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

Used oil collection unit

Used oil collection unit.

Purpose

The Product Stewardship for Oil Program commenced 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 to 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 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 directly connected 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 for full recycling into as-new, re-refined base oil. Table 1 shows the 2010–11 benefit rates.

Benefit rates do not directly reflect the comparative effort involved in recycling or the environmental benefit achieved. Rates were set by determining the amount of incentive required for industry to undertake and increase each form of recycling. Some forms of recycling require more incentive than others.

Benefits were paid to 24 recyclers during 2010–11.

Table 1: Product stewardship benefit rates in 2010–11
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 criteria¹.	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 they are enforced.	7
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.	5
5	High-grade industrial burning oils (filtered, de-watered and de-mineralised).	5
6	Low-grade industrial burning oils (filtered and de-watered).	3
7	Industrial process oils and process lubricants, including hydraulic and transformer oils (re-processed 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.

Compliance

The Australian Taxation Office audit program from previous years continued, with two audits completed in 2010–11.

Reporting

Information provided for this annual report is prepared in accordance with section 35 of the Product Stewardship (Oil) Act 2000 and covers the operation of the PSO Act and the Product Stewardship for Oil Program from 1 July 2010 to 30 June 2011.

Product stewardship levy

In 2010–11, total revenue collected from the product stewardship levy was $32.0 million, comprising $22.3 million in excise collections on domestic production and $9.8 million in customs duty on imported oils. An amount of $2.5 million was paid back to clients in the form of drawbacks (for export) and refunds, bringing the balance of revenue from the levy to $29.5 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 2 and 3 show excise and customs tariff collections by category for 2010–11.

Product stewardship benefits

A total of $34.9 million was paid as product stewardship benefits in 2010–11, with $32.7 million paid to recyclers for recycling used oil.¹ This represents an increase of $0.7 million in benefits for recycling when compared to 2009–10.

The volume of recycled oil on which benefits were paid in 2010–11 was 269 million litres, compared to 267 million litres in 2009–10. Figure 1 shows the annual volume of used oil recycled since the program began.

Table 2: Product stewardship levy collection (excise) by category
Item number	Category	Levy collected ($)
15.1	Lubricant base oils.	19 769 291
15.2	Lubricant base oils (recycled).	2 076 271
15.3	Petroleum-based greases and their synthetic equivalents.	409 621
Total		22 255 182

Table 3: Product stewardship levy collection (customs tariff) by category
Item number	Category	Levy collected ($)
27101991	Petroleum-based oils including lubricants, hydraulic fluids and transformer oils	6 048 807
27101992	Petroleum-based greases	517 672
27109191	Petroleum-based oils including lubricants, hydraulic fluids and transformer oils	22 516
27109192	Petroleum-based greases	5 289
27109991	Petroleum-based oils including lubricants, hydraulic fluids and transformer oils	108 331
27109992	Petroleum-based greases	26 144
34031110	Preparations for the treatment of textiles, containing petroleum oils, solid	1 828
34031190	Preparations for the treatment of textiles, containing petroleum oils, liquid	3 425
34031910	Other preparations (for example, cutting oil, anti-corrosion) containing petroleum oils, solid	84 318
34031990	Other preparations (for example, cutting oil, anti-corrosion) containing petroleum oils, liquid	495 860
34039110	Preparations for the treatment of textiles, not containing petroleum oils, solid	4 504
34039190	Preparations for the treatment of textiles, not containing petroleum oils, liquid	9 113
34039910	Other preparations (for example, cutting oil, anti-corrosion) not containing petroleum oils, solid	106 930
34039990	Other preparations (for example, cutting oil, anti-corrosion) not containing petroleum oils, liquid	359 117
38112110	Additives for lubricating oil, containing petroleum oils, solid	79 555
38112190	Additives for lubricating oil, containing petroleum oils, liquid	1 798 794
38190000	Hydraulic brake fluids	108 499
	Total	9 780 701

Figure 1: Annual volume of oil recycled since the Product Stewardship for Oil Program began

Note: The pre-Product Stewardship for Oil 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.

Figure 1 text version (Excel 19 KB)

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

Note: Volumes reported for categories 2 and 4 are too small to chart. Category 8 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.

Figure 2 text version (Excel 25 KB)

Figure 2 shows the annual volume of used oil claimed in each category since the program began. Table 4 provides a breakdown by product category for 2010–11, indicating volumes recycled and benefit payments.

The volume of recycled oil claimed in category one in 2010–11 increased by 3.0 million litres over the 2009–10 volume. The volume claimed in category 5 increased by 2.2 million litres, while the volume in category 6 decreased by 4.2 million litres.

Table 4: Product stewardship benefit payments by category in 2010–11
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	23 137 028	46 274 056
2	Other re-refined base oils (for example, chain bar oil)	105 555	1 085 553
3	Diesel fuels that comply with the Fuel Standard (Automotive Diesel) Determination 2001, as they are enforced	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)	6 999 700	139 994 009
6	Low grade industrial burning oils (filtered and de-watered)	2 462 383	82 079 444
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	2 202 328	40 417 106
Total volume of recycled oil (excludes category 8¹)			269 433 062
Total benefit payments		34 909 995

¹ Benefits paid under category 8 do not contribute to the overall volume of recycled oil.

Financial information

The department’s 2010–11 operating costs for the Product Stewardship for Oil Program, including staff salaries and allowances, consultancies, advertising and other related expenses, were $170 724.

The Australian Taxation Office’s operating costs for the program were $194 448. 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 provides advice to the minister on the product stewardship mechanisms and their operation, the oil recycling and oil production industries, and on markets for recycled used oil products. Part 3 of the PSO Act establishes the council. Members of the council are appointed on the basis of their relevant knowledge and experience, or as Australian Government representatives (see Table 5). The appointments of all members expired on 29 August 2010 and no appointments or reappointments have been made since then. The council held one meeting in 2010–11, on 19 July 2010.

Table 5: Membership of the Oil Stewardship Advisory Council until 29 August 2010
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
Mr Harold Grundell	Used oil recycling
Mr Peter Harding	Representing the Commissioner of Taxation
Mr Paul Howlett	Non-government sector
Mr Gary O’Connor	State or territory government
Ms Kelly Pearce	Representing the Department of the Sustainability, Environment, Water, Population and Communities
Mr Bob Pullinger	Used oil recycling
Mr Tim Rose	Used oil recycling

Footnotes

¹ The difference between the two figures is that category 8 benefits are not included in the second figure because they are not benefits for recycling used oil. Category 8 benefits are a refund of the product stewardship levy where oil is incorporated into products.

Outcome 2: Sustainable environment

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