by a technical body constitutes a material legal risk.

C. State-Level Regulatory Fragmentation: Navigating Single-Use Plastic Bans

While the federal government addresses the EPR framework, state and territory governments continue to implement their own accelerating, varied bans on single-use plastics. This divergence creates significant operational complexity for national distributors, who must manage differing timelines and banned items across jurisdictions.²⁰

Complexity of Integrated Packaging Bans

A particularly disruptive development is the targeting of “integrated packaging.” In New South Wales (NSW), the ban on certain single-use plastic items extended to those that are sealed within or attached to packaged food and drinks by machine-automated processes (e.g., plastic spoons sealed inside snack packs or plastic straws attached to juice boxes).²¹ The transition period for integrated packaging ended in January 2025.²¹ This regulatory action mandates immediate, costly changes to product formulation, supplier contracts, and automated packaging line equipment, necessitating a strategic and rapid operational redesign for affected products.

Other State Bans

Other states are proceeding with broad phased bans ²⁰:

• Western Australia (WA): The WA Plan for Plastics is phasing out a broad range of items between 2022 and 2025. This includes plastic straws, cutlery, coffee cups, and expanded polystyrene food containers.²⁰ From September 2024, the ban extends to disposable plastic produce bags for loose fresh fruit and vegetables, and, critically, disposable plastic lids for foodware containers.²⁰
• South Australia (SA): SA banned plastic bowls, plates, and pizza savers in September 2023. From September 2024, the ban will be extended to plastic barrier bags (used for produce) and single-use plastic beverage containers, including coffee cups.²⁰
• Victoria (VIC): Victorian bans commenced in February 2023 for items like drinking straws, cutlery, and polystyrene food service items. An exemption on paper or cardboard plates lined with plastic is scheduled to end in November 2024.²⁰

The requirement to manage multi-state stock compliance, particularly concerning highly integrated items, imposes severe supply chain and potential product portfolio rationalization challenges.

Table 2 synthesizes the primary financial and legal risks facing Brand Owners in this environment.

Table 2: Financial and Legal Risk Matrix for Sustainable Packaging

Table 3 summarizes the operational challenges posed by state-level regulatory fragmentation.

Table 3: Key State and Territory Single-Use Plastic Bans Timeline Summary

VII. Strategic Recommendations and Conclusion

The current regulatory landscape for packaging in Australia is defined by systemic failure under the voluntary co-regulatory model and an inevitable, imminent shift to a mandatory Extended Producer Responsibility (EPR) scheme. This shift, driven by the persistent 51% failure gap in plastic recycling ², necessitates a proactive and costly strategic response from Brand Owners.

7.1 Immediate Compliance and Legal Action

The primary immediate action is the mandating of technical verification for all packaging claims. ARL/PREP verification must be implemented across all new and redesigned packaging skus to provide a robust, auditable defence against the high financial risk established by ACCC greenwashing penalties.⁶ Furthermore, internal legal review processes must be updated to scrutinize marketing material, visuals, and textual claims for compliance with ACCC guidance, avoiding broad or unsubstantiated terms.¹⁸

7.2 Operational and Design Transformation

A comprehensive Research and Development (R&D) program must be initiated with the exclusive goal of redesigning packaging that relies on hard-to-recycle plastic polymers. The focus must be on materials that achieve demonstrably high scores under the existing PREP system and meet the spirit of the anticipated DCCEEW Design Grading Framework. This future-proofing effort should prioritize aligning designs with emerging EU and international mandatory standards to leverage economies of scale in design compliance globally.¹⁷ Additionally, national supply chain teams must immediately address the operational disruption caused by fragmented state bans, particularly the complex issue of integrated plastic components banned in states like NSW.²¹

7.3 Financial Modeling and Strategic Positioning

Financial planning must transition from treating compliance as an operational expense to incorporating regulatory costs as an internalized capital expense. Brand Owners must incorporate projected mandatory EPR fees and the penalty structure of eco-modulated fees into their 3-5 year financial forecasts.⁴ Modelling the economic impact of placing non-compliant packaging (POM) on the market will provide clear justification for capital expenditure towards sustainable alternatives. By proactively redesigning packaging now to score highly under eco-modulation, businesses will secure a competitive cost advantage when the full, mandatory EPR funding scheme takes effect.

In conclusion, Australia’s transition is not a gradual evolution but a forced systemic overhaul. The voluntary era of packaging sustainability is over. Success in the new mandatory environment will be determined by how quickly and decisively Brand Owners move away from high-risk, low-recovery plastic models and integrate verified sustainable design principles into their core business strategy.

Works cited

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