Australia’s Packaging Recycling Reform Changes Direction

Recent changes to the Australian Government’s proposed packaging regulations have raised concerns across the plastics and recycling industries, particularly around investment certainty and demand for locally recycled materials.

In June 2023, Australia’s environment ministers agreed to reform packaging regulation after concluding that voluntary targets and design guidelines were not delivering the required outcomes. The proposed national approach included mandatory packaging design requirements and minimum recycled-content standards intended to improve packaging circularity and create stronger markets for recovered materials.

Following extensive consultation — including more than 1,000 participants in government webinars and 426 formal responses in 2024 — the Commonwealth regulatory model received substantial support. More than 80% of respondents to the consultation preferred Commonwealth regulation, while 65% supported an extended producer responsibility model incorporating mandatory requirements.

Commonwealth scheme put on hold

On 8 September 2026, ABC News reported that the Federal Government had advised stakeholders that a new Commonwealth packaging scheme would not be introduced during the current term of government.

The government cited concerns about cost-of-living pressures and indicated that it would instead work with state and territory governments to improve packaging regulation. Environment Minister Murray Watt said the government remained committed to stronger environmental outcomes but was seeking an approach that would also minimise costs to consumers.

The announcement generated significant concern within Australia's recycling sector. According to the Australian Council of Recycling, cited by the ABC, Australian plastics recycling facilities are operating at around half of their available capacity on average. The organisation argued that without obligations supporting demand for recycled material, Australian recyclers face difficult competition from lower-cost imported plastics.

The announcement also came as Recycling Plastics Australia entered voluntary administration. The business had previously received $20 million in federal funding under the Recycling Modernisation Fund to expand soft-plastics recycling capability.

The issue highlights a broader challenge for Australia's circular economy: recycling capacity alone does not create a functioning market for recycled polymers. Collection and processing infrastructure need to be accompanied by appropriate product and packaging design, material specifications, economically viable processing technologies and reliable end markets for recycled materials.

Governments agree on a new pathway

There has, however, been an important development since the initial announcement.

On 18 September 2026, federal, state and territory environment ministers met and agreed that reform of packaging rules — including soft plastics — remains a national environmental priority.

Rather than proceeding with the previously proposed standalone Commonwealth scheme, governments agreed to work together with industry to strengthen packaging regulation through National Competition Policy. Ministers also agreed to explore greater harmonisation of bans on problematic plastic items, which currently differ between jurisdictions.

Speaking on the same day, Environment Minister Murray Watt characterised the government's position as taking a different approach to reform rather than walking away from packaging reform altogether.

The result is therefore more nuanced than the original September announcement alone suggests. The previously proposed Commonwealth regulatory model will not proceed during this term, but work towards stronger packaging regulation is continuing through a different federal–state framework. The details, timing and eventual regulatory requirements of that approach remain important issues for industry to watch.

Why this matters to the plastics industry

Australia has invested significantly in recycling infrastructure and processing capacity. For those investments to remain commercially sustainable, the industry requires sufficient and predictable markets for recovered polymers.

For manufacturers, packaging producers, recyclers, brand owners and material suppliers, consistency is also important. Different requirements between Australian jurisdictions can increase complexity, while long periods of regulatory uncertainty can make decisions about new recycling capacity, equipment and product development more difficult.

Effective circularity therefore requires more than setting recycling targets. It requires coordination across material selection, product and packaging design, collection, sorting, recycling technology, manufacturing specifications and end-market demand.

SPE Australia-New Zealand has traditionally focused on education, technical knowledge, professional development and connecting the plastics community, rather than political advocacy. That remains our foundation. However, where policy developments have significant consequences for the future of plastics manufacturing, recycling and circularity in Australia and New Zealand, we believe the industry benefits from informed technical participation. SPE ANZ supports constructive engagement between government, industry, researchers and the wider community, and encourages policies that are informed by science, engineering evidence, commercial realities and the practical experience of plastics professionals.

Sources: ABC News, Australian Government Department of Climate Change, Energy, the Environment and Water, and Australian Government Environment Minister announcements, September 2026.