Bills Digest No. 161 2002-03
(Oil) Legislation Amendment Bill
(No. 1) 2003
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact Officer & Copyright Details
Product Stewardship (Oil)
Legislation Amendment Bill (No. 1)
27 March 2003
House: House of Representatives
Portfolio: Environment and Heritage
The Act itself commences
on Royal Assent. However, the operative provisions (Schedules 1 and
2) commence on a day to be fixed by proclamation, or failing that,
six months after Royal Assent.
To effectively exempt some uses of
multi-purpose oils from incurring the environmental levy under the
Product Stewardship for Waste Oil Scheme. This will be done by
refunding the cost of the levy.
The Product Stewardship for Waste Oil (PSO)
scheme has its origins in the Government s decision in the late
1990s to reduce the excise on diesel fuel. Concern was expressed in
the Senate Committee
report, Inquiry into the GST and A New Tax System,
that a potential negative effect of the excise changes would be to
reduce the incentive to recycle oil. For example, the reduction in
the excise would make diesel extender (a major product created from
recycled oil) less competitive with ordinary diesel fuel.
The Government subsequently introduced what
was to become the Product Stewardship (Oil) Act 2000 (the
Act) and related customs and excise legislation.(1) The
PSO scheme actually consists of three main components, of which
only the first two are relevant to the amendments proposed by this
Bill. These two are:
- the imposition of a set levy on oil producers, and
- the payment of a variable rebate ( stewardship benefit ) to oil
Under the levy component, certain petroleum
based oils and greases and their synthetic equivalents (hereafter
simply called oils) that are produced in Australia or imported for
domestic consumption are subject to a 5.45 cent a litre (or a kilo)
excise or customs duty.
Under the stewardship benefit component, once
the oil is used and subsequently recycled, recyclers may claim to
be rebated a stewardship benefit according to the type of product
the oil is recycled into. There are seven levels of benefit (called
categories 1-7).(2) At the high end, recycling waste oil
to such a standard that it could re-used as hydraulic oil attracts
a benefit of 50c a litre. Towards the lower end, if the recycled
product is suitable only to be reused as a low grade industrial
burning oil, the benefit would only be 3 cents a litre.
According to figures given in the
Explanatory Memorandum to the Bill, the levy raised $25
million in 2001-2002, with $8.2 million being paid out to oil
recyclers through the stewardship benefit.(3) The
Explanatory Memorandum comments that benefit payments are
expected to increase as claims against category 1 (re-refined base
oils) come on line .(4)
The Government is advised in the
implementation of the PSO scheme by the Oil
Stewardship Advisory Council, (OSAC) a mainly non-government
body established by the Act.
According to the second reading speech, the
operation of the PSO scheme over the last two years has shown that
some single use and multi-use (multi-purpose) oils that do not
create a recyclable waste oil stream(5) and represent
only a low risk to the environment are being captured by the
scheme.(6) To address this unintended consequence,
single use oils of this type (such as food grade white oil,
polyglycol brake fluids and aromatic process oils) were exempted
from the scheme by amendments to the relevant customs and excise
legislation in November 2002.(7)
Multi-use oils have been more difficult to
deal with in this regard. It would appear that multi-use oils were
not included in the November amendments because whether an
exemption should be granted to a particular product depends on its
specific use only some uses create a recyclable waste product that
represents a risk to the environment and so should continue to be
covered by the scheme, whilst other recyclable waste products pose
only a low risk to the environment and thus not covered.
Under the Product Stewardship (Oil)
Legislation Amendment Bill (No.1) 2003 (the Bill), those multi-use
oils that the Government feels should effectively be outside of the
PSO scheme will be eligible for a new category of product
stewardship benefit, to be known as the category 8 benefit.
According to the second reading speech, the benefit will be same
rate as the levy (5.45c per litre), payable for specific uses of
oil as approved by the Minister for the Environment and
Heritage.(8) Ministerial approval of the oils and uses
will be via Gazette notice, hence the term gazetted oil and
gazetted use in the Bill. The idea of effectively refunding the
cost of the levy in the case of multi-use oils, as opposed to
exempting them from the levy, seems to have been the preferred
option of the Australian Taxation Office.(9)
According to the Explanatory
Memorandum,(10) the cost of providing levy relief
for uses of oil likely to qualify for exemptions created under the
Bill will be around $1.25 million per year.
Items 1 and
2 insert definitions of gazetted oil and gazetted
use into existing subsection 6(1) of the Act. Under these
definitions, a product stewardship benefit will only become
potentially payable if the use of the oil will not permit it to be
recycled and the end (waste) oil product constitutes only a low
risk to the environment . Low risk is not defined in the Act or
Item 5 amends existing
subsection 10(1) to provide that the amount of the benefit payable
to an eligible claimant is to be calculated in accordance with the
regulations. As mentioned in endnote 2 of this digest, the amount
of benefit for all categories of recycled oils covered by the PSO
scheme is set out in regulation 4 of the Product Stewardship (Oil)
Item 12 amends existing
subsection 10(4). Subsection 10(4) requires that before a
regulation is made in relation to an entitlement to a product
stewardship benefit, the Minister must consider:
- the total amount that will likely be raised by the levy;
- any relevant environmental matters related to the recycling of
Item 12 simply extends the
requirement to consider any relevant environmental matters to those
relating to the use of gazetted oil .
Grants and Benefits Administration Act 2000 provides the
legislative basis for the payment of benefits under the PSO scheme.
It was originally established primarily
to administer the fuel grants scheme designed to counteract the
effect of the GST on petrol prices in regional and remote areas,
but has since served a wider role. The proposed amendments in
Schedule 2 relate to registration requirements for persons
wishing to claim stewardship benefits for gazetted oil.
Item 1 amends existing
paragraph 9(3A)(a) which currently provides that a person wishing
to register for a potential claim under existing categories 1-7
must be licensed under the Excise Act 1901. Under
item 1, this requirement will not apply if a
person only wishes to be registered for benefits under the new
gazetted oil category, category 8. While no explanation is given
for why a less rigorous registration hurdle applies for category 8,
presumably it is because category 8 oils are supposed to be
effectively exempted from the PSO scheme.
Item 2 makes a similar
change, but in relation to existing paragraph 9(3A)(b). This
paragraph requires that a person wishing to register for a
potential claim under existing categories 1-7 must demonstrate
compliance with relevant Commonwealth, State or Territory recycling
legislation, or Codes of Practice. Item 2 provides
this will not be required for category 8 registration.
Item 3 provides that a
registration for any category 1-7 benefit existing at the time
Schedules 1 and 2 come into force will automatically be extended to
apply to category 8.
- The Customs Tariff Amendment (Product
Stewardship for Waste Oil) Act 2000 and the Excise Tariff
Amendment (Product Stewardship for Waste Oil) Act 2000.
- The categories are actually contained in
regulation 4 of the Product Stewardship (Oil) Regulations
- At p. 3.
- That is, are not readily recyclable.
- House of Representatives, Debates,
27 March 2003 p. 13756.
- These exemptions actually came into effect on
15 April 2002 through the Excise Tariff Proposal No. 2 (2002) and
Customs Tariff Proposal No. 1 (2002). The proposals were Gazetted
on 12 April and tabled in Parliament on 29 May 2002.
- Op. cit.
- Discussion of item 8, minutes of OSAC
meeting, 11 June 2002. http://www.ea.gov.au/industry/waste/oilrecycling/meeting5.html
- op. cit.
29 May 2003
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