Ted O'Brien (Fairfax, Liberal Party, Shadow Minister for Climate Change and Energy) Share this | Link to this | Hansard source

I'm happy to rise today to speak on the Excise Tariff Amendment (Product Stewardship for Oil) Bill 2023. From the outset, I'd like to point out that it was a coalition government that devised the Product Stewardship for Oil Scheme and that we continue to support its existence. The relevant act, the Product Stewardship (Oil) Act 2000, was devised by the Howard government. That was primarily because the members of that government had realised that there was a need to encourage more recycling of oil, especially amidst an increasing awareness globally of the highly contaminable nature of oil. Indeed, at the time this scheme commenced operation in 2001, no oil recycling at all was being undertaken in Australia. The department website currently says:

Since then, the amount of oil that Australia collects and recycles has risen from none to over 320 megalitres of base lubricating oil every year. That's more than half the oil sold in Australia each year.

This has been a levy benefits scheme that has worked extremely well for almost all of its history. It has not only significantly increased the incentives for the recycling of used oil in Australia but done so with great effect. It has fostered a sustainable used oil recycling industry, notwithstanding the difficulties that sector endured during the COVID period. It has also lowered the potential for and the various risks associated with many environmental and health problems that might have otherwise resulted from the poor storage and disposal of oil. Additionally, as has been noted in each of the four formal reviews of the scheme, including the most recent one completed by Deloitte in 2020, it has improved industry and community awareness and understanding that oil should not simply be regarded as a waste product. That's a substantial record of achievement.

It's important to add that, when it was established, the architecture of the scheme was carefully designed in such a way as to try to make it, at the very least, self-sustaining. This was so that the scheme, insofar as it remained successful, could continue long into the future without proving to be a financial burden to the federal government. Unfortunately, though, during the past four years, the returns to government from the scheme have been overtaken by the outlays. We understand the latest figure on this is that there has been an average deficit of approximately $34.5 million annually. It's not unreasonable, therefore, for a government to be making the kinds of changes that are reflected in these two bills. The coalition respects that addressing these deficits through a levy rise was identified as one of the three recommendations of the Deloitte report.

In our consultations with stakeholders about the bills, it has become apparent that there are some mixed views about the best means of recovering the loss, including how to most appropriately set the levy rates. Likewise, there are some differing views about how the current government and future governments might best be able to continue to incentivise high-quality oil recycling in Australia whilst also minimising the potential impacts of levy changes on Australian consumers. Overall, though, there is general agreement that the cost recovery arrangements need to be brought back onto a more stable and sustainable financial footing.

Overall, though, there is general agreement that the cost recovery arrangements need to be brought back onto a more stable and sustainable financial footing. Given that these bills were introduced only last Thursday, we will, for now, take at face value the government's claims that the levy increase to 14.2 cents per litre or kilo will return to 139 million to balance—or very nearly balance—the recent losses. Obviously, if the changes in the bill don't deliver the expected outcomes and/or result in unintended consequences, then we will seek to revisit this matter.

For now though, we thank the government for bringing these bills to the parliament. We also thank the various stakeholders with whom we have spoken over many years in this policy area. In relation to these two bills specifically, I thank them for their detailed discussions with us in the very short time since the bills were introduced. Their insights and expertise have been invaluable in helping us analyse this pieces of legislation and to help inform our approach to them.

Brian Mitchell (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

I rise today in support of the Excise Tariff Amendment (Product Stewardship for Oil) Bill 2023 and the Customs Tariff Amendment (Product Stewardship for Oil) Bill 2023. These bills aims to rectify the persistent deficit and ensure that the costs of recycling oil are appropriately borne by its users. These bills are about ensuring a sustainable future that emphasises the importance of taking action on oil use and its recycling.

The scheme was established with a strong and clear intent to promote environmentally sustainable practices in the management, re-refining and reuse of used oil. The scheme does this through providing incentives to oil recyclers for the sale of consumption of Australia recycled oil. It operates on a levy-benefit model, wherein levies collected from refiners and importers offset the benefit payments to recyclers. However, despite the policy intent for the scheme to be fiscally neutral, self-funding its operations entirely, it has consistently operated at a deficit for several years, with benefit payments exceeding the duty collected through the scheme. The increasing investments across the refining sector have facilitated higher production of products that attract higher benefit rates. Unfortunately, the duties have remained static, resulting in a deficit averaging $34½ million annually. This imbalance is not sustainable for the long-term success of the scheme, and it has been an issue that requires addressing.

The intent of the scheme is a strong and clear. It improves oil recycling, refinement and reuse. We just need to ensure that it is fully meeting the intended expectations and operates as a fiscally neutral scheme. The bills before the House represent a solution to this problem. By raising the excise duty and customs duty from 8½ cents per litre to 14.2 cents per litre respectively, these bills aim to bring the scheme out of its deficit and ensure that it operates as intended. The adjustment is necessary to align the duty rates with the greater cost of oil refinement, and it paves the way for a sustainable future for the scheme.

As part of this process, I must note that the Australian government is committed to refining benefit payments to align with the greater cost of oil refinement. It's a process that takes time, and it's ongoing as we speak under the watchful eye of the Minister for the Environment and Water. This scheme is vital for Australia because it guarantees that our industry takes responsibility for recycling waste oil and facilitates the creation of new products, such as base oils that can be repurposed as car engine oil. Over time, waste oil can accumulate hazardous by-products such as lead or arsenic, posing a severe threat to our environment and public health, if it's not effectively managed. Moreover, used oil releases harmful particles that we unknowingly inhale, further exacerbating the environmental and health risks. The scheme tackles these issues head-on by ensuring that waste oil is given that second life, minimising its negative impact on our environment and safeguarding our community health and wellbeing.

Since its inception, the scheme has successfully produced 5½ billion litres of recycled oil from waste oil. This could fill Lake Burley Griffin more than 150 times. I'm not suggesting we give it a go, but it could do it. This achievement is testament to the power of the circular economy, allowing waste engine oil to have a second life, being transformed into a valuable resource once again. The levy benefit model forms the foundation of this process, where levies paid on all importation or production, as well as on their synthetic substitutes, finance benefits for those engaged in the re-refining. It ensures the financial responsibility of managing oil waste falls upon those who reap the benefits of its re-use. The bills before the House are a direct response to an independent review of the scheme, which recommended raising the levy to address this imbalance. Through the implementation of these bills, we can remedy the longstanding deficit and relieve from taxpayers the shouldering of the scheme's financial shortfall. The Australian government is ensuring this environmentally beneficial scheme is fiscally secure and economically beneficial.

The benefits of these bills extend far beyond financial rectification. By ensuring the costs of the recycling of oil are appropriately borne by its users, we create a fair and sustainable system that incentivises responsible behaviour. This approach both supports the principles of environmental stewardship and encourages businesses to prioritise sustainability in their operations. It sets a precedent for other industries to adopt similar models, driving us closer to a circular economy where waste can be minimised and resources can be better utilised to their fullest potential. The total cost of an oil change for a passenger car may increase by approximately 28½c as a result of this measure. That is 0.2 per cent on a $150 service. It's a very small price to pay to ensure this scheme's ongoing sustainability.

The bills represent a decisive step towards rectifying the deficit that has burdened the scheme for far too long. By raising the excise duty and customs duty, we ensure the costs of recycling oil are appropriately borne by the users. This initiative upholds the government's commitment, and certainly the minister's commitment, to environmental sustainability and promotes responsible management of waste oil, so let's embrace the opportunity to build a more sustainable future for ourselves and for future generations. I thank the minister for bringing the bill to the House and I commend it.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'd like to thank those who have contributed to the debate on both bills, the Customs Tariff Amendment (Product Stewardship for Oil) Bill 2023 and the Excise Tariff Amendment (Product Stewardship for Oil) Bill 2023. These two pieces of legislation will ensure the environmentally sustainable management of used oil is funded by those who benefit from the use of that oil. They will do this by ensuring the customs and excise tariffs collected on relevant oils are sufficient to fund their end-of-life management costs, reducing the burden on taxpayers. This will have a minor impact on oil users, with the cost of an oil change for an average car rising by about 28 cents.

The continuing success of this scheme is vital to protecting our soils and our waterways. It's also essential in ensuring Australia has an effective oil recycling sector to turn waste oil into new oil, supporting our circular economy.

Question agreed to.

Bill read a second time.