The draft bill would also get rid of industry-run "cartels" that had come under fire for setting eco fees to pay for the recycling of tires, electronics and hazardous materials like batteries, said Environment Minister Jim Bradley.
Producers and importers pay fees to those stewardship organizations to administer recycling programs, which are usually passed on to consumers.
But the governing Liberals want to overhaul the system, which had come under fire in recent years after consumers were slapped with new fees on a slew of new products with little warning.
If passed, consumers won't get a shock at the cash register, because the costs of recycling will be built into the shelf and advertising price, said Bradley.
"Just as every other cost that a producer would incur — the cost of electricity, the cost of labour, any bonuses that are paid to anybody, any of the materials that they have to gather together," he said.
"All those costs are reflected in the final cost. No surprises."
Since producers would be responsible for recycling the goods they make, competition will drive down the fees that are passed on to consumers, he said.
"If I'm an individual producer now, I'm going to want to be able to recycle at the lowest cost possible," he said.
"So I'm going to start thinking, 'What about the packaging I'm using? Do I have to have that much packaging? Do I have to have that kind of packaging?'"
The bill would lift the 50 per cent producer funding cap on Blue Box costs, which would give municipalities that subsidize the program some relief, he said.
Waste Diversion Ontario, the not-for-profit organization funded by the industry that oversees the province's recycling programs, will be converted into the Waste Reduction Authority.
It would monitor the fees, set targets, have enforcement powers and the authority to impose fines, Bradley said.
Three industry-run organizations WDO created to develop, fund and manage the province's recycling programs will be shut down, he said.
One of them, Stewardship Ontario, came under fire in 2010 when it started charging eco fees on thousands of new household products, sparking outrage from consumers and businesses.
The governing Liberals quickly dropped the fees on those products, but taxpayers were still on the hook because the government forked over $5 million to keep the program running for a few months.
They made some changes last year to have producers pay a lump sum for the actual cost of waste disposal, rather than a projected per-unit cost estimated by Stewardship Ontario.
Bradley said if the bill passes, it will take nearly five years to fully implement the new system.
"You need to do it right," he said.
The legislation will reduce costs for consumers and property taxpayers, said Emily Alfred, a spokeswoman for the Toronto Environmental Alliance.
"Anything that goes into the cost of making something is included in the cost," she said. "So now recycling will just be one more cost of doing business."
The minority government needs at least one opposition party onside to pass the bill, but the New Democrats and Progressive Conservatives haven't shown their hand.
"This legislation was brought in to erase the misery of the last five years with the Liberal failed eco tax program, the cartels that they in fact set up that they've now said that they would remove," said Tory critic Michael Harris.
His party wants to get rid of WDO — which they created — and have the ministry set targets, measure outcomes and increase competition by allowing the free market to take over, Harris said.
Consultations on revamping the legislation began in 2008. The Liberals have been dragging their feet and proposing a new system that will take five years to get off the ground, said NDP critic Jonah Schein.
"This government's been here for 10 years, has been reviewing the Act for five years," he said. "We're impatient to move forward here."