Bills Digest no. 187 2006–07
Product Stewardship (Oil) Amendment Bill 2007
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
Financial implications
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
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replace the existing term waste oil throughout
the PSO Act with the new term used oil so as to promote consistency
with the object of the PSO Act
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permit necessary regulations to be made for the purposes
of subsection 10(1) of the PSO Act, so as to ensure that the re-refined
oil which attracts the product stewardship (oil) benefit is based
on the most up to date quality criteria
-
provide that members of the Oil Stewardship Advisory
Council (other than members appointed to represent the Commonwealth
and the Commissioner for Taxation) will be appointed on the basis
of their knowledge of, or experience in, a range of prescribed subject
areas relevant to product stewardship arrangements for oil
-
provide that members of the Oil Stewardship Advisory
Council appointed to represent the Commonwealth and the Commissioner
for Taxation will not have voting rights so as to remove the potential
conflict of interest between their two positions, and
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strengthen and make more demanding the procedures
for the disclosure of direct or indirect pecuniary interests by member
of the Oil Stewardship Advisory Council, and for ensuring that such
interests held by members do not jeopardise the provision of quality
advice by the Oil Stewardship Advisory Council.(1)
The PSO Act is the legislative basis for the Product
Stewardship for Oil Program (the PSO Program). The Product Stewardship
(Oil) Act 2000 came into effect on 1 January 2001, as part of the
Government’s May 1999 commitment to A New Tax System - Measures
for a Better Environment package.(2)
‘The PSO Act is designed to ensure the environmentally
sustainable management, recycling and reuse of Australia’s used oil.
It provides for the payment of benefits to used oil recyclers as an
incentive to increase the volume of used oil collected and recycled
in Australia’.(3)
The Department of the Environment and Water Resources’
website offers the following information about the PSO program.(4)
Oil is a valuable and finite resource. Each year, more
than 500 million litres of lubricating oil is sold in Australia. Of
this amount, at least 250 million litres of used oil is generated by
industry and the community and is available for recycling.
Supported by the Australian Government's Product Stewardship for
Oil Program, Australians recycled approximately 194 million
litres of their used oil in 2003. Even though this rate is high, between
60 and 100 million litres remains unaccounted for.
We don't know what happens to this 'missing oil'. However, anecdotal
evidence suggests it could be:
-
Sitting in temporary stockpiles (eg in the garage
or shed);
-
Retained in waste or scrap equipment (such as vehicles);
-
Lost to the environment at collection points (eg
leaking, spills etc).
-
Put out for household rubbish collection; or
-
Illegally dumped (in parks and reserves or in waterways,
sewer systems and stormwater drains).
The improper use of used oil can pollute land, waterways,
underground reservoirs and the marine environment. One litre of used
oil can contaminate up to one million litres of water.
Used oil is hazardous - toxic, carcinogenic and harmful to the environment
when irresponsibly discarded. It is also poisonous if swallowed or inhaled
and can present a fire hazard if not properly stored.
The Product Stewardship for Oil Program has in place arrangements
providing incentives to increase used oil recycling in the Australian
community.
There are 3 parts to the Arrangements:
The PSO Act requires an
independent review of the legislation be done at intervals of not longer
than 4 years. Two reviews of the Product Stewardship for Oil Program
were conducted during 2004. The first review was the Independent Review of the
Transitional Assistance Element of the Product Stewardship for Oil (PSO)
Program. The second review was the Independent
Review of the Product Stewardship (Oil) Act 2000 (‘the Independent
Review’) and was conducted by the Allen Consulting Group. The PSO Bill
seeks to give effect to a a few of the recommendations of the Independent
Review relating to the constitution and operation of the Oil Stewardship
Advisory Council (OSAC).(5) The OSAC is joint industry/government
advisory council established by the PSO Act and charged with the task
of advising the Minister for the Environment and Water Resources on
matters relating to the product stewardship arrangements for oil.
The Independent Review in 2004 noted that:
There are concerns, about potential conflicts of interest
on OSAC. While perceptions of conflicts of interest will almost always
exist for industry-focused bodies, the actual risk of there being a
clear financial gain is harder to point to given that OSAC only has
an advisory role. This was certainly a point made by the OSAC Steering
Committee. However, a significant number of stakeholders (including
current and former members of OSAC), both verbally and in submissions,
suggested that preferential access to industry information does at times
raise potential conflict of interest issues.(6)
[…]
The Review Team considers that OSAC has a higher accountability and
transparency obligation than most advisory bodies because of its legislative
imprimatur. That is, because OSAC is established under the Product
Stewardship (Oil) Act 2000 there is a need to hold to it
to a higher standard of transparency and accountability than for an
advisory body that is otherwise constituted.
Other government bodies facing similar conflict of interest issues have
adopted best-practice meeting procedures in order to minimise conflicts
of interest.(7)
The review also made other recommendations, some of which
would require either legislative or regulatory changes. These changes
are listed below.
Recommendation 1
Greater efforts by Commonwealth departments and agencies
need to be made to ensure that statistics on the volumes of oil produced,
imported and sold are consistent and are universally accepted as accurate.
Recommendation 2
The benefit rate for high grade burning oil should be
increased relative to the benefit rate for lube-to-lube oil.
Recommendation 3
The PSO Act should be amended to clearly
provide that it does not apply to vegetable oils.
Recommendation 4
The PSO legislation should be amended
to require that the processes used by claimants of Category 1 benefits
must include either thin film evaporation or vacuum distillation, followed
by either solvent extraction or hydrofinishing. There should also be
a provision to allow the Minister to approve the substitution of other
processes that are able to produce comparable outcomes.
Recommendation 5
Subsection 14(2) of the PSO Act should
be amended to provide the Minister with greater flexibility as to the
size and representative mix of the Oil Stewardship Advisory Council.
Recommendation 6
The PSO Act should provide a formal
mechanism for an alternative representative, at a member's request,
to temporarily deputise for that member.
Recommendation 7
The Oil Stewardship Advisory Council should adopt clearer
and more stringent conflict of interest procedures.
Recommendation 8
The Department of the Environment and Heritage, the Department
of Industry, Tourism and Resources and the Oil Stewardship Advisory
Council should work with the oil companies to identify cost-effective
ways in which they can become more involved in the product stewardship
of oil in Australia.
Recommendation 9
There is a continuing need for the Department of the
Environment and Heritage and the Oil Stewardship Advisory Council to
raise the community awareness of the problem of used oil and the PSO
Program in order to further increase recycling.
Recommendation 10
The Department of the Environment and Heritage and the
Oil Stewardship Advisory Council should work better engage State and
Territory environment agencies as part of the PSO
Program. Progress in enhancing this engagement should be reported through
the Environment Protection and Heritage Council.
Recommendation 11
Given the need for the PSO Program
to move away from reliance on the excise system, unless a comprehensive
self-regulatory product stewardship model for used oil develops over
the next four years, the next independent review should include a further
examination of the use of a tradeable certificate scheme for used oil.
In response to an issue raised during the (first) review
of the PSO Act, the Government implemented a change to the Regulations
in the reporting period. This change clarifies the meaning of ‘re-refined
base oil’ under categories 1 and 2 by providing a clear definition for
‘base oil’ and specifying the eligible processes for ‘re-refined oil’.
The amendment also includes flexibility provisions, enabling the Minister
for the Environment and Heritage to recognise equivalent technologies
as re-refining processes. This change, which came into effect on 14
February 2005, reinforces the hierarchy of benefits, simplifies the
administration of the Regulations and provides clarity for industry
beneficiaries.(8)
The government response to the recommendations from the
two independent reviews of the programme is ongoing. The government
has responded to some of the recommendations and expects to address
others during the coming year.
The next review will be conducted in 2008.
The Explanatory Memorandum states that there is no
financial impact.
Definitions
The amendments proposed
in items 1, 2, 4 and 6 substitute the term waste oil
with the term used oil, the stated purpose being to provide greater
clarity and be more consistent with promoting the object of the Act.
Used oil was also the preferred term adopted by the Independent
Review.
Proposed subsection
6(1) defines a voting member of the Oil Stewardship Advisory
Council to be one who is appointed on the basis of their knowledge of,
or experience in, one or more of the areas referred to in proposed
subsection 14(2). This means that members of the OSAC who are appointed
pursuant to proposed subsection 14(2B) representing the Commissioner
for Taxation and the Commonwealth will not be voting members. This is
designed to remove the potential conflict of interest for OSAC members
who are also Commonwealth employees.
Regulations for
determining eligibility for product stewardship (oil) benefits
Item 5 proposes the insertion of a new
subsection 10(5) to allow regulations to be made for the purpose
of determining eligibility for the product stewardship (oil) benefits.
Such regulations may adopt or incorporate oil testing methods or standards
for the accreditation of laboratories undertaking oil testing, as in
force or existing from time to time. This is despite section 14 of the
Legislative Instruments Act 2003 (LI Act). Subsection 14(2) of
the LI Act provides that unless the enabling legislation permits instruments
to be incorporated from time to time, an instrument may only be incorporated
in the form in which it exists at the date of incorporation.
The current regulation stipulate the test methods for
analysing re-refined oil so as to determine eligibility for benefits
under the PSO Act, and they obligate testing laboratories to be accredited
to a specified standard. Both the testing methods and accreditation
standards are revised from time to time. Thus, in order to ensure that
the benefits under the program are being effectively targeted to re-fined
oil, it is essential that regulations that are used to determine eligibility
incorporate test methods and accreditation standards as are in force
or existing from time to time.
Operation of OSAC
Item 7 inserts proposed subsection 13(3)
which provides that the performance of a function of the OSAC is not
affected by the fact that the Council does not include any members appointed
on the basis of their knowledge of, or experience in, a particular area
listed in subsection 14(2) or does not include a representative of the
Commissioner or the Commonwealth appointed under subsection 14(2B).
Constitution of
the OSAC
Proposed subsection 14(2) prevents the Minister from
appointing a person as a member of the OSAC (other than as a member
under proposed subsection 14(2B)) unless the Minister is satisfied that
the person has knowledge of, or experience in one or more of the areas
listed below.
-
broad waste management issues from a business perspective
-
research and development relevant to the product stewardship
arrangements for oil
-
State or Territory government
-
local government
-
the non-government sector
-
national consumer issues
-
remote, including remote Indigenous, issues
-
oil production
-
used oil recycling
-
used oil collection.
This is obviously designed to broaden and secure a
broad range of relevant expertise of the OSAC so as to improve the quality
of their advice. Indeed, in appointing OSAC members, the Minister must
endeavour to ensure that the constitution of the OSAC reflects breadth
of that range of expertise (proposed subsection 14(2A)).
Proposed subsection 14(2B) provides that the
Minister must also ensure that the membership of the OSAC includes a
representative of the Commissioner and the Commonwealth.
Disclosure of pecuniary interests
Proposed subsection 15(1A) forbids the Minister
from appointing as Chair to the OSAC, a ‘member who has a direct or
indirect pecuniary interest in the product stewardship arrangements
for oil if, in the Minister's opinion, that interest could conflict,
to a significant extent, with the proper performance of the duties of
the Chair’. Proposed subsection 15(1B) mandates that ‘the Chair
must notify the Minister of any direct or indirect interest that he
or she acquires in the product stewardship arrangements for oil’.
Proposed subsection 15(6) enables
the Minister to terminate the appointment of the Chair of the OSAC if
the Minister becomes aware that ‘the Chair has a direct or indirect
pecuniary interest in the product stewardship arrangements for oil;
and in the Minister's opinion, the interest conflicts, or could conflict,
to a significant extent, with the proper performance of the duties of
the Chair’.
Proposed paragraph 21(2)(d) enables the Minister
to terminate the appointment of a member of the OSAC appointed to represent
the Commissioner or the Commonwealth, if in the Minister’s opinion,
that member is no longer an appropriate representative either because
of a change in employment, residence or other circumstances.
Meetings of the OSAC
Proposed paragraph 22(3)(b) provides that a
Chair must convene a meeting of the OSAC on receipt of a written request
from at least five other voting members.
Proposed section 24 provides that ‘a majority
of voting members, or 6 voting members, whichever is greater, form a
quorum at a meeting of the OSAC’.
Proposed subsection 25(1) provides that questions
arising at an OSAC meeting are to be decided by a majority of votes
of the voting members who are present and voting.
Proposed subsections 29(2) - 29(2C) provide for
how disclosures of pecuniary interests at OSAC meetings are to be handled
and the requirement that such disclosures be recorded in the minutes.
The amendments contained in this Bill are designed
to strengthen the OSAC’s role as a source of independent expert advice
so as to maintain its relevance and better equip it in meeting the objects
of the PSO Act.
- Explanatory Memorandum,
p. 2.
- The Commonwealth Budget
2000-2001, The
Commonwealth’s Environmental Expenditure, Chapter 2: Strategic
Directions and Budget Overview.
- Mr John Cobb, MP, Assistant
Minister for the Environment and Water Resources, Second reading speech:
House of Representatives, Product Stewardship (Oil) Amendment Bill
Debates, 24 May 2007.
- http://www.oilrecycling.gov.au/program/index.html
Accessed 1 June 2007.
- Second Reading Speech.
- Independent Review of
the Product Stewardship (Oil) Act 2000 p. 41.
- ibid, p. 65.
- Department
of the Environment and Heritage annual report 2004-05,
‘
Legislation Annual Reports'.
Juli Tomaras
20 June 2007
Bills Digest Service
Parliamentary Library
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