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Wednesday, 28 June 2000
Page: 15890


Senator IAN CAMPBELL (Parliamentary Secretary to the Minister for Communications, Information Technology and the Arts) (5:20 PM) —I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows

PRODUCT STEWARDSHIP (OIL) BILL 2000

This bill, together with three consequential amendment bills, represents a commitment made by the Government in the course of negotiations for A New Tax System - Measures for a Better Environment. As one of the outcomes of those negotiations, the Prime Minister announced, on 28 May of last year, that the Commonwealth would fund the development of a product stewardship arrangement and provide transitional assistance to ensure the environmentally sustainable management and re-refining of waste oil and its reuse.

Each year more than 500 million litres of oil is sold onto the domestic market and only about 150 million litres of this finds its way to recycling or acceptable disposal routes. While some of the oil is consumed in use, two-stroke oil being an obvious example, a considerable volume of waste, currently in the order of 35 to 50 million litres each year, is unaccounted for. It is sitting around in rusting drums, dumped in land-fills, or inappropriately used, for example as a dust suppressant, or as a weed killer.

The most effective long-term solution to environmentally damaging disposal of waste oil is a product stewardship partnership which links oil companies, recyclers, the States and the Commonwealth; and by which the oil companies assume a progressively greater share of the costs. This package of bills offers all these elements. The primary piece of legislation, the Product Stewardship (Oil) Bill 2000, has the object of developing product stewardship arrangements for waste oil that will ensure the environmentally sustainable management, refining and reuse of this oil. The bill also has the object of supporting economic recycling options for waste oil.

Product stewardship is an innovative and exciting tool to address environmental problems of waste disposal and to encourage recycling of finite resources. It is a simple concept - that responsibility lasts for the entire life of the product, through research and development, production, distribution, utilisation, and finally to recycling and appropriate waste management. One approach is for the responsibility to be borne solely by the manufacturers of the product, as is a growing practice in segments of the chemicals industry. Alternatively, the responsibility can be shared between the producers and users of a product, as is the case here.

Under these product stewardship arrangements, the waste oil is given a monetary value. Benefits for recycling waste oil will be paid through the mechanisms established in the primary legislation. This provides a financial incentive for the oil to be collected, recycled, and reused. The added value for the oil is largely funded by the oil producers and consumers, through a levy administered by the Commonwealth Government, which ensures the costs of providing for proper recycling and reuse are internal to the market. In economic terms, it `internalises the externalities'.

The amount of stewardship benefit received will be based on the volume, intended use or quality of goods produced from waste oil and subsequently sold. A system of differentiation will mean some uses and products of waste oil will attract a different level of benefit to other uses and products. The Government recognises that there are a variety of end uses for waste oil. As the focus of this legislation is environmental, product stewardship benefits will reflect the environmental merits of the products and processes. In making a decision to differentiate, the Minister for the Environment must consider any relevant environmental matters related to the recycling. The information needed to differentiate benefits will be based in part on a comparison of the `environmental footprint' for the production of each product.

In the initial stages of the product stewardship scheme, a simple differentiation system, based largely on sustainability criteria, is proposed. Lower levels of benefit will be paid for uses where the waste oil is consumed as a fuel, where essentially only the thermal energy of the oil is recovered. Where the waste oil molecules are not consumed, such as when they are turned into lubricant rather than fuel, a substantially higher benefit should apply. With oil being a limited natural resource this approach is both highly desirable, and consistent with the objects of this bill.

A key to the successful use of recycled lubricant, is the market acceptance and demand for such lubricant, and motor manufacturers are clearly leaders in this market.

In the United States, recycled lubricant that meets American Petroleum Institute standards is accepted by General Motors, Ford and Chrysler. In Europe, some 12 motor manufacturers including companies such as Saab-Scania, Rover and Porsche positively accept the use of high-quality re-refined oil, and two German manufacturers, Daimler-Benz and the Volkswagen Audi Group have gone further. They promote the use of re-refined oils by employing them as factory-fill in a number of new models.

When the Minister for the Environment recently sought the views of manufacturers in Australia on the use of re-refined lubricant of an appropriate standard in Australian built vehicles, senior executives of Holden, Toyota, Mitsubishi and Ford have responded most positively, and supported the Minister's initiative in this matter.

An Oil Stewardship Advisory Council is established which will advise the Minister on the operations of the product stewardship arrangements under the Act, and on the setting of appropriate benefit rates.

The Council is appointed by the Minister and will reflect both industry and broader community interests. The membership includes representatives from the waste oil industry, and from oil producers, as well as from a non-government body with a substantial interest in sustainable industry. Local government and the Australian and New Zealand Environment and Conservation Council, or ANZECC, are similarly represented, as is a national consumer organisation. The Commonwealth is represented though the Environment portfolio, and the Commissioner of Taxation.

Finally, this bill addresses a number of procedural matters such as delegation provisions and the tabling of an annual report. The bill also requires the Minister to commission an independent review of the operations of the Act within four years of its commencement, and to table of that review. The Minister must commission such independent reviews on an ongoing basis at intervals of not longer than four years.

These are the salient points of this package of legislation that is necessary to give effect to the Government's commitment to reduce the amount of waste oil finding its way into the environment. This goal is accomplished, not through a heavy-handed `command and control' mechanism, but through a product stewardship arrangement involving consultation, and which values the waste oil and gives economic incentives for its recovery and reuse. In the main, this economic incentive is provided by those who use and derive benefit from the original product.

I commend the bill.

CUSTOMS TARIFF AMENDMENT (PRO-DUCT STEWARDSHIP FOR WASTE OIL) BILL 2000

I will now discuss the first of three pieces of amending legislation that are closely related to the Product Stewardship (Oil) Bill 2000 the Customs Tariff Amendment (Product Stewardship for Waste Oil) Bill 2000.

This bill contains amendments to the Customs Tariff Act 1995 by introducing a levy of five cents per litre on imported petroleum-based oils and their synthetic equivalents and a levy of five cents per kilogram on petroleum-based greases and their synthetic equivalents. Imported recycled oils and greases will also be captured by the levy. The levy will be subject to future Consumer Price Index adjustments.

I commend the bill.

EXCISE TARIFF AMENDMENT (PRODUCT STEWARDSHIP FOR WASTE OIL) BILL 2000

I will now discuss the second of three pieces of amending legislation that are closely related to the Product Stewardship (Oil) Bill 2000 the Excise Tariff Amendment (Product Stewardship for Waste Oil) Bill 2000.

The amendments proposed in this bill contain alterations to the Excise Tariff Act 1921. The bill introduces an excise levy of five cents per litre on domestically-produced oils on 1 January 2001, again subject to CPI adjustments. The excise will be levied on petroleum-based oils and greases and their synthetic equivalents. Most of these products will be levied, because they also have the potential to be a danger to the environment if disposed of inappropriately.

I commend the bill.

PRODUCT STEWARDSHIP (OIL) (CONSE-QUEN-TIAL AMENDMENTS) BILL 2000

The Product Stewardship (Oil) (Consequential Amendments) Bill 2000 is the third and last piece of amending legislation making up the Government's legislative package on product stewardship for waste oil.

The legislative mechanism which sets out the terms and conditions of the benefit payments prescribed under provisions of the Product Stewardship (Oil) Act 2000 will be the Products Grants and Benefits Act 2000. Minor amendments to this Act, the Excise Act 1901 and the Taxation Administration Act 1953, are necessary to bring the oil product stewardship benefit payments and levy collection into line with other excise programs.

The Australian Taxation Office will pay benefits to eligible recyclers. The rate of product stewardship benefit that is payable for a particular use of waste oil will be set by regulations, issued under the authority of the Minister for the Environment, under a provision of the Product Stewardship (Oil) Bill 2000.

A claimant for product stewardship benefits will need to satisfy a number of requirements. The Commissioner of Taxation must be satisfied that a recycler holds both a licence as a manufacturer of excisable goods under section 34 of the Excise Act 1901 and an Australian Business Number. The claimant must also demonstrate that all necessary licences, permits and approvals to operate the business are held as required by relevant State and Territory environmental protection agencies.

The Product Grants and Benefits Act 2000 contains provisions against contrived schemes. This will safeguard appropriate use of benefits and is consistent with other taxation legislation designed to prevent rorting and cheating of benefit systems. This Act provides adequate penalties and safeguards to protect public funds and prevent abuse of the product stewardship arrangements.

I commend the bill.

Debate (on motion by Senator O'Brien) adjourned.