Eco fees are not new in Canada; in fact they were introduced approximately 15 years ago to fund the British Columbia paint stewardship program. Since then there has been an ongoing debate to define responsibilities under product stewardship or extended producer responsibility (EPR) programs and how such programs manage eco fees. Retailers have long stated that they require the flexibility to manage these fees as a separate line item on the cash register tape. On the other hand, many provincial governments and consumers would prefer that product brand owners or first importers (stewards) be responsible to pay these fees and include them in the price of their products. (See articles, pages 4 and 54.)
Ontario, being a late entry into EPR programs in Canada, has made up for lost time by designating and approving numerous stewardship programs for product such as hazardous waste, tires and electronics in the past few years. The recent July 1 launch of the phase II Municipal Hazardous or Special Waste (MHSW) program introduced new eco fees on thousands of consumer products and has fuelled the eco fee debate once again.
Government fears regarding consumer reaction to these new fees are understandable. Ontarian’s haven’t forgotten David Peterson’s $5 tire tax that was never used to develop a scrap tire management system in Ontario. Let’s face it: a visible eco fee on the cash register tape has the look and feel of a tax, not an industry run stewardship program.
Consumers are sceptical of environmental programs that appear to be green washing or have the appearance of a government tax. This scepticism is compounded when new programs are launched before the required collection, transportation and processing infrastructure needed to support consumer demand have been set up.
The stewards that fund the programs have pushed for visible eco fees for two reasons: Visible fees are the least costly method of managing program costs; and, they provide a level of transparency and program communication that a hidden fee does not.
If a manufacturer or an importer incorporated eco fees into the price of the product, this fee would increase the cost of their goods. Then, standard business processes would apply mark-ups to both the actual cost of the product as well as the eco fee cost. Thus, by the time the product passes through an importer and/or wholesaler, to the retailer the eco fee may be marked up two or three times; a 10 cent eco fee could costs the consumer 20 cents or more.
Some will argue that manufactures are getting a free ride by charging consumers these fees and not bearing the full cost of these programs. However, in the end, the consumer ultimately pays these fees. So the question becomes: Should consumers know they are paying these fees and how much they are paying?
Previous Ontario stewardship program launches did not generate such widespread media coverage or consumer outrage. Why was this program launch different? Was it that it launched on the same day as the HST (Harmonized Sales Tax)? The HST has a much greater financial impact to a consumer than eco fees, but its implementation went through with minimal media attention.
Why the difference?
The answer lies in program communication. Due to extensive prelaunch advertising, the general public was familiar with all aspects of the HST. However, Stewardship Ontario (SO) launched its program before the stewards were obligated to pay any program fees, thus SO had little money available to conduct a comprehensive public communication initiative.
There are also merits to charging a visible eco fee. Experience has demonstrated that the best way to communicate a message to an individual is through their pocketbook. If consumers know they have paid a stewardship fee — to responsibly manage unused or end of life products — they are more likely to use the programs they have paid for. Furthermore, once a retailer puts the eco fee on a cash register tape the financial cost of the program becomes transparent.
The current form of stewardship programs may not be perfect. However, the government’s decision on July 20, 2010 to prohibit visible fees has the potential to reduce transparency, increase overall program costs and increase consumer confusion regarding which products require special collection and treatment. Visible eco fees are not popular but they are effective.
Grant Caven is President of GLA Environmental Consulting in Toronto, Ontario. Contact Grant at email@example.com