The chairman of Australia's biggest plastic packaging company, Pact Group Ltd., has called on the Australian Government to speed the planned legislative change to enforce mandatory recycled content in plastics packaging.
Raphael Geminder also warned of the danger of Australian-produced recycled material being undermined by cheap products imported by businesses seeking to comply with mandated requirements.
He appeared before the government's House Standing Committee on Industry, Science and Resources which is inquiring into "opportunities for innovation and growth in Australia's food and beverage manufacturing industry."
In October 2022, Australia's federal, state and territory environment ministers together agreed to reform packaging regulation by 2025 to ensure all packaging available in Australia is designed to be recovered, reused, recycled and reprocessed safely.
In June 2023, the ministers agreed to introduce mandatory packaging design obligations based on international best practice and make industry responsible for the packaging they manufacture under a new regulatory scheme. They also agreed to regulate-out harmful chemicals and other contaminants in packaging.
In November 2023, the ministers agreed the federal government would regulate packaging and design requirements to be finalized before the end of 2024 and the new scheme would be in place by the end of 2025.
Pact provided a written submission to the committee and Geminder gave a personal presentation, which Packaging News described as "a rousing speech." He said: "We need the new legislative framework now and I am somewhat disappointed at our pace, albeit I understand we are not the only priority and there is a lot to navigate in this monumental change for good."
Pact's submission said Australia's transition to more sustainable packaging had progressed slowly because of a reliance on "voluntary targets and the goodwill of industry leaders."
No legislation is yet before the Australian Parliament.
Pact's submission called for a mechanism to ensure all packaging in the Australian market complies with the minimum recycled content requirements. "The United Kingdom and the European Union have implemented a plastics levy passed on the percentage of recycled content."
The submission suggested the Australian Government implement an enforcement scheme whereby producers and brand owners pay a fee per metric ton for packaging that contains less than the required percentage of domestic recycled material. Revenue raised by the scheme could be reinvested into the Australian Government's Recycling Modernization Fund.
Pact and its joint-venture partners in three major plastic recycling facilities have received funding from the Recycling Modernization Fund and other government-funded schemes.
The voluntary targets to which Geminder referred are overseen by the Australian Packaging Covenant (APCO) and aim to see 70 percent of plastic packaging reusable, recyclable or compostable by Dec. 31, 2025.
Pact's submission said APCO data shows the voluntary targets "are not driving industry-wide change" and the recovery rate for plastic packaging is only 18 percent.
Pact's submission, and Geminder in his presentation to the committee, warned against "unintended consequences" for the domestic recycling sector from mandating minimum recycled content for plastic packaging.
"Locally produced recycled content cannot be undermined by cheap products imported by businesses seeking to comply with mandated requirements," the submission said.
Geminder told the committee: "To ensure a viable recycling system, get meaningful diversion from landfill, and fast track our progress towards a circular economy, we need mandatory requirements for the procurement and use of domestic recycled content in all packaging. Demand creation is a critical building block in the circular economy."
He said markets for domestically produced recycled plastic had to be prioritized, because high production costs in Australia can see locally produced packaging competing against cheap virgin and recycled imports.
The submission suggested Australia follow the EU lead and require recycled plastic content be collected and recycled within the EU or meet EU environmental, health and modern slavery standards if collected or processed elsewhere.
Pact's submission supported the Australian Government's intention to create a Future Made in Australia Act to support domestic manufacturing through finance and investor incentives.
"The challenges faced by domestic manufacturers in the packaging manufacturing sector [were] highlighted when Qenos, Australia's only manufacturer of ethylene used for plastic packaging, was placed into voluntary administration," the submission said. When Qenos stops operating this year, manufacturers will have to rely solely on imported resins.
Another key challenge for Geminder has been his inability to privatize Pact Group.
He launched a bid to privatize the Australian Securities Exchange (ASX) listed company in September 2023 but, when the bid finally closed in June, Geminder's family-owned company Kin Group Pty. Ltd., which he also chairs, had amassed only 87.86 percent.
Under Australian law, unless a bidder reaches a 90 percent stake, they cannot compulsorily acquire the remaining shares and must go through a complex process that takes at least 12 months before they can delist the company from the ASX without the permission of the remaining shareholders.
The Australian newspaper has reported that the shareholders that refused to sell to Geminder include companies associated with two former Pact Group business partners, David Harris and Mark Gandur.
Harris and Gandur are co-directors of Melbourne-based TIC Group Pty. Ltd., a logistics and supply chain company serving the retail industry. TIC sold a coat hangers and security tags business to Pact in 2018 and is now "locked in a legal battle" over an earnout payment.
Melbourne-based Pact's 2023 annual report notes that TIC Group and Pact's dispute is before the Supreme Court of Victoria. The annual report said Pact is "vigorously defending" TIC's claim for A$30 million plus interest and costs, saying no earnout amount is payable. The Australian has reported that the trial is set for April 2025.
Geminder, who appears in newspaper The Australian Financial Review's annual rich list, with an estimated wealth of A$1.3 billion, launched Pact Group in 2002, after buying several plastics businesses from his late father-in-law Richard Pratt. Pact was listed on the ASX in December 2013.
Pratt's father Leon founded the global packaging company Visy Industries, which is privately owned by Pratt Holdings Pty. Ltd. Visy is now run by the third generation, Richard Pratt's son and Geminder's brother-in-law Anthony Pratt, who is now based in the United States.