Who Benefits When
Containers Aren't Returned?
The Perverse Incentive Problem.
Australia's container deposit schemes are built on a structural paradox: the organisations responsible for maximising return rates have documented financial interests in keeping them low. This page presents the evidence — from parliamentary inquiries, government reports, and international regulatory findings — without speculation.
10
Allegations referred to QLD Crime & Corruption Commission — Oct 2025
$96M
Paid by COEX to Circular Economy Systems — a Coca-Cola/Lion joint venture (QLD Parliamentary Inquiry 2025)
€506M
Unclaimed deposits retained by Verpact (Netherlands) 2021–2024 — ILT Government Report
€66.7M
Unclaimed deposits retained by Re-Turn (Ireland) in 2024 alone — RTÉ/Irish Times
Queensland's Inquiry found structural conflicts of interest
that may have limited the scheme's effectiveness.
The following structural conflicts of interest are documented in official parliamentary reports and government findings — not inferred. They represent the core governance failures that explain why return rates have plateaued well below the 85% national target.
Note on scope: Queensland is the only Australian CDS that has been subject to a comprehensive parliamentary investigation. All documented findings below relate to Queensland unless otherwise noted. The absence of equivalent investigations in other states means the same structural issues may exist elsewhere without being publicly documented. This is a data gap, not an absence of concern.
Beverage companies on coordinator boards pay more in scheme fees when return rates go up
Scheme fees charged to beverage companies are directly tied to the volume of containers returned. The more containers returned, the higher the scheme fee cost for Coca-Cola, Lion, and other board members. The QLD Parliamentary Committee noted this created a documented structural conflict of interest — board members who governed a scheme designed to maximise returns also bore a financial cost when returns increased. The committee did not make a finding that board members acted to suppress return rates, but found the governance arrangement itself was problematic.
Source: QLD Parliamentary Inquiry Report, Oct 2025 — Section 3.1.2 →Unclaimed deposits accumulate as retained earnings — with no mandated spend
When consumers don't return containers, the deposit they paid is never refunded. These unclaimed funds accumulate within the scheme's financial system. In Queensland, COEX was found to hold substantial retained earnings 'with no clear policy for spending it for environmental or charitable purposes' — confirmed in the parliamentary inquiry report. The committee noted the scheme 'turns over nearly half a billion dollars a year, yet only 36% of this is returned to consumers.'
Source: QLD Parliamentary Committee Chair Rob Molhoek, Oct 2025; QLD Parliamentary Inquiry Report Section 3.2.4 →The 'fused model' gives one organisation control over both scheme administration AND network operations
Queensland uses a unique 'fused model' where COEX acts as both the Product Responsibility Organisation AND the network operator — unlike other states where these roles are separated. This concentration of power means the same body that is supposed to hold network operators accountable IS the network operator. The parliamentary committee found this model was adopted 'without an open tender process' and contributed to 'serious governance and accountability failures.'
Source: QLD Parliamentary Inquiry Report, Section 2.1.3 — 'Fused model' →Scheme coordinators set their own scheme pricing — with no independent oversight
In Queensland, COEX sets the scheme price (the fee charged to beverage companies per container) without independent regulatory review. The parliamentary inquiry found a 'lack of transparency' in scheme pricing and noted the 'true cost of the scheme' was not clearly disclosed. When the body setting the price is governed by the same companies paying it, a structural incentive exists to minimise that price. The parliamentary committee noted this governance arrangement as a concern — without making a finding that pricing was set with that intent.
Source: QLD Parliamentary Inquiry Report, Section 3.2.3 — 'Scheme pricing' →The Money Flow — Where Does The 10c Go?
Only 36% of scheme value was returned to consumers in QLD (FY25). Where did the rest go?
36%
Returned to consumers as refunds
$188.1M of ~$522M total scheme value in QLD FY25
~62%
Scheme operations, network fees, administration, reserves
Includes coordinator revenue, depot operator payments, COEX overheads and retained earnings
< 2%
Donated to charities and community groups
$4.6M in FY25 — 2.4% of total scheme value distributed
Source: COEX Annual Report FY2024-25; QLD Parliamentary Inquiry Chair's statement Oct 2025; QLD DETSI Parliamentary Briefing March 2025. Note: The ~62% allocated to scheme operations includes legitimate depot handling fees, transport, RVM maintenance, and administration — as well as coordinator overheads and retained earnings. The committee's concern was specifically about the retained earnings portion and its lack of transparent use policy.
One state. One investigation.
Six findings that changed everything.
Queensland's Containers for Change is the only Australian CDS to have undergone a comprehensive parliamentary inquiry. What the committee found — after receiving 119 submissions, hosting public hearings, and hearing from dozens of whistleblowers — represents the most detailed public account of CDS governance failure in Australian history.
Important context: Queensland's scheme has increased return rates significantly — from 18% in 2018 to 67.1% by 2025. The findings below do not negate that progress. They document the governance failures and structural conflicts that are preventing the scheme from reaching the 85% national target — and potentially explain why the trajectory has stalled.
The Unanswered Question
If this is what one investigation found — what would the others reveal?
Queensland is the only Australian CDS that has faced a formal parliamentary investigation. NSW, WA, Victoria, ACT, SA, NT, and Tasmania have not undergone equivalent scrutiny. The structural conditions that allowed governance failures in Queensland — beverage industry dominance of coordinator boards, no open tender for coordinator appointment, lack of independent pricing oversight, and retention of substantial surpluses — are not unique to Queensland's legislative framework.
This is a data gap, not a clean bill of health. The absence of investigation is not evidence of absence of problem. The 10 CCC referrals, the $96M contract to a Coke/Lion joint venture, and the documented bullying of whistleblowers were only revealed because a parliamentary committee asked. Without equivalent inquiry processes in other states, equivalent issues may remain undiscovered.
When containers aren't returned,
the money doesn't disappear. Someone keeps it.
Every deposit return system generates unclaimed funds when consumers don't return containers. The question of who keeps those funds — and what incentives that creates — is one of the most consequential and least discussed aspects of scheme governance globally.
How unclaimed deposits work — the mechanics
1
Consumer buys a drink
A deposit (10c in Australia, 15–25c in Ireland, 25c in Netherlands) is included in the purchase price. The consumer has effectively pre-paid a refund they may or may not claim back.
2
Container is not returned
If the container goes into landfill, kerbside recycling, or litter — the deposit is not refunded. The 10c the consumer paid is permanently retained within the scheme's financial system.
3
Someone keeps the money
Depending on jurisdiction design, unclaimed deposits flow to: scheme operators (as retained earnings), beverage distributors (as windfall profit), or state governments (via escheat laws). In Australia, this is not publicly disclosed per state.
The perverse incentive — plainly stated
If a scheme operator retains unclaimed deposits, they receive more money when fewer containers are returned. This is a direct financial incentive to underinvest in return rate improvement. The Dutch government's inspectorate confirmed this exact mechanism in writing about Verpact, describing it as a "perverse incentive" in an official enforcement document.
In Australia, the public disclosure of how unclaimed deposits are allocated within each state's CDS is insufficient to determine whether the same incentive exists. This is itself a governance failure — the absence of mandatory public reporting on unclaimed deposit flows means accountability is impossible.
Netherlands
Verpact · July 2021 – December 2024
Unclaimed total
€505.9M
Annual figure
~€139M (2024 alone)
Return rate
77%
Target
90%
Dutch Human Environment and Transport Inspectorate (ILT) formally accused Verpact of 'calculating' and 'opportunistic' behaviour that undermines collection. ILT explicitly documented a 'perverse incentive': the fewer bottles collected, the more unclaimed deposits Verpact retains. The ILT pushed to impose €1.5M/day penalties.
Source: NL Times, Nov 2025; ILT confidential documents reported by ADIreland
Re-Turn · FY2024 (annual)
Unclaimed total
€66.7M
Annual figure
€66.7M in 2024 alone
Return rate
76%
Target
90%
Re-Turn, a private operator, retains all unclaimed deposits. Irish Times reported consumers saying 'They are sitting on a cash pile of unclaimed deposits and we are left out of pocket.' Re-Turn held €103.2M in total unredeemed deposits at end of 2024, estimating €36.5M would eventually be claimed — meaning ~€66.7M was permanently retained. Irish critics raised concerns about the lack of requirement to return surpluses to environmental programmes.
Source: Irish Times, Feb 2026; RTÉ News, Aug 2025USA (Multiple States)
Various (state or industry) · Ongoing — documented across 10 bottle-bill states
Unclaimed total
Hundreds of millions USD annually
Annual figure
Michigan, New York, Connecticut, Maine, Vermont escheat to state; Iowa, Oregon retained by industry
Return rate
Varies — Iowa: ~85%, Michigan: ~90%
Target
State-specific
The Bottle Bill Resource Guide (bottlebill.org) documents that in states where beverage distributors keep unclaimed deposits, 'some distributors are likely making a net profit because the revenue from unredeemed deposits and sale of scrap add up to more than the handling fees paid out.' In Iowa, distributors retain 100% of unclaimed deposits. Critics argue this is 'tax-free, windfall profits for the bottler/distributor.' States with high government oversight (Michigan, NY) consistently outperform industry-managed states.
Source: Bottle Bill Resource Guide (bottlebill.org) — comprehensive US state-by-state analysisAustralia (Queensland)
COEX · FY2018–2025
Unclaimed total
Not publicly disclosed
Annual figure
Not published — COEX does not disclose retained earnings breakdown
Return rate
67.1% (FY25)
Target
85%
Queensland's parliamentary committee confirmed COEX held 'recurring and substantial cash reserves' with no clear policy governing how those funds should be spent for environmental or charitable purposes. COEX's own submission stated surplus is managed 'in a way that supports the sustainability of the scheme' — without specifying amounts or purposes. The committee dedicated an entire section (3.2.4) to this issue, noting the lack of transparency and accountability for these funds.
Source: QLD Parliamentary Inquiry Report Section 3.2.4; COEX submission to QLD Inquiry 2025What this data shows: Internationally, the pattern is clear — wherever scheme operators retain unclaimed deposits without mandatory reporting or redistribution requirements, return rates consistently fall below targets, financial surpluses accumulate, and regulatory conflict eventually follows. The Dutch ILT named it explicitly. The Irish public named it explicitly. The Queensland parliamentary committee named it explicitly. The mechanism is not unique to any one country or scheme structure — it is an inherent design vulnerability of any deposit return system that does not require transparent accounting of unclaimed funds.
The same pattern appears globally:
Industry control correlates with underperformance.
Examining deposit return schemes across multiple jurisdictions reveals a consistent pattern: where scheme operators have a financial interest in retaining unclaimed deposits and face insufficient independent oversight, return rates fall short of targets and governance conflicts emerge. Where structural design removes this incentive — through mandatory retail participation or state management — performance is materially higher.
The Global Pattern — Documented Across 5 Jurisdictions
Industry-managed, operator retains unclaimed deposits
- • Netherlands (Verpact): 77% — regulatory enforcement required
- • Ireland (Re-Turn): 76% — public criticism of cash pile
- • USA-Iowa (distributors keep all): Below natural ceiling
- • Australia QLD (COEX): 67.1% — parliamentary inquiry launched
State-managed or structurally mandated return
- • Germany (retail mandate): ~97–98% — structural obligation
- • USA-Michigan (state escheat): ~90%+ historically
- • USA-New York (80% state escheat): High performance
- • NT Australia (88%): highest in Australia
Important note: Correlation does not prove causation. Return rates are also affected by population density, urban vs. rural geography, infrastructure maturity, and cultural factors. However, the consistent cross-jurisdictional pattern — industry governance + unclaimed deposit retention = underperformance — is documented by multiple independent regulatory bodies and is not coincidental.
The Finding, Plainly Stated
Based exclusively on parliamentary reports, regulatory enforcement documents, official government findings, and verified media reporting. No speculation.
The structural conditions that allow coordinator conflicts of interest to suppress return rates are documented, not alleged. In Queensland — the only Australian CDS subject to a comprehensive parliamentary investigation — a committee found that the board was dominated by companies with a financial incentive to reduce container return volumes, that a $96M contract was awarded to a joint venture owned by those same companies, that substantial cash reserves were held with no clear policy for use, and that 10 allegations warranted referral to the Crime and Corruption Commission.
Internationally, the same pattern repeats across multiple independent jurisdictions. The Dutch environmental inspectorate formally documented a "perverse incentive" in their scheme operator's behaviour — word for word. Ireland's operator was publicly accused of sitting on a "cash pile of unclaimed deposits." US analysis confirmed beverage distributors make "windfall profits" from unclaimed deposits in states where they retain them. In every case, the pattern is: industry governance + unclaimed deposit retention = underperformance against targets.
The contrast with high-performing schemes is instructive. Germany's near-100% return rate is not achieved through higher deposits alone — it is achieved through mandatory retail participation that structurally removes the operator's ability to underperform. Michigan and New York, where unclaimed deposits flow to state environmental funds rather than industry accounts, outperform industry-managed systems. The NT, Australia's highest performer at 88%, operates with a simpler structure and fewer governance layers.
Queensland is not an anomaly. It is the only one that has been looked at.
What the evidence shows is failing
- Scheme coordinators dominated by companies that pay more when return rates rise
- Unclaimed deposit flows not publicly disclosed in any Australian CDS
- No mandatory independent pricing review of scheme fees in most jurisdictions
- Self-managed complaints mechanisms with no external accountability
- Substantial coordinator cash reserves with no mandated environmental use
- No national standardisation of coordinator governance requirements
- Return rates plateaued well below the legally binding 85% national target
What high-performing schemes have in common
- Unclaimed deposits mandated to flow to environmental programmes, not operator reserves
- Independent regulatory oversight of scheme pricing and governance
- Mandatory participation requirements remove operator discretion on return rates
- Independent board composition with waste industry expertise
- Transparent financial reporting on all scheme revenue streams
- External accountability mechanisms for coordinator performance
- Structural incentives aligned with — not against — return rate maximisation
A third-party behavioural solution bypasses the perverse incentive entirely.
The 10c Recycling Games does not require fixing scheme governance to work. It operates as a third-party contractor — expressly permitted under the legislation of all 8 Australian jurisdictions — that creates an independent incentive for consumers to return containers, regardless of whether the scheme coordinator is actively pursuing return rate improvement.
This is precisely why the federal government's support for innovative third-party engagement is critical: it provides a path to the 85% national target that does not depend on the goodwill of scheme coordinators whose financial interests may not be aligned with that outcome. It also provides federal oversight with a direct performance mechanism — measurable, auditable, and externally accountable — that the current coordinator-driven model cannot offer.
Key Sources — All Claims Verified
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