Sydney Water says up to 12,000 food businesses in the city’s south-west could be illegally discharging fats, oils and grease into the sewage catchment that flows to Malabar – home to a problematic fatberg that could be as big as four buses.

The rise in restaurants and food manufacturers without proper grease traps and waste control measures is partly due to an increase in businesses overall.

But it also coincides with changes that Sydney Water introduced to its so-called Wastesafe program in 2017, critics say, with digital reporting and fewer dedicated inspectors making it easier “to fly under the radar”.

Mysterious black ball-shaped debris first washed up on Coogee beach in October 2024. Composite: Randwick City council/Facebook

The scale of possible noncompliance by food retailers was revealed in a secret Sydney Water report on the cause of the debris balls that closed Sydney beaches in October 2024 and January 2025.

The August report, obtained by Guardian Australia last week, suggested a huge accumulation of fats, oils and grease (FOGs) had built up in an inaccessible area of the Malabar plant at the start of the deep ocean outfall (DOOF), which carries primary-treated sewage 2.3km out to sea.

Changes in pumping pressure caused the fatberg to break up, with poo balls released into the ocean before returning to Sydney’s eastern and northern beaches driven by waves and wind, the report suggested.

It concluded: “The hypothesis is that the accumulation of this FOG correlates with a substantial increase in both FOG and volatile organic compounds in the influent coming into the plant. Increases are calculated as 39% for FOG … and 125% for VOCs over the past 10 years.”

“A recent database analysis has identified that there could be up to 12,000 retail food businesses operating within the Malabar catchment without the necessary approvals from Sydney Water and that these could be significant contributors to FOG loads.”

Sydney Water instituted the Wastesafe scheme in 1991.

It required food processors and restaurants to have grease control mechanisms that were approved by Sydney Water. Businesses had to empty their grease traps on a regular basis and the corporation’s inspectors ensured compliance.

In 2017, Sydney Water moved to a new digital system. Insiders say transport companies themselves were made responsible for reporting the FOGs they collected by scanning a barcode at the food retailer and completing a form detailing the volume removed.

At the same time, Sydney Water changed its inspections.

Sign up: AU Breaking News email

“Sydney Water do have inspectors, but not at the rate they used to,” Brett Lemin, the executive director of the Waste Contractors and Recyclers Association of NSW, said. His members include pump-out contractors.

“It’s very hard to police people who aren’t even registering for the Wastesafe system,” Lemin said. “There are great people in the food industry who are doing the right thing, but it’s very easy to fly under the radar.”

Sydney Water acknowledges that in 2017, “the service provider for the Wastesafe tracking system changed”.

“However, the program’s core purpose, functions and compliance obligations remained unchanged,” a spokesperson said. “Sydney Water currently has 12 field inspectors who work directly with retail food trade waste customers.”

Factsheets for businesses are produced in multiple languages.

Wastewater systems in greater Sydney. Illustration: Sydney Water

The president of Restaurant and Catering Australia, John Hart, said he was surprised by Sydney Water’s 12,000 figure.

“If it is a problem, it’s their problem,” he said this week.

Hart said all public-facing food businesses, like cafes and restaurants, required development approval from councils – and those DAs required a grease trap.

“Food businesses also need to be registered and DA approval is necessary to register,” he said. Most food businesses were inspected once a year by food inspectors, Hart added.

University of Sydney water expert Prof Stuart Khan said the figure of 12,000 potential unregistered users of the sewer system “didn’t seem outrageous”.

“It [Malabar] is a huge catchment all the way back to Glenfield and Liverpool,” the chair of the NSW government’s independent water advisory panel said.

“It doesn’t seem outrageous that there could be that many, when you consider all the cafes, chicken shops and food manufacturers in that catchment.”

A project looking at the Bondi treatment plant, which services the city and eastern suburbs, confirmed that “a significant number of businesses are operating without the required trade waste approvals,” Sydney Water’s August 2025 report stated.

The Bondi FOG project identified more than 300 new customers that were discharging trade waste without approval, representing a 13% increase in known retail food trade waste contributors in that catchment.

“When extrapolated across Sydney Water’s total area of operations, this suggests a conservative estimate of at least 1,500 retail food businesses discharging FOG illegally,” it found.

However, Sydney Water said “this conservative estimate excludes the range of non-retail food trade waste sources of FOG and doesn’t consider the diversity and scale of businesses operating in catchments other than Bondi”.

“A more recent database analysis suggests that up to 12,000 retail food businesses could be operating without approval in the Malabar catchment alone.”