Question: Why are the supermarkets profiting from plastic bag levies?

Crikey reader Vivienne Benton wonders out loud:

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The trial of a plastic bag levy will soon begin in a few supermarkets in Victoria. Shoppers who use plastic bags will be asked to pay an extra amount of 10 cents on top of the exorbitant amount they are already paying for groceries to carry their shopping home in plastic bags.

While I applaud some action to limit the use of plastic bags, I am wondering why the government has opted to slug the consumer with what constitutes an additional tax, instead of rewarding them for not using them.

Back in 1999, I was doing a study for my postgraduate degree in Environmental Science and I had elected to look at plastic bags and the damage they did in the ocean. During that study I discovered that whether or not you use plastic bags, the supermarkets have already levied for them, spreading their cost (which back then was 4 cents a unit) across all groceries.

I have rarely used plastic bags in the last 25 years, but I have never been offered a refund by a supermarket for not using them. There was a time when the checkout chick would pop a paper coin in a jar if you refused the plastic bag, but that’s long gone by the by.

My question is why have the supermarkets remained stum about the already existing charge? And why is the government ignoring that it’s already in place and that there’s a more positive alternative available: give back the 4 cents if the customer doesn’t use a plastic bag.

With supermarkets hiking their profits up over their heads, how can the struggling consumer be expected to pay a levy on a levy?

Why not put a few extra coins in the consumers’ pockets as a reward. Of course you’d have to round it off to 5 cents, but then the supermarket and government are well versed in that tactic.

Answer: They are — and they aren’t.

Crikey intern Julie Shingleton explains:

Safeway, Coles and IGA stores have indeed signed up to participate in a proposed trial to test a 10 cent charge on plastic bags. The trial, pending approval from ACCC, will start in August. It’s a Victorian state government initiative which aims to test the assumption that charging more for plastic bags will reduce usage.

So will this extra money end up in the supermarkets’ coffers?

No, says Margy Osmond, CEO of the Australian National Retailers Association.

She told Crikey today that the proceeds from the trial will be used to cover the cost of the trial and will be poured back into local environmental initiatives. 

“The trial aims to look at ways to reduce the use of plastic bags further … It is a one month trial and an information gathering exercise,” says Osmond.

The supermarkets participating in the trial will not profit from the trial.

Ok, but what of the current state of play? Why shouldn’t consumers be given money back if they don’t use a plastic bag in the first place?

According to the supermarkets, it’s just too difficult. Crikey spoke to Woolworths and Coles and both have confirmed that the cost of plastic bags is treated as an operating cost, which means it’s indirectly factored into the cost of goods purchased in supermarkets, just like the cost of lighting, refrigeration, cleaning and staff.

A Coles spokesperson Jim Cooper says the cost of plastic bags is considered as one of a series of costs to run the business.

Right. But doesn’t it start to add up at some point? In 2005, a report commissioned by the Department of the Environment found that supermarkets had cut the number of bags distributed to shoppers by almost 30%, helping to bring down the number used each year from 6.9 billion to 5.6 billion (reported in The SMH).

Woolworths spokesperson Luke Schepen told Crikey today that the cost of plastic bags is “minimal” compared with other operating costs, like wages and transport.

“We aim to keep the prices low for our customers by passing on efficiencies in our supply chain management,” he says, but some costs “have increased such as transport costs” due to rising fuel prices.  

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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