Bills Digest No. 161 2002-03
Product Stewardship (Oil) Legislation Amendment
Bill (No. 1) 2003
WARNING:
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 Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Product
Stewardship (Oil) Legislation Amendment Bill
(No. 1) 2003
Date Introduced:
27 March 2003
House:
House of Representatives
Portfolio:
Environment and Heritage
Commencement:
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.
Background
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 recyclers.
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 Bill.
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) Regulations 2000.
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; and
- any relevant environmental matters related to the recycling of oils.
Item 12 simply extends the requirement to consider
‘any relevant environmental matters’ to those relating to the use of ‘gazetted
oil’.
The Product 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 2000.
- At p. 3.
- ibid.
- 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.
Angus Martyn
29 May 2003
Bills Digest Service
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ISSN 1328-8091
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