Annual reports

Department of the Environment, Water, Heritage and the Arts Annual Report 2009-10

Department of the Environment, Water, Heritage and the Arts, 2010
ISSN 1441-9335

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:

Purpose of the Act

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

The program aims to develop different forms of recycling and a diverse range of products and markets for recycled oil, 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. Under the levy arrangements, no eligible lubricant sold in Australia escapes the levy; imported and domestic oils are treated equally but 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 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 2009-10 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 25 recyclers during 2009-10.

Table 1: Product stewardship benefit rates in 2009–10
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 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
Additional benefit 1 July 2008 to 30 June 2009 2 3.3
Additional benefit 1 July 2007 to 30 June 2008 3 6.7
Additional benefit 1 July 2006 to 30 June 2007 4 10.057

1 The Regulations specify a health, safety and environmental standard for re-refined lubricants that is consistent with the current requirements for virgin products. The basic requirement of this standard is to produce a non-carcinogenic and non-toxic product. Source: Product Stewardship (Oil) Regulations 2000.

2 The additional benefit is separate from categories one to eight. All category five and six claimants are eligible to claim the additional benefit. The 3.3 cent per litre additional benefit ceased as of 30 June 2009. Claims may still be submitted if the used oil was recycled and sold for use (or used by the claimant) prior to 30 June 2009.

3 The 6.7 cent per litre additional benefit ceased as of 30 June 2008. Claims may still be submitted if the used oil was recycled and sold for use (or used by the claimant) prior to 30 June 2008.

4 The 10.057 cent per litre additional benefit ceased as of 30 June 2007. The claim period closed after 30 June 2010.

Compliance

The Australian Taxation Office audit program from previous years continued, with two audits completed in 2009-10 and a third audit underway.

Reporting

This annual report is prepared in accordance with section 35 of the Product Stewardship (Oil) Act 2000 (the PSO Act) and covers the operation of that Act and the operation of the Product Stewardship for Oil Program, from 1 July 2009 to 30 June 2010.

Product stewardship levy

In 2009-10, total revenue collected from the product stewardship levy was $28.8 million, comprising: $21.0 million in excise collections on domestic production and $7.8 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 $26.5 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 for 2009-10, by category.

Product stewardship benefits

A total of $33.0 million was paid as product stewardship benefits in 2009-10, with $32.0 million paid to recyclers for recycling used oil.2 This is a decrease of $6.9 million in benefits for recycling compared to 2008-09. The decrease is due to the phasing out of the additional benefit.

The volume of recycled oil on which benefits were paid in 2009-10 was 267 million litres, compared to 269 million litres in 2008-09. 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 $18,739,828
15.2 Lubricant base oils (recycled) $1,699,367
15.3 Petroleum based greases and their synthetic equivalents $534,714
  Total $20,973,909
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 $4,322,436
27101992 Petroleum based greases $468,328
27109191 Petroleum based oils including lubricants, hydraulic fluids and transformer oils $22,494
27109192 Petroleum based greases $2,715
27109991 Petroleum based oils including lubricants, hydraulic fluids and transformer oils $36,432
27109992 Petroleum based greases $5,318
34031110 Preparations for the treatment of textiles, containing petroleum oils, solid $1,623
34031190 Preparations for the treatment of textiles, containing petroleum oils, liquid $3,749
34031910 Other preparations (for example, cutting oil, anti-corrosion) containing petroleum oils, solid $58,508
34031990 Other preparations (for example, cutting oil, anti-corrosion) containing petroleum oils, liquid $453,014
34039110 Preparations for the treatment of textiles, not containing petroleum oils, solid $3,681
34039190 Preparations for the treatment of textiles, not containing petroleum oils, liquid $26,965
34039910 Other preparations (for example, cutting oil, anti-corrosion) not containing petroleum oils, solid $93,115
34039990 Other preparations (for example, cutting oil, anti-corrosion) not containing petroleum oils, liquid $307,385
38112110 Additives for lubricating oil, containing petroleum oils, solid $75,018
38112190 Additives for lubricating oil, containing petroleum oils, liquid $1,834,554
38190000 Hydraulic brake fluids $97,752
  Total $7,813,085
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.

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.

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 2009-10, indicating volumes recycled and benefit payments.

The volume of recycled oil claimed in category one in 2009-10 was an increase of 2.9 million litres on 2008-09. The volume claimed in category five increased by 0.8 million litres, while the volume in category six decreased by 5.4 million litres.

Table 4: Product stewardship benefit payments by category in 2009–10
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 $21,621,360 43,244,805
2 Other re-refined base oils (for example, chain bar oil) $12,672 126,725
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) $6,893,148 137,807,095
6 Low grade industrial burning oils (filtered and de-watered) $2,585,674 86,247,642
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 $1,032,145 18,942,831
Additional benefit 1 July 2006 to 30 June 2007 1, 2 nil nil
Additional benefit 1 July 2007 to 30 June 2008 1, 2 nil nil
Additional benefit 1 July 2008 to 30 June 2009 1, 2 $849,769 25,748,925
Total volume of recycled oil (excludes category eight and the additional benefit)   267,426,267
Total benefit payments $32,994,768  

1 Benefits paid under category eight and the additional benefit do not contribute to the overall volume of recycled oil.

2 The additional benefit is separate from categories one to eight. All category five and six claimants are eligible to claim the additional benefit.

Financial Information

The department's 2009-10 operating costs for the Product Stewardship for Oil Program, including staff salaries and allowances, consultancies, advertising and other related expenses, were $225,902.

The Australian Taxation Office's operating costs for the program were $157,457. 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 for the Environment Protection, Heritage and the Arts 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 Product Stewardship (Oil) Act 2000 establishes the council. Members of the council, listed in Table 5, are appointed on the basis of their relevant knowledge and experience, or as Australian Government representatives. The council did not meet in 2009-10.

Table 5: Membership of the Oil Stewardship Advisory Council as at 30 June 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 Environment, Water, Heritage and the Arts
Mr Bob Pullinger Used oil recycling
Mr Tim Rose Used oil recycling

2 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 levy on oil that is incorporated into products.

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