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Oil Stewardship Advisory Council - 9th Meeting 27 November 2003


AGENDA DRAFT MINUTES
No. Item Background/Report Discussion/Action Further Action Required Time Frame
1 Welcome Attendees: Mike Williamson (Chair), Mark Borlace, Martin Kirwin, Gary O'Connor, Harold Grundell, Paul Howlett, Ewan Macpherson, Bob Pullinger, Fred Wren

Department of Environment and Heritage: Paul Dworjanyn, Mary Wiley-Smith, Gunther Mau, Mitch Jeffery, Adam Rush

Apologies: Cathie Halliday, Peter Holt

Visitors: Review Team from Academy of Technical Sciences and Engineering for presentation at Item 9 (Roy Jackson and Dennis Goggin)
The Chair welcomed participants and noted apologies from Cathie Halliday and Peter Holt.    
2 Adoption of Draft Agenda   OSAC adopted the draft agenda.    
3 Declaration of Conflicts of Interest in Agenda Items The Chair invited members to declare conflicts of interest in accordance with Article 29 of the PSO Act 2000. No conflicts of interest were declared.

The Department of Environment and Heritage (DEH) noted that it would be writing to all members to update their affiliation details including their commercial interests in the oil industry. The resultant information will be maintained as commercial in confidence within Government. OSAC members agreed to provide the required information.

DEH to send members a proforma with the draft OSAC minutes.
 
4 Oral report from ATO on the PSO Program DEH reported on behalf of Peter Holt, from the Australian Taxation Office. Briefly talked through the levy collection - benefit payment reports included in the meeting papers. Mr Kirwan reported that Southern Oil Refineries would be at full production on 21 December, which will have an impact on January Category 1 benefit payments.

DEH noted that it would be revisiting the original modelling conducted at the inception of the PSO by using the lube to lube and other production data reported by ATO. OSAC agreed that a more detailed paper on modelling should be presented and discussed at the next meeting.



DEH to undertake modelling and report at OSAC 10.



Next meeting
5 Oral Report from DEH on the PSO TA Funds DEH reported on the status of Transitional Assistance (TA) Funding, including:
  • The Minister has approved another 21 grants.
  • DEH had advertised in AFR on 22 November for Expressions of Interest for Oil Bottoms. Submission close in February and in the first week 7 requests for information had been lodged (including an Aust oil major + an international company). It is intended that assessment would be conducted so that if an appropriate solution were identified an offer and contract could be in place by June 2004.
  • There are currently 6 ad hoc submissions being assessed. (Details of specific projects were not provided).
  • DEH has advertised for a consultant to undertake the Legislative Review. The Minister has asked that that the Review be completed and report to him in April 2004.
  • The selected Review consultant will approach OSAC members, peak bodies and relevant industries for their input.
There was general discussion on a number of issues related to the TA funding, including:
  • Confirmation that Narrabi and Port Stephens Councils received larger grants than most grant recipients because they each installed 4 facilities.
  • Confirmation that DEH is in final negotiations on a contract for a container collection network to be rolled out nationally over the next few years. Mr Macpherson informed OSAC that AIP were delivering the project with Visy and provided a brief overview of the project.
  • In response to a member's question DEH advised that several companies supplied collection facilities, Councils can choose their preferred supplier and could negotiate over collection of the waste oil. Facilities must meet State/Territory EPA requirements.
  • Information on where facilities are located will be on the new DEH oil recycling website, due for completion in April next year.
  • It was noted that a recent ABS report indicated that 1 in 5 households are disposing their used oil appropriately.
  • It was mentioned that the DIY market is still large in outer urban areas.
   
6 Oral Report from the Steering Group The Chair reported that the main issues discussed at the Steering Group meeting were:
  • Excise changes and their impact on the oil recycling industry;
  • Communications Activities - including urging the Minister to push through approval for the budget; and
  • The Legislative Review.
DEH mentioned that the findings in the Review of TA Funding, would feed into the Legislative Review - emphasizing the importance of sound independent analysis in the TA review.    
Matters arising from previous meeting
7 Presentation on the oil recycling industry by the AORA Harold Grundell presented an overview on the oil recycling industry on behalf of AORA, including:
  • The recycling industry in Australia currently collects between 200 and 210 million litres of used oil per annum.
  • Markets for recycled oil product include alternate fuels, process oils for non-critical applications, lubricant applications, explosives, and calorific enhancement of low heat value alternate fuels.
  • AORA was formed to assist in the development of the used oil recycling industry. It serves to increase awareness of the industry and its positive environmental contribution.
  • Market expectation is that recycled products should sell for a lower price.
  • Challenges for the industry (development of new markets, excise changes, increased gas infrastructure, etc).
Council members noted that AORA has a good coverage of the industry with 23 members from the 30 producers in the industry.

Members thanked Mr Grundell and AORA for the presentation.
   
8 Oral Report by DEH on Oil Communication Activities DEH reported that:
  • In light of advice from the Government Communications Unit, DEH is looking at options to bring forward the budget for communication activities.
  • DEH will seek approval for their communication strategy from the Ministerial Committee on Government Communications early next year.
  • Other communication activities are proceeding well - with positive feedback received for the used oil fact sheets and the On the Land video.
  • A used oil brochure, Frequently Asked Questions fact sheets, and information for Oil major hotlines will be available shortly.

Council agreed that communication activities were proceeding well. The Chair noted that support for the Communication Strategy and its associated budget would be included in OSAC's letter to the Minister.

Chair to write to Minister

asap
9 Presentation on the Review of TA Funding by the Academy of Technical Sciences and Engineering DEH gave a brief overview of the Review process, and introduced the members of the Academy.

Roy Jackson outlined the data collected, and the consultation process undertaken by the Academy.

An 'issues paper' was presented, and the Academy asked the Council for feedback on each issue identified.
Council agreed that the figures identified by the Academy were appropriate and that further investigation to try and obtain more accurate figures would not be required.

DEH mentioned that training for local councils in the use and maintenance of their oil collection facilities would be addressed through the strategic partnerships with state organisations.

Bob Pullinger noted that Councils' responsible for collection facilities should be reminded to leave space for the collection of containers and access for collection trucks.

The Academy confirmed that oil 'bottoms' could be recycled into asphalt.

DEH requested information from recyclers on sample specifications for oil bottoms and the amount they are paying for the disposal of, or are paid for, their oil bottoms.

DEH requested information from Council members on industry participants for consultation on the Review Report. It was agreed that contact details on AORA members, relevant AIP members and other industry players would be forwarded to DEH.

DEH noted that the report was still not sufficiently developed for release for public consultation. The Council agreed.

Council agreed that public consultation should occur in two major cities.
DEH to circulate draft report to OSAC members




OSAC members to forward contact details for consultation to DEH.
asap



asap



asap
10 Oral Report by DEH on Excise Changes The Chair noted that it was important that Council agrees on the advice to give the Minister regarding impacts of excise changes on the recycling industry.

The Chair reported on the outcomes of the Steering Group's discussion on excise, including:
  • On 1 February 2004 excise concessions cease, effectively placing a 7.5 cents per litre increase on the cost of the recycled product (used as burner fuel).
  • The increase may make the re-refined product more expensive than the virgin product - thereby forcing the affected re-refiners out of business.
  • The Steering Group agreed that the excise changes could close off one of the uses for used oil, closing businesses and potentially creating a used oil surplus.
  • The SG believed the loss of the burner fuel market for recyclers would not be a good environmental outcome.
  • The SG recommended that OSAC should consider writing to the Minister
DEH noted that the excise changes in question were the consequence of implementing the Energy Grant Credit Scheme (EGCS) and were not a consequence of changes to the PSO.

DEH confirmed that the Minister has asked for the Legislative review to be brought forward and completed in April 2004. The Review will inform the Government's decision on the need for any changes to the PSO (eg benefit categories and rates) and whether any additional offset was justified in light of excise changes.

AORA members noted that 3 companies would be impacted by the excise change. Not only would there be an increase in the excise but there would be additional cash flow problem as the recyclers were required to pay the full excise weekly, yet it was there clients that would get the partial benefit off-set.

Members agreed that the loss of the burner fuel market would be a bad environmental outcome, and may lead to excess used oil in the market.

It was agreed that OSAC would write to the Minister, suggesting that one solution may be to create a new benefit category, under the PSO, for a defined use. (ie: burner fuel for use in power stations.) The new category could assist re-refiners to offset the increased cost for their product due to the excise change.

Mike Williamson tabled a letter from AORA to OSAC on the impacts of the excise changes, and OSAC agreed to include it with the letter to the Minister.

Mr Macpherson and Mr Howlett agreed to draft the letter to the Minister.
OSAC to write to the Minister. Completed and sent 1 December 2003
Other Business     The Chair wished Paul Dworjanyn all the best in his new position in the Department of Finance, and thanked him for his support and cooperation with the Council.    
11 Next Meeting       June 2004