Mr VAILE (Trade) (12:24 PM) —I move:

That the bill be now read a second time.

The Ozone Protection Amendment Bill 1998 will amend the Ozone Protection Act 1989—the act. The act enables Australia to fulfil its international obligations as a party to the Montreal Protocol on Substances that Deplete the Ozone Layer—the Montreal protocol—to eliminate its consumption of ozone depleting substances. The act controls the import, export and manufacture of a range of ozone depleting substances, known as `scheduled substances', by requiring licences for these activities, and by prohibiting the import and manufacture of certain products containing ozone depleting substances.

The act is a key element in Australia's approach to ozone protection. It is administered and enforced in conjunction with complementary state and territory legislation and controls, and industry and non-government organisation activities, including voluntary codes of practice. This highly cooperative approach to environmental protection is detailed in the 1994 revised strategy for ozone protection and was endorsed by the Australian and New Zealand Environment and Conservation Council in 1995.

The innovative licensing and quota systems, first enacted in 1989, enabled Australia to achieve by 1995 a phase-out of the ozone depleting substances CFCs—chlorofluorocarbons—carbon tetrachloride, methyl chloroform and HBFCs—hydrobromofluorocarbons. The phase-out has been total other than for a restricted range of essential uses. A total phase-out of halons, except for essential uses, was reached in 1992, one year in advance of Montreal protocol requirements. Australia's foresight in adopting such control measures was most recently borne out in the 1997 Montreal amendment which now requires parties to develop and implement a licensing system to regulate the import and export of ozone depleting substances. These outstanding efforts were formally recognised in 1997 through the award of a certificate of appreciation to the Australian government by the United Nations Environment Program, in a ceremony which marked the 10th anniversary of the Montreal protocol.

The Ozone Protection Amendment Bill 1998 represents the most recent step in Australia's response to the challenge of ozone depletion. It proposes amendments to improve the operation of the act's licensing and quota systems, and to allow more effective and targeted regulation of ozone depleting substances. The amendments reflect agreed solutions to issues encountered by industry, government and community stakeholders in progressing Australia's phase-out of ozone depleting substances.

The decision to implement these solutions through legislation was taken through ongoing dialogue with industry and consultation with the Office of Regulation Review to make the initiatives business effective. This is reflected in the conclusions of the regulation impact statements. As a party to the Montreal protocol and its amendments, Australia must phase-out consumption and production of HCFCs by 2020 and methyl bromide by 2005.

The act provides that the import, export or manufacture of either HCFCs or methyl bromide is prohibited unless otherwise authorised under a `controlled substances' licence. The bill clarifies that, in assessing an application for a `controlled substances' licence, separate consideration may be given to each activity in which an applicant seeks to engage. Given the proximity of the scheduled phase-out dates for HCFCs and methyl bromide, and that neither substance is currently manufactured in Australia, this proposed amendment will ensure manufacturing is not commenced in Australia by `controlled substances' licensees without due consideration.

Australia's HCFC industry activity triggered the quota system under the act for the first time in 1997. The act limits the total quantity of HCFCs that may be imported or manufactured by licensees to approximately half the `country cap' allocated by the Montreal protocol, whereby the quota system is triggered.

The HCFC quota system will commence from 1 January 1999. From this date, HCFC `controlled substances' licensees must seek a quota allocation to engage in the regulated HCFC activity of importation or manufacture. The quotas will be allocated for a period of two years. After the first quota allocation, quotas will be based on the licensee's individual activity in the penultimate calendar year before the start of the following quota period.

The amendment enables the continued issuance of a `controlled substances licence' for a two-year period, and further specifies as a condition of the licence the quantity of HCFCs a licensee may import or manufacture within any given year of a quota period. This will ensure Australia's HCFC controls remain equitable and efficient by avoiding possible distortion in the calculation of future quota allocations, for example, if a disproportionate amount of a total quota allocation is imported in the first year of a quota period.

It is with the strong and active support of the fluorocarbon industry that this bill addresses this issue. During the development of the bill, the Commonwealth Attorney-General's Department identified an area of duplication in the act, arising from its historical development which reflects Australia's changing international obligations.

The ratification by Australia of the Montreal amendment to the Montreal protocol which the parties adopted at their ninth meeting in 1997 to ban trade in methyl bromide with non-protocol countries, means the substance is now more effectively covered by the existing provisions in subsections 18(2) and (3), rather than in sections 42 and 43, which are to be repealed by the bill.

Subsections 18(2) and 18(3) provide that it is a condition of a licence granted under the act that scheduled substances, which include methyl bromide, are not to be imported to, or exported from, a non-protocol country. Breach of the licence condition without reasonable excuse is an offence with a maximum penalty of 500 penalty units, currently $55,000. The bill also updates the Montreal protocol text in the act with the addition of the most recent text following schedule 3.

The last two amendments will finetune the administration of the act. One allows ministerial delegation of the power to request further information in relation to a licence application. This will shorten the time for licence applications to be assessed and issued.

Another clarifies the scope of the exemption from the prohibition on manufacturing or importing CFC-dependent refrigeration and airconditioning equipment. The amendment specifies that the exemption only applies to the import of the CFC-dependent refrigerated transport containers not their manufacture.

Debate interrupted; adjournment proposed and negatived.