Explanatory Memorandum(Circulated by authority of the Minister for the Environment and Heritage, The Honourable Dr David Kemp, MP)
General outline and financial impact statement
The Customs Tariff Amendment (Product Stewardship for Waste Oil) Act 2000 and the Excise Tariff Amendment (Product Stewardship for Waste Oil) Act 2000 impose a levy on certain petroleum based oils and greases and their synthetic equivalents to fund the development of a recycling program for waste oil - the Product Stewardship Arrangements for Waste Oil (the PSO).
The intention of the PSO is to reduce the environmental impact of waste oil by imposing a levy on virgin oils and lubricants. The levy is used to fund a benefit scheme designed to encourage the recycling of waste oils. Benefits are paid on a six-tiered differentiated scale, with differing benefit rates for various waste oil recycling activities.
Multi-use oils that are used in a specific way, either in the manufacture of another product, or in a process, that does not create a recyclable waste oil stream, and is considered to present a low level of risk to the environment, are outside the original policy intent of the product stewardship arrangements for waste oil. This Bill provides the mechanism for exempting such oils from the levy.
To effect this exemption, a new category of benefit (to be known as the category 8 benefit) under the Product Stewardship (Oil) Act 2000 will be paid, at the same rate as the levy, for uses of oil as approved by the Minister for the Environment and Heritage by Gazette notice.
The purpose of this Bill is to amend the Product Stewardship (Oil) Act 2000 to:
- Provide an effective exemption for certain multi-use oils and uses of multi-use oils from the Product Stewardship (Oil) levy;
- Introduce a mechanism which will allow the Minister for the Environment and Heritage to approve the uses of certain oils as eligible for the category 8 benefit; and
- Implement consequential amendments to the Product Grants and Benefits Administration Act 2000 to enable category 8 claimants to register for PSO benefits.
Financial impact statement
In 2001-02 Product Stewardship (Oil) levy revenue was $25 million, with $8.2 million in benefits paid to oil recyclers. Benefit payments are expected to increase as claims against category 1 (re-refined base oils) come on line.
The cost to the Government of providing an effective exemption for certain oils and uses of oils from the Product Stewardship (Oil) levy will be small. Based on industry estimates, the cost of providing levy relief for uses of oil likely to qualify for exemptions would be less than 5% of total PSO levy revenues, or $1.25 million per annum.