NSW Government repeals dine-in mug mandate and $110k reusable cup scheme fines, retains 2028 single-use cup recyclability requirement

Overview

Cafes and hospitality venues in New South Wales will no longer have to serve dine-in customers in mugs or glasses by 2028. Businesses will also not be compelled to join reusable cup schemes under threat of fines of up to $110,000. Premier Chris Minns and Environment Minister Penny Sharpe have confirmed the government will repeal both provisions from its recently passed plastic and waste reduction reforms, as reported by The Guardian on 28 October 2026.

The reversal is partial. Two obligations survive. Businesses will still have to accept customers’ clean reusable cups, and all single-use takeaway beverage cups must be recyclable by 2028. The retreat followed sustained opposition from small business operators and hospitality industry groups. They argued the dine-in and scheme requirements imposed operational costs and compliance burdens that many venues could not absorb.

For environmental professionals, the decision matters less for individual coffee shops than for what it shows about where the burden of waste reduction now sits. Removing the strongest source-reduction measures puts more weight on downstream recovery. This comes at a time when NSW Government projections show Greater Sydney’s putrescible landfill capacity approaching exhaustion around 2030. Developers of commercial precincts, councils planning waste services, packaging suppliers and lawyers advising on retail transactions should read this as a change to the compliance timeline, not the end of cup regulation in NSW.

Key details

Two measures have been dropped from the NSW plastic and waste reforms. The first would have required cafes and hospitality venues to provide reusable mugs or glasses, rather than disposable cups, to dine-in customers from 2028. The second would have obliged businesses to take part in reusable cup schemes, with reported maximum penalties of up to $110,000 for non-compliance. Both were among the most contested elements of the package, and both are now to be repealed.

Two measures are retained. Businesses will still be legally required to accept clean reusable cups brought in by customers, so a venue will not be able to refuse a BYO cup simply because it prefers to serve in disposables. Separately, single-use takeaway beverage cups must be recyclable by 2028. The second obligation has the greater consequences for supply chains. It applies to the cup itself rather than to venue behaviour, so it reaches manufacturers, importers, distributors and franchise procurement teams.

What “recyclable” means in practice will depend on the wording of the legislation and any NSW EPA performance standard or guidance issued under it. Most takeaway coffee cups are paperboard with a plastic lining. Kerbside systems and materials recovery facilities (MRFs) have historically struggled to separate and recover these cups. A standard tested against real NSW collection, sorting and reprocessing capacity is very different from one that only requires a cup to be technically recyclable somewhere. Until the final text and commencement provisions are confirmed, advisers should treat the media report as a guide to policy direction, not the operative legal position.

The statutory framework behind the reforms spans several instruments:

• The Waste Avoidance and Resource Recovery Act 2001 (NSW) establishes the state’s waste hierarchy and strategy objectives, which rank avoidance and reuse ahead of recycling.
• The Protection of the Environment Operations Act 1997 (NSW) (POEO Act) governs the licensing of waste facilities. Under section 88, it also sets the waste levy that applies to material disposed of at licensed landfills in the regulated area.
• NSW’s existing single-use plastic bans, which commenced in stages from June 2022 under the Plastic Reduction and Circular Economy Act 2021, are the backdrop against which the cup measures were developed.

Australian context

The NSW retreat reflects a broader tension in Australian waste policy between avoidance targets and the cost of implementation for small business. The waste hierarchy in the Waste Avoidance and Resource Recovery Act, mirrored in waste legislation in other states, ranks avoidance and reuse above recycling. Dropping the dine-in and scheme mandates moves NSW’s cup policy down that hierarchy. It now relies on recycling performance rather than reduced consumption.

Recyclability claims in Australia already face scrutiny beyond state waste law. The Australasian Recycling Label, administered through the Australian Packaging Covenant Organisation, relies on the Packaging Recyclability Evaluation Portal (PREP) to assess whether packaging can be recovered through kerbside systems. Under the Australian Consumer Law, a “recyclable” claim must also be accurate and capable of substantiation. The ACCC’s December 2023 guide on making environmental claims warns businesses against broad or unqualified recyclability statements. Any NSW recyclability standard will operate alongside these existing tests. Suppliers should expect overlapping evidence requests from regulators, customers and auditors.

Infrastructure is the constraint behind all of this. NSW Government projections in the NSW Waste and Sustainable Materials Strategy 2041 indicate that Greater Sydney’s putrescible landfill capacity will be close to exhausted by around 2030. Waste facilities in NSW require environment protection licences under the POEO Act. Larger recovery facilities generally also need development consent under the Environmental Planning and Assessment Act 1979, and the major projects are often assessed as state significant development. With reliance shifting from source reduction to recovery, new MRF and reprocessing capacity will need to be approved, built and licensed within roughly the same window as the 2028 recyclability deadline.

Practical implications

Hospitality operators and franchise groups should review any procurement, fit-out or lease commitments made in anticipation of the dine-in mandate. Venues that planned dishwashing upgrades, extra crockery storage or reusable cup scheme memberships may be able to scale back or defer that spending. Operators should not drop their BYO cup policies, as the obligation to accept clean reusable cups has been kept.

Packaging suppliers, importers and distributors face the most direct exposure. They should start gathering evidence now on whether their takeaway cups and lids can be recovered through NSW kerbside and MRF systems, including PREP assessments where available. Suppliers relying on lined paperboard cups should test alternative linings and coatings well before 2028, since retooling and stock turnover take time. Any recyclability claims on packaging or in sales material should be checked against ACCC guidance in the meantime.

Councils and waste service planners should consider how a 2028 recyclability requirement will change the mix of material arriving at MRFs, and whether current sorting contracts and processing arrangements can handle a higher volume of fibre-based cups. Developers of commercial precincts and shopping centres should factor this into waste management plans, particularly where centralised waste rooms and collection contracts serve multiple food and beverage tenants.

Lawyers advising on retail and hospitality transactions should check supply agreements, franchise manuals and leases for clauses tied to the repealed mandates, and confirm how the retained obligations are allocated between parties. Warranties on packaging compliance may need updating once the final legislative text and any NSW EPA standard are published.

All parties should watch for the repeal legislation, commencement dates for the retained obligations and the NSW EPA’s definition of “recyclable”. These details will determine the actual compliance burden, and they have not yet been settled.

References and related sources

• Primary source: www.theguardian.com
• sydneytimes.net.au
• bsky.app

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This is an iEnvi Machete news summary. Prepared by iEnvi to summarise the source article for contaminated land, groundwater, remediation, approvals and site risk professionals.

Published: 03 Nov 2026

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