Department of Sustainability, Environment, Water, Population and Communities

Operation of the Product Stewardship (Oil) Act 2000

The Product Stewardship for Oil Program is underpinned by a package of legislation and associated regulations.

The Product Stewardship (Oil) Act 2000 is the primary piece of legislation that establishes the general framework and benefit entitlements. The Product Stewardship (Oil) Regulations 2000 prescribe the product stewardship benefit rates. The policy settings for the stewardship arrangements are established and governed by the parliamentary secretary. The Act also establishes the Oil Stewardship Advisory Council.

The Excise Tariff Amendment (Product Stewardship for Waste Oil) Act 2000 and the Customs Tariff Amendment (Product Stewardship for Waste Oil) Act 2000 and associated Regulations establish the product stewardship levy. The Product Stewardship (Oil) (Consequential Amendments) Act 2000 contributes to the establishment of the levy and the general administrative provisions in the Product Grants and Benefits Administration Act 2000. The Product Grants and Benefits Administration Act 2000 sets out eligibility criteria and establishes the administrative mechanisms used by the Australian Taxation Office to pay benefits to recyclers.

Purpose

The Product Stewardship for Oil Program came into effect on 1 January 2001. The program’s objectives are to:

• 
  provide economic incentives to increase the uptake, and encourage appropriate recycling and use of, used oil
  
• 
  encourage the environmentally sustainable management and re-refining of used oil, and its re-use
  
• 
  support economic recycling options for used oil.
  

The program aims to develop different forms of recycling and a diverse range of products and markets for recycled oil in order to help ensure the long-term viability of the used-oil recycling industry in Australia.

Operation

The Product Stewardship for Oil Program consists of an economic incentives package (a levy/benefit scheme). The department has policy responsibility for the program, but it is administered by the Australian Taxation Office. The Treasurer sets the levy amount.

The product stewardship oil levy was introduced on 1 January 2001. It is currently set at 5.449 cents per litre of lubricant oil produced or sold in Australia. The levy applies to both domestic and imported oils and is paid by oil producers and importers. Exported oil is not levied. The levy is collected as an excise by the Australian Taxation Office and as customs duty by the Australian Customs and Border Protection Service. While the levy is intended to offset the cost of benefits paid under the Product Stewardship for Oil program, it is not hypothecated to benefit payments.

Product stewardship benefits are paid to recyclers as a volume-based incentive to encourage increased oil recycling. Benefits are provided at different rates depending on the type of product: the lowest benefits are provided for basic burner fuels and the highest are provided for full recycling into as new, re-refined base oil. Table 3 shows the 2012–2013 benefit rates.

Benefit rates partly reflect the comparative effort involved in recycling and partly reflect the environmental benefit achieved. Rates are set by determining the amount of incentive required for industry to undertake and increase each form of recycling. Benefits were paid to 16 recyclers during 2012–2013.

On 23 April 2013 the Australian Taxation Office published a decision impact statement which advised that used oil which had only been filtered and dewatered was no longer eligible for a Category 6 benefit. This decision was a consequence of an Administrative Appeals Tribunal decision relating to excise. The Australian Taxation Office’s decision impact statement, on its website at: http://law.ato.gov.au/atolaw/view.htm?DocID=LIT/ICD/2011/3815/00001, explains how the Administrative Appeals Tribunal’s decision affects eligibility for Category 6 benefits.

The department will consider the implications of this decision in the context of the recommendations of the 2013 Independent Review of the Product Stewardship (Oil) Act 2000.

Table 3: Product stewardship benefit rates in 2012–13

Category	Product	Benefit (cents per litre)
1	Re-refined base oil (for use as a lubricant or as hydraulic or transformer oil) that meets the prescribed criteria^1	50
2	Other re-refined base oils (for example, chain bar oil)	10
3	Diesel fuels that comply with the Fuel Standard (Automotive Diesel) Determination 2001, as in force from time to time	7
4	Diesel extenders: (a) that are filtered, dewatered and demineralised (b) that, if combined with diesel fuels, would produce a combined fuel that complies with the determination mentioned in Category 3	5
5	High-grade industrial burning oils (filtered, dewatered and demineralised)	5
6	Low-grade industrial burning oils (filtered and dewatered)	3
7	Industrial process oils and process lubricants, including hydraulic and transformer oils (reprocessed or filtered, but not re-refined)	0
8	Gazetted oil, consumed in Australia for a gazetted use	5.449

¹ The Product Stewardship (Oil) Regulations 2000 specify a health, safety and environmental standard for re-refined lubricants. The basic requirement of this standard is to produce a non-carcinogenic and non-toxic product.

Reporting

This section fulfils the requirements of section 35 of the Product Stewardship (Oil) Act 2000 and covers the operation of that Act and the operation of the Product Stewardship for Oil Program from 1 July 2012 to 30 June 2013.

Product stewardship levy

In 2012–13 total revenue collected from the product stewardship levy was $33.5 million, comprising $21.6 million in excise collections on domestic production and $11.9 million in customs duty on imported oils. An amount of $2.3 million was paid back to clients in the form of drawbacks (for export) and refunds, bringing the balance of revenue from the levy to $31.3 million.

Levy collections are recorded against a number of categories based on the type of oil. Customs duty is recorded under international customs classifications. Tables 4 and 5 show excise and customs tariff collections for 2012–13 by category.

Product stewardship benefits

A total of $33.4 million was paid as product stewardship benefits in 2012–2013, with $31.5 million paid to recyclers for recycling used oil.² This is a decrease of $1.4 million in benefits for recycling compared with 2011–12.

The volume of recycled oil on which benefits were paid in 2012–2013 was 253 million litres, compared to 271 million litres in 2011–12. Figure 2 shows the annual volume of used oil recycled since the program began.³

Table 4: Product stewardship levy collection (excise) by category

Item number	Category	Levy collected
15.1	Lubricant base oils	$18 970 990
15.2	Lubricant base oils (recycled)	$2 124 828
15.3	Petroleum-based greases and their synthetic equivalents	$502 820
	Total	$21 598 638

Source: Australian Taxation Office, 2013.

Table 5: Product stewardship levy collection (customs tariff) by category

Item number	Category	Levy collected
27101991	Petroleum based oils including lubricants, hydraulic fluids and transformer oils	$8 135 887
27101992	Petroleum-based greases	$511 171
27109191	Petroleum-based oils including lubricants, hydraulic fluids and transformer oils	$2106
27109192	Petroleum-based greases	$2940
27109991	Petroleum-based oils including lubricants, hydraulic fluids and transformer oils	$252 572
27109992	Petroleum-based greases	$29 031
34031110	Preparations for the treatment of textiles, containing petroleum oils, solid	$1313
34031190	Preparations for the treatment of textiles, containing petroleum oils, liquid	$1754
34031910	Other preparations (for example, cutting oil, anti-corrosion) containing petroleum oils, solid	$65 446
34031990	Other preparations (for example, cutting oil, anti-corrosion) containing petroleum oils, liquid	$495 379
34039110	Preparations for the treatment of textiles, not containing petroleum oils, solid	$3097
34039190	Preparations for the treatment of textiles, not containing petroleum oils, liquid	$9390
34039910	Other preparations (for example, cutting oil, anti-corrosion) not containing petroleum oils, solid	$97 152
34039990	Other preparations (for example, cutting oil, anti-corrosion) not containing petroleum oils, liquid	$384 088
38112110	Additives for lubricating oil, containing petroleum oils, solid	$78 955
38112190	Additives for lubricating oil, containing petroleum oils, liquid	$1 770 578
38190000	Hydraulic brake fluids	$90 688
	Total	$11 931 546

Source: Australian Customs and Border Protection Service, 2013.
Figure 1: Annual volume of oil recycled since the Product Stewardship for Oil program began

Note:
The pre-PSO program value is an industry estimate. Program benefits commenced in January 2001, therefore the 2000–01 value was derived from data covering only six months.

Source: Australian Taxation Office, 2013.

Figure 2: Annual volume of recycled oil in each category since the Product Stewardship for Oil program began

Note:
Volumes reported for categories two and four are too small to chart. Category eight and the additional benefit do not contribute to the overall volume of used oil recycled. Program benefits commenced in January 2001, therefore the 2000–01 value was derived from data covering only six months.

Source: Australian Taxation Office, 2013.

Figure 2 shows the annual volume of used oil claimed in each category since the program began. Table 6 provides a breakdown by product category for 2012–13, indicating volumes recycled and benefit payments.

The volume of recycled oil claimed in category one in 2012–13 was a decrease of 2.7 million litres on 2011–12. The volume claimed in category five decreased by 3.0 million litres while the volume in category six decreased by 12.0 million litres.
Table 6: Product stewardship benefit payments by category in 2012–13

Category		Benefit payments	Litres
1.	Re-refined base oil (for use as a lubricant or a hydraulic or transformer oil) that meets the specified criteria	$22 628 518	45 257 035
2.	Other re-refined base oils (for example, chain bar oil)	$45 000	454 000
3.	Diesel fuels that comply with the Fuel Standard (Automotive Diesel) Determination 2001, as in force from time to time	nil	nil
4.	Diesel extenders: (a) that are filtered, de-watered and de-mineralised (b) that, if combined with diesel fuels, would produce a combined fuel that complies with the determination mentioned in category 3	nil	nil
5.	High grade industrial burning oils (filtered, de-watered and de-mineralised)	$6 518 310	130 366 200
6.	Low grade industrial burning oils (filtered and de-watered)	$2 304 849	76 828 287
7.	Industrial process oils and lubricants, including hydraulic and transformer oils (re-processed or filtered, but not re-refined)	nil	nil
8.	Gazetted oil consumed in Australia, for a gazetted use	$1 918 177	35 202 370
Total volume of recycled oil (excludes category eight^3)			252 905 522
Total benefit payments		$33 415 253

³ Benefits paid under category eight do not contribute to the overall volume of recycled oil.

Source: Australian Taxation Office, 2013.

Monitoring and evaluation

The third Independent Review of the Product Stewardship (Oil) Act 2000 commenced in March 2013 and is expected to be completed in June 2013. Once the review report has been tabled in parliament it will be publicly released and available on the department’s website. The Australian Government will respond to the recommendations of the review in due course.

Financial information

The department’s 2012–13 operating costs for the Product Stewardship for Oil program, including staff salaries and allowances, consultancies, advertising and other related expenses, were $394 360.

The Australian Taxation Office’s operating costs for the program were $202 700. Services provided by the Australian Taxation Office include processing registrations and claims for benefits, compliance monitoring, and client liaison.

Committees

The Oil Stewardship Advisory Council is established under Part 3 of the Product Stewardship (Oil) Act 2000. The council’s role is to provide advice to the Parliamentary Secretary for Sustainability and Urban Water on matters relating to the product stewardship of used oil. Members of the council are appointed on the basis of their relevant knowledge and experience, or as Australian Government representatives. Current members of the council were appointed on 4 April 2013 for a three year term (see Table 7). The council held one meeting in 2012–13, on 15 April 2013.
Table 7: Membership of the Oil Stewardship Advisory Council

Member	Area of knowledge or experience
Mr Mike Williamson Chair	Broad waste management issues, from a business perspective
Mr Paul Barrett	Oil production
Mr Mark Borlace	National consumer issues
Ms Rebecca Brown	Local Government Remote, including remote Indigenous, issues
Mr Paul Howlett	Broad waste management issues, from a business perspective Non-government sector
Ms Kylie Hughes	State or Territory government
Ms Jane O’Sullivan	Representing the Department of Sustainability, Environment, Water, Population and Communities
Mr Bob Pullinger	Used oil recycling
Ms Valerie Southam	Broad waste management issues, from a business perspective Non-government sector
Ms Pauline Zdjelar	Representing the Commissioner of Taxation