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Monday, 11 August 2003
Page: 12942

Senator ALLISON (12:47 PM) —The Democrats will also support the Product Stewardship (Oil) Legislation Amendment Bill (No. 1) 2003. The bill grants relief from the product stewardship oil levy for certain uses of multipurpose oils. That is, the bill will apply to multipurpose oils which, when used in a particular way, cannot be recycled and present only a very low risk to the environment—so-called category 8 oils. The government is seeking to exempt the use of these particular oils from the levy because it argues that their inclusion was outside the policy intent of the original product stewardship arrangements for waste oil.

The treatment of waste oil can pose a very significant environmental risk, including to humans. This was identified during the inquiry into the government's legislation which reduced diesel excise. When used in vehicle engines, transmissions and electrical equipment, lubricating oil collects hazardous contaminants that are toxic and often carcinogenic. These hazardous contaminants include metals such as lead and zinc, dioxins, toluene, chlorine, benzene and sulfur. If inappropriately collected, treated and disposed of, waste oil can pollute land, inland waters, including ground water, and the marine environment.

Taking dioxins as an example, once in the environment dioxins accumulate in the fatty tissues of many species and are known to cause health effects such as cancer, birth defects and reproductive and developmental problems. Their capacity to harm is assisted by the fact that, once in the environment, dioxins break down very slowly and they can travel large distances. For humans, short-term exposure to a high level of dioxins may result in skin lesions and altered liver function. Long-term exposure has been linked to impaired function of the immune, nervous, endocrine and reproductive systems.

In the main, this amendment bill is intended to apply to paraffinic and naphthenic process oils. These are oils that are included in formulations for personal care products, explosives, paints, agricultural sprays and printing inks. As mentioned, the advice is that the oils for which this amendment bill is likely to apply will present a low level of risk to the environment. That is because there is minimal chance of these oils entering the environment through direct spillage, for example. These oils involve oil formulation that is typically bound to the product and cannot be released for recycling. With respect to printing ink, the oil and other components in the ink are bound to the paper and cannot be recovered. In relation to rubber, once the oils are chemically bound into the rubber they cannot be readily extracted.

The department informs me that agricultural sprays and explosives use small amounts of the oils of which we are talking. According to the department, the environmental impact of agricultural sprays which are assessed by the Australian Pesticides and Veterinary Medicines Authority will be low because of the low toxicity of the oils used and the low application rates. These oils, again, are not recoverable because they are widely dispersed into the environment.

The oil levy was developed as part of the Measures for a Better Environment package and is used to fund benefit payments for waste oil recycling and reuse. In addition to the levy benefit scheme, the Democrats negotiated additional funding for transitional assistance to ensure greater collection and recycling of waste oil. The levy is paid by oil producers and importers at a rate of 5.449c per litre on domestic and imported petroleum based oils and 5.449c per kilogram for petroleum based greases. In 2001-02, the levy raised was $25 million, with $8.2 million paid in benefits to oil recyclers. The current benefit rate for rerefined oil products is between 3c and 50c per litre, the highest benefit being 50c per litre for rerefined base oil— that is, oil that is used as a lubricant, hydraulic or transformer oil.

Each year in Australia, around 500 million litres of lubricating oil are sold, and of these 500 million litres at least 100 million litres are unaccounted for. We simply do not know where that oil is, but the most likely scenario is that it is being stockpiled in garages and sheds, retained in scrap equipment such as old vehicles, put out for rubbish collection, lost through leaks and spills, or illegally and deliberately dumped.

Since the introduction of the waste oils recycling program, an extra 30 million litres of waste oil has been recovered each year. That represents an 18 per cent increase in the amount of waste oil that was previously being recycled. Oil-recycling facilities have been established in most local government areas. So I think the program is a success. There is more room to move, but so far I congratulate the government on the implementation of the program. The Democrats are, as I said, relatively pleased with the progress and that is why we accepted the government's proposal that $20 million of the funding originally allocated to transitional assistance be redirected to support other so-called sustainable cities initiatives. However, we do have some concerns with the current benefits schedule from discussions that I have conducted with oil recyclers. The current benefits payments for rerefined oil at 5c per litre would still appear to be too low— that is, it does not fully reflect the cost of collecting and rerefining that oil. As such, the grant does not provide the incentive that it should in order to ensure the greater reuse of waste or, more appropriately, used oil in this country. I think there is also an issue with the distance that is now required to be travelled to extract some of that last remaining used oil from storage places.

I seek assurances from the minister in this debate that the current review, which I understand is under way, looks at these questions. We do not want to obviously set up disincentives for full scale rerefining with possible reuse at the end of that process as lubricating oil, but we do want to make sure that the price incentives are in place which would ensure that we maximise the amount of used oil that is collected. I am also pleased that, as a result of our talks with the government, the department will be addressing the problem of oil bottoms, which is the material that is left over after rerefining and other processes. It represents a major cost to oil recyclers. The more we rerefine the more oil bottoms will be there and will need to be disposed of. This is another issue I would like to see resolved by the minister and by the department. On that note, I again indicate that the Democrats will be supporting the bill.