The long and short of this inquiry is that legislative reform is required to close a loophole that has allowed Caltex to seek and receive a windfall payment of taxpayer's funds under a scheme that was never intended to operate in this way. Indeed, the scheme involves a duty-and-benefit-payment structure designed to encourage the proper recycling of non-combustible oils, whereas Caltex has sought and received the benefit payment without having paid any relevant excise duty in relation to diesel that it was already in the habit of 'recycling' for sale.
There is no real question therefore that the loophole should be closed.
During this inquiry, Labor Senators sought to understand the relevant departmental and government considerations on the question of whether it was possible to avoid the loss of $8 million from the taxpayer to Caltex. The bills themselves were presented on the basis that the Federal Court's interpretation of the existing law meant it was possible to collect duty under item 15 of the Excise Tariff Act 1921 in relation to the diesel fuel for which Caltex was seeking the never before paid and broadly unjustified benefit.
The financial impact assessment of the bills reinforces the view that the excise duty under item 15 could be applied to the diesel fuel that Caltex recycled, saving taxpayers $8 million in a payment that is not within the intended scope or spirit of the PSO Scheme.
This appears to offer the prospect of recouping monies otherwise lost, but this approach was not taken and it's not clear why.
In order to understand this approach, Labor Senators put questions on notice to the Department of Agriculture, Water and the Environment and to the Australian Taxation Office (ATO), as follows:
Either in anticipation of, or following the result of the Federal Court ruling of the 'Caltex Case', what consideration did the Commonwealth give to determining whether to impose on Caltex an excise duty for oils as outlined under item 15 of the Excise Tariff Act 1921 in order to recoup the benefit payment that was being claimed? If no such approaches were considered, why not?
What legal or other advice was provided to the Commonwealth that led to the decision to not seek to apply such a levy, or otherwise recoup the benefit payment to Caltex?
At any point in the course of this matter did any communication (written or otherwise) take place between Caltex or its representatives and the Commonwealth or its representatives in relation to corporate social responsibility, particularly in relation to Caltex's decision to seek an $8 million benefit payment from the Commonwealth through the Product Stewardship for Oil Scheme in circumstances when it knew the scheme was not intended to function in that way, and when it ought to have known the pursuit of the benefit payment was in effect the pursuit of a windfall, the technical entitlement to which was of questionable moral basis?
In each case, but for different reasons, the Department of Agriculture, Water and the Environment and the ATO responded by saying these questions could not be answered, essentially as a matter of jurisdiction (Department of Agriculture, Water and the Environment) and for legislative obligations in relation to privacy (ATO).
In light of the Department's evidence that the Federal Court decision means the relevant excise duty under the PSO Scheme could be applied to diesel fuel, it is not clear why the ATO has not chosen to apply the duty to the fuel for which Caltex has received the benefit payment. If this occurred it would at least mean that both sides of the PSO Scheme equation had been applied to the diesel fuel in question, and it would save the Commonwealth and the taxpayer $8 million.
Labor Senators remain unsure as to why no attempt has been made to apply the relevant excise duty under the scheme to Caltex in order to recover the $8 million in taxpayer's funds that have been lost through the use of the technical loophole that these bills must now seek to close.