Used Oil Recycling
Environment Australia, 2001
ISBN 0 642 548 188
ISSN 1446 6422
The Product Stewardship Arrangements for Waste Oil (PSO) came into effect on 1 January 2001, fulfilling the Government's May 1999 commitment to do so, as outlined in the Measures for a Better Environment package. The PSO have the objectives of:
The arrangements consist of three elements - the product stewardship levy on oils; product stewardship benefits; and transitional assistance.
The product stewardship levy was introduced on 1 January 2001 at 5 cents/litre and was subsequently indexed to 5.2 cents/litre under general excise indexation arrangements. It is levied on domestic and imported oils, and is paid by oil producers and importers. Under the levy arrangements, no oil is levied twice, no 'eligible' lubricant escapes the levy, imported and domestically-produced oils are treated equitably (to the extent possible), and exported oil is not levied. The levy is collected as an excise by the Australian Taxation Office (ATO) and as customs duty by the Australian Customs Service (ACS).
Product stewardship benefits are paid to recyclers as volume-based incentives to encourage more oil recycling, with improved environmental outcomes. Eligibility requirements for PSO benefits are set out in the Product Stewardship (Oil) Act 2000, the Product Grants and Benefits Administration Act 2000, and the associated regulations. Benefits are provided at different rates, depending on the type of product produced - the lowest benefit being provided for basic burner fuels, and the highest for full recycling into a lubricant base oil. The 2000-01 benefit rates are set out in Appendix A.
Transitional assistance funding of $60 million has been provided for strategic initiatives to increase oil recycling and ensure a sustainable oil recycling industry. It is intended to complement the levy-benefit arrangements and is an interim measure to engender change that will ensure the long-term viability of the oil recycling industry. The transitional assistance funding was originally provided over four years commencing on 1 July 2000, but was extended to 30 June 2005 following a re-phasing of the program funding (see Chapter 4).
The product stewardship arrangements are underpinned by a package of legislation and associated regulations.
The Product Stewardship (Oil) Act 2000 (the PS(O) Act) is the primary piece of legislation that establishes the general framework and benefit entitlements. The policy settings for the stewardship arrangements are established and governed by the Minister for the Environment and Heritage. The Act also establishes the Oil Stewardship Advisory Council (OSAC), with broad industry and community representation, to provide the Minister with pertinent advice. The Product Stewardship Benefit rates are prescribed in the Product Stewardship (Oil) Regulations 2000 (the PS(O) Regulations).
The Excise Tariff Amendment (Product Stewardship for Waste Oil) Act 2000 and the Customs Tariff Amendment (Product Stewardship for Waste Oil) Act 2000 (and associated regulations) establish the Product Stewardship Levy.
The Product Stewardship (Oil) (Consequential Amendments) Act 2000 contributes to the establishment of the levy and the general administrative provisions in the Product Grants and Benefits Administration Act 2000.
The Product Grants and Benefits Administration Act 2000 (the PGBA Act), as amended, sets out eligibility criteria and establishes the administrative mechanisms used by the ATO to pay benefits to recyclers.
Transitional assistance expenditure, including general running costs of the PSO and general grant funding, is funded under the Appropriation (Supplementary Measures) Act (No 2) 1999.
Due to a delay in the passage of the enabling legislation, implementation of the PSO was shifted from the original target date of 1 July 2000 to 1 January 2001. The arrangements were introduced following extensive stakeholder consultation and input, particularly from the oil collection and recycling industries (with regard to the benefits) and the oil production industry (with regard to the levy).
On the whole, implementation of the benefit payments system progressed smoothly, with 34 recyclers registered for benefits as at 30 June 2001. The majority of registration applications and benefit claims were processed by the ATO within the timeframes for complete claims specified in the Taxpayer's Charter (the service delivery standard for the program). A small number of delays in processing registrations occurred, mainly due to applicants submitting incomplete forms and/or misunderstanding the registration requirements (primarily those relating to the need for an excise manufacturer's licence). Delays in the processing of benefit claims arose due to:
Documentation and procedures for the PSO are being examined and revised to address these problems.
Levy collections commenced on schedule although concerns arose with the indexation of the levy occurring so soon after its introduction (as part of standard excise indexation arrangements).
Additional concerns surrounded issues of:
These issues have either been addressed through fine tuning of the collection procedures or are under consideration at the present time (see Chapter 5).
From the inception of the PSO, there was general recognition that the first 12 - 18 months would be a period of refinement and review of the arrangements, to identify potential weaknesses and problems and make the necessary adjustments. Experience over the first six months has identified a number of areas which require further examination in this context. They are described in Chapter 5.