• ## Methodology

The product stewardship for oil has two sides:

• a levy applied to new oil producers that assists in funding the program
• a benefit paid to recyclers of used oils.

As such, there is a separate gap analysis for each one. The results are then combined to form a total program compliance gap.

For the levy we use a bottom-up illustrative method. This extrapolates the compliance levels found in the fuel excise tax gap analysis to the product stewardship for oil levy, as the populations share key producers.

We produced the gap using the following three steps:

### Step 1: Estimate the product stewardship for oil levy gap

We estimate the product stewardship for oil levies that are hypothetically due using reference to industry-wide compliance results revealed through the fuel excise gap. We use a three year average to smooth the variation observed in the fuel excise gap.

### Step 2: Estimate the product stewardship for oil benefit gap

The product stewardship for oil benefit analysis uses our industry compliance results to inform the program benefit gap. We apply a small uplift to allow for non-detection for oil recyclers that are not subject to compliance activity in a given year.

### Step 3: Combine Steps 1 and 2 to estimate the program level gap

The results of the product stewardship for oil levy and benefit gap analyses are totalled to arrive at a program level compliance view. This is summarised in Table 2.

Table 2: Summary of estimation process – product stewardship for oil (PSO) program gap

Step

Description

2013–14

2014–15

2015–16

2016–17

2017–18

2018–19

1

Estimate the product stewardship for oil levy gap ('000)

530

909

712

764

842

602

2.

Estimate the product stewardship for oil benefit gap ('000)

736

605

630

548

797

558

3.1

Combine Steps 1 and 2 to estimate the program level gap ('000)

1,266

1,514

1,343

1,312

1,638

1,159

3.2

PSO program gap (%)

1.7%

1.5%

1.3%

1.1%

1.3%

1.0%

### Limitations

The following caveats and limitations apply when interpreting this gap estimate.

• The product stewardship for oil levy estimate is calculated with reference to the compliance levels indicated by the fuel excise gap analysis. An assumption has been made that compliance levels are similar for product stewardship for oil producers, given these segments share key producers.
• The product stewardship for oil benefit gap has been calculated with compliance results attributed to the year in which the audit is undertaken, rather than the years the audit adjustments were made. This is not thought to influence the gap analysis considerably, as these would likely balance out over time.