Department of Sustainability, Environment, Water, Population and Communities Annual Report 2011-12
Department of Sustainability, Environment, Water, Population and Communities, 2012
ISSN 1441-9335
Outcome 2: 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 policy settings for the stewardship arrangements are established and governed by the minister. The 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.
Purpose of the Act
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.
Operational aspects of the Act
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 12 shows the 2011-12 benefit rates.
Benefit rates do not directly reflect the comparative effort involved in recycling, or the environmental benefit achieved as the amount of incentive required varies between the different forms of recycling. Rates are set by determining the amount of incentive required for industry to undertake and increase each form of recycling.
Benefits were paid to 22 recyclers during 2011-12.
| 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, 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 demineralised). | 5 |
| 6 | Low-grade industrial burning oils (filtered and de-watered). | 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.
Compliance and enforcement
The Australian Taxation Office audit program from previous years continued, with one audit completed in 2011-12.
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 1July 2011 to 30 June 2012.
Product stewardship levy
In 2011-12 total revenue collected from the product stewardship levy was $33.4 million, comprising $22 million in excise collections on domestic production and $11.5 million in customs duty on imported oils. An amount of $2.8 million was paid back to clients in the form of drawbacks (for export) and refunds, bringing the balance of revenue from the levy to $30.6 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 13 and 14 show excise and customs tariff collections for 2011-12, by category.
Product stewardship benefits
A total of $35.6 million was paid as product stewardship benefits in 2011-12, with $32.9 million paid to recyclers for recycling used oil.1 This is an increase of $0.2 million in benefits for recycling compared to 2010-11.
The volume of recycled oil on which benefits were paid in 2011-12 was 271 million litres, compared to 269 million litres in 2010-11. Figure 2 shows the annual volume of used oil recycled since the program began.
| Item number | Category | Levy collected |
|---|---|---|
| 15.1 | Lubricant base oils. | $19,440,756 |
| 15.2 | Lubricant base oils (recycled). | $2,060,461 |
| 15.3 | Petroleum based greases and their synthetic equivalents. | $465,353 |
| Total | $21,968,582 |
| Item number | Category | Levy collected |
|---|---|---|
| 27101991 | Petroleum-based oils, including lubricants, hydraulic fluids and transformer oils. | $7,363,505 |
| 27101992 | Petroleum-based greases. | $641,197 |
| 27109191 | Petroleum-based oils, including lubricants, hydraulic fluids and transformer oils. | $10,996 |
| 27109192 | Petroleum-based greases. | $3,298 |
| 27109991 | Petroleum-based oils including lubricants, hydraulic fluids and transformer oils. | $287,334 |
| 27109992 | Petroleum-based greases. | $28,833 |
| 34031110 | Preparations for the treatment of textiles, containing petroleum oils, solid. | $1,654 |
| 34031190 | Preparations for the treatment of textiles, containing petroleum oils, liquid. | $5,033 |
| 34031910 | Other preparations (for example, cutting oil, anti-corrosion) containing petroleum oils, solid. | $83,212 |
| 34031990 | Other preparations (for example, cutting oil, anti-corrosion) containing petroleum oils, liquid. | $535,686 |
| 34039110 | Preparations for the treatment of textiles, not containing petroleum oils, solid. | $2,104 |
| 34039190 | Preparations for the treatment of textiles, not containing petroleum oils, liquid. | $6,590 |
| 34039910 | Other preparations (for example, cutting oil, anti-corrosion) not containing petroleum oils, solid. | $93,967 |
| 34039990 | Other preparations (for example, cutting oil, anti-corrosion) not containing petroleum oils, liquid. | $364,755 |
| 38112110 | Additives for lubricating oil, containing petroleum oils, solid. | $96,460 |
| 38112190 | Additives for lubricating oil, containing petroleum oils, liquid. | $1,823,226 |
| 38190000 | Hydraulic brake fluids. | $107,769 |
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.
The above graph shows the annual volume of used oil claimed in each category since the program began. Table 15 provides a breakdown by product category for 2011-12, indicating volumes recycled and benefit payments.
The volume of recycled oil claimed in category one in 2011-12 was an increase of 1.7 million litres on 2010-11. The volume claimed in category five decreased by 6.6 million litres while the volume in category six increased by 6.9 million litres.
| Item number | 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. | $23,654,285 | 47 924 415 |
| 2 | Other re-refined base oils (for example, chain bar oil). | $45,676 | 462 708 |
| 3 | Diesel fuels that comply with the Fuel Standard (Automotive Diesel) Determination 2001, as in force from time to time. | $19,553 | 282 971 |
| 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). | $6,583,106 | 133 376 050 |
| 6 | Low-grade industrial burning oils (filtered and de-watered). | $2,634,759 | 88 968 583 |
| 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. | $2,618,515 | 48 680 534 |
| Total volume of recycled oil (excludes Category 81). | 271 014 727 | ||
| Total benefit payments | $35,555,895 | ||
1 Benefits paid under Category 8 do not contribute to the overall volume of recycled oil.
Financial Information
The department’s 2011-12 operating costs for the Product Stewardship for Oil program, including staff salaries and allowances, consultancies, advertising and other related expenses, were $163,362.
The Australian Taxation Office’s operating costs for the program were $151,491. 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 minister on matters relating to the product stewardship of used oil.
Footnotes
1 The difference between the two figures is due to Category 8 benefits being excluded from 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.
