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2022 - 2023
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS TARIFF AMENDMENT (PRODUCT STEWARDSHIP FOR OIL) BILL
2023
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for the Environment and Water,
the Hon Tanya Plibersek MP)
CUSTOMS TARIFF AMENDMENT (PRODUCT STEWARDSHIP FOR OIL)
BILL 2023
GENERAL OUTLINE
The Product Stewardship (Oil) Act 2000 (the PSO Act) establishes the Product Stewardship
for Oil Scheme (PSO Scheme) to encourage the environmentally sustainable management
and re-refining of used oil and its reuse, by providing incentives to oil recyclers for the sale or
consumption of oil that has been recycled in Australia.
The PSO Scheme is a levy-benefit scheme which offsets benefit payments to recyclers using
revenue collected through the Excise Tariff Act 1921 (Excise Tariff Act) and the Customs
Tariff Act 1995 (Customs Tariff Act) from oil refiners and oil importers. In order to claim a
benefit, the person must be registered for an entitlement to a benefit under the Product Grants
and Benefits Administration Act 2000 and must have an entitlement to a benefit. A person is
entitled to a benefit for the sale or consumption of recycled oil that the person has recycled in
Australia, or for the consumption in Australia of gazetted oil for a gazetted use.
Different grades of recycled oil output create entitlements for different rates of benefit
payments. For example, waste oil recycled into high-grade industrial burner oils creates an
entitlement to a 5 cents per litre benefit while producing re-refined base oil creates and
entitlement to 50 cents per litre. This is to encourage the oil recyclers to produce higher
quality products.
The PSO Scheme is intended to be self-funding. To achieve this intention, items in the
Schedules to both the Excise Tariff Act and Customs Tariff Act impose duty on the import
and manufacture of petroleum-based oils and their synthetic equivalents, intended to be the
same types of oil as those defined in the PSO Act. In the Customs Tariff Act context, the
import of such goods under specified tariff headings and subheadings is subject to the rate of
customs duty as set out in Schedule 3 to that Act. Those goods may also be eligible for a
lower rate of customs duty under Schedules 4 to 15 to the Customs Tariff Act.
The purpose of the Customs Tariff Amendment (Product Stewardship for Oil) Bill 2023 (the
Bill) is to amend the Customs Tariff Act to increase the specific rate of customs duty imposed
on the import of the relevant goods from 8.5 cents per kilogram or litre (as the case may be)
to 14.2 cents per kilogram or litre (as the case may be). This is intended to return the PSO
Scheme to fiscal neutrality.
The types of oil defined in the PSO Act fall under 16 tariff subheadings and 1 heading in the
Customs Tariff Act. The Bill would amend all references to the previous levy rate (applied as
a specific customs duty) across the Customs Tariff Act for those classifications to increase
the levy to 14.2 cents per litre or kilogram, as applicable. Where the goods are subject to a
compound customs duty of a percentage of the value of the goods (ad valorem duty) plus the
levy, the ad valorem duty component of the duty is retained and the levy is increased.
Equivalent amendments to the Excise Tariff Act are proposed by the Excise Tariff
Amendment (Product Stewardship for Oil) Bill 2023.
The PSO Scheme has been running at a deficit for more than four years with benefit
payments significantly exceeding the amount of duty collected by an average of $34.5 million
per year. This is primarily due to investments across the oil recycling sector facilitating an
increase in higher quality oils attracting greater PSO benefits, while the duties that pay for the
scheme have remained static. This Bill, combined with equivalent amendments proposed to
the Excise Tariff Act, will broadly address the deficit, returning an estimated $139 million to
consolidated revenue over the forward estimates. It will also meet the original policy intent
for PSO duty revenue to fully offset benefit payments, and ensure that the cost of managing
used oil is paid for by oil users.
FINANCIAL IMPACT STATEMENT
The Bill, when combined with the proposed amendments to Excise Tariff Act, would have a
positive impact on the Australian Government budget. There will be a net $139 million gain
to consolidated revenue over the four years from 2023-2024 to 2026-2027. This includes
approximately $161 million in revenue less $22 million in payments, including the associated
increase in the benefit rate for oil recyclers as the PSO Category 8 benefit is tied to the excise
rate.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
The Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
The full statement of compatibility with human rights is attached to this explanatory
memorandum (Attachment A).
CUSTOMS TARIFF AMENDMENT (PRODUCT STEWARDSHIP FOR OIL)
BILL 2023
NOTES ON CLAUSES
Clause 1 - Short title
1. This clause would provide for the 'Customs Tariff Amendment (Product Stewardship
for Oil) Bill 2023' (the Bill), when enacted, to be cited as the Customs Tariff
Amendment (Product Stewardship for Oil) Act 2023.
Clause 2 - Commencement
2. This clause would set out, in a table, the date on which provisions of the Bill, when
enacted, will commence. It would provide that information in column 3 of this table is
not part of the Act, and that the information in this column or information in it may be
edited, in any published version of the Act.
3. Table item 1 would provide for sections 1 to 3 and anything in the Bill not elsewhere
covered by the table to commence on the day after the Bill receives the Royal Assent.
4. Table item 2 would provide for Schedule 1 to the Bill to commence on 1 July 2023.
5. Table item 3 would provide for Schedule 2 to the Bill to commence on the later of 1
July 2023 and immediately after the commencement of Schedule 1 to the Customs
Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Act 2022. However, Schedule 2 to the Bill would not commence at all if Schedule 1 to
the Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement
Implementation) Act 2022 does not commence.
6. Table item 3 would have the effect that Schedule 2 to the Bill commences at the same
time that the Australia-United Kingdom Free Trade Agreement (A-UKFTA) comes in
force or on 1 July 2023, whichever is later. The Minister is required to announce by
notifiable instrument the day the A-UKFTA enters into force, which would be
published on the Federal Register of Legislation. However, table item 3 provides that
Schedule 2 to the Bill would not commence at all if the A-UKFTA does not enter into
force.
Clause 3 - Schedules
7. This clause would enable the Schedules to the Bill, when enacted, to amend or repeal
provisions of legislation specified in the Schedules, in accordance with the applicable
items. The Customs Tariff Act 1995 (Customs Tariff Act) would be amended by the
Bill.
Schedule 1-Amendments
Customs Tariff Act 1995
8. The Customs Tariff Act gives effect to Australia's import trade classification system,
imposes a duty of customs on goods that are imported into Australia (being goods that
are identified through the trade classification system), and sets out the rate for such
duty.
9. There are three categories of customs duty. Schedule 3 to the Customs Tariff Act sets
out the general and special rates of customs duty that apply to imported goods.
Schedule 4 to the Customs Tariff Act sets out the concessional customs duty for which
certain classes of imported goods are eligible. Schedule 4A and subsequent Schedules
to the Customs Tariff Act set out the preferential customs duty that applies to goods
imported from a country with which Australia has a Free Trade Agreement and where
that Agreement is in force. Schedules 4A to 15 to the Customs Tariff Act list the tariff
classifications for which there is a customs duty rate other than 'Free' under the
relevant Free Trade Agreement.
Items 1, 3, 5, 8, 10, 12, 14, 16
10. These items would amend the rate column for the tariff subheadings in Schedule 3 to
the Customs Tariff Act, listed in Table 1, to repeal and substitute the rate of customs
duty for imported goods covered by those subheadings.
Table 1 - tariff subheadings amended
2710.19.91 2710.91.91
2710.99.91 3403.11.90
3403.19.90 3403.91.90
3403.99.90 3811.21.90
11. The proposed changes are set out below:
Previous rate New rate
$0.085/L $0.142/L
NZ/PG/FI/ NZ/PG/FI/
DC/LDC: DC/LDC:
$0.085/L $0.142/L
12. The tariff subheadings listed in Table 1 cover certain goods (that are petroleum oils,
oils obtained from bituminous minerals and goods that contain such oils), in liquid form
(not in solid or semi-solid form), and that are measured by litre.
13. The purpose of the proposed amendments is to increase the rate of customs duty that
applies to the goods classified to the tariff subheadings listed in Table 1 from $0.085
per litre to $0.142 per litre. To this effect, goods so classified and imported from a
country, including New Zealand, Papua New Guinea, a Forum Island Country, a
Developing Country or a Least Developed Country would be subject to the increased
rate of customs duty of $0.142 per litre.
14. For example, the rate of customs duty for goods classified to tariff subheadings
2710.19.91 which are petroleum based oils (other than grease covered by subheading
2710.19.92) including lubricant base oils, prepared lubricant additives containing
carrier oils, lubricants for engines, gear sets, pumps and bearings, hydraulic fluids,
brake fluids, transmission oils, and transformer and heat transfer oils would be $0.142
per litre.
Items 2, 4, 6, 7, 9, 11, 13 and 15
15. These items would amend the rate column for the tariff subheadings in Schedule 3 to
the Customs Tariff Act, listed in Table 2, to repeal and substitute the rates of customs
duty for imported goods covered by those subheadings.
Table 2 - tariff subheadings amended
2710.19.92 2710.91.92
2710.99.92 3403.11.10
3403.19.10 3403.91.10
3403.99.10 3811.21.10
16. The proposed changes are set out below:
Previous rate New rate
$0.085/kg $0.142/kg
NZ/PG/FI/ NZ/PG/FI/
DC/LDC: DC/LDC:
$0.085/kg $0.142/kg
17. The tariff subheadings listed in Table 2 cover certain goods (that are petroleum oils,
oils obtained from bituminous minerals and goods that contain such oils), in solid or
semi-solid form, and that are measured by kilogram.
18. The purpose of the proposed amendments is to increase the rate of customs duty that
applies to the goods classified to the tariff subheadings listed in Table 2 from $0.085
per kilogram to $0.142 per kilogram. To this effect, goods so classified and imported
from a country, including New Zealand, Papua New Guinea, a Forum Island Country, a
Developing Country or a Least Developed Country would be subject to the increased
rate of customs duty of $0.142 per kilogram.
19. For example, the rate of customs duty for goods classified to tariff subheading
2710.19.92 which are petroleum based greases will be $0.142 per kilogram.
Item 17
20. Item 17 would amend the rate column for tariff heading 3819.00.00 in Schedule 3 to the
Customs Tariff Act to repeal and substitute the rate of customs duty for imported goods
covered by that heading.
21. The proposed change is set out below:
Previous rate New rate
5%, and 5%, and
$0.085/L $0.142/L
NZ/PG/FI/ NZ/PG/FI/
DC/LDC: DC/LDC:
$0.085/L $0.142/L
22. The purpose of the proposed amendment is to increase the rate of customs duty that
applies to hydraulic brake fluids and other prepared liquids for hydraulic transmission,
not containing or containing less than 70% by weight of petroleum oils or oils obtained
from bituminous materials from 5% of the value of the goods and $0.085 per litre to 5%
of the value of the goods and $0.142 per litre. To this effect, goods so classified and
imported from a country, including New Zealand, Papua New Guinea, a Forum Island
Country, a Developing Country or a Least Developed Country would be subject to the
increased rate of customs duty of 5% of the value of the goods and $0.142 per litre.
Item 18
23. Subparagraph (c)(ii) of table item 50 of Schedule 4 to the Customs Tariff Act provides
a concessional customs duty for goods that a tariff concession order, under Part XVA of
the Customs Act 1901, declares are goods to which this item applies, that are classified
under tariff heading 3819.00.00 and that are not prescribed by by-law. The concessional
rate of customs duty for goods covered by subparagraph (c)(ii) currently provides for a
customs duty of the existing levy amount ($0.085/L) without the additional 5% duty on
the value of the goods which otherwise applies to such goods under the general rate of
customs duty.
24. This item would amend the column headed 'Rate of duty' for table item 50 in Schedule
4 to the Customs Tariff Act to omit reoccurring references to '0.085/L' and substitute
'$0.142/L'.
25. The purpose of this proposed amendment is to increase the rate of customs duty that
applies to the goods covered by subparagraph (c)(ii) of table item 50 in Schedule 4
from $0.085 per litre to $0.142 per litre. To this effect, goods so covered and imported
from a country, including New Zealand, Papua New Guinea, a Forum Island Country, a
Developing Country, a Least Developed Country, and goods that are Singaporean, US,
Thai, Peruvian, Chilean, ASEAN-Australia-New Zealand, Pacific Islands, Trans-
Pacific Partnership, Malaysian, Indonesian, Korean, Indian, Japanese, Chinese, Hong
Kong and Regional Comprehensive Economic Partnership (RCEP) originating goods
would be subject to the increased rate of customs duty of $0.142 per litre.
Items 19 to 289
26. These items would amend Schedules 4A to 14 to the Customs Tariff Act, replacing
references to '$0.085/L' and '$0.085/kg' with '$0.142/L' and '$0.142/kg', respectively.
Column 1 of Table 3 sets out the Schedule to the Customs Tariff Act concerned and
column 2 of Table 3 sets out the table items of the corresponding Schedule that would
be amended.
Table 3 - table items in Schedules 4A to 14 to the Customs Tariff Act amended
Schedule to the Customs Table items that are amended
Tariff Act
4A (Singaporean 81, 82, 96, 97, 110, 111, 122, 123, 124, 125, 126, 127,
originating goods) 128, 129, 130, 131 and 133
5 (US originating goods) 72, 73, 84, 85, 96, 97, 122, 123, 124, 125, 126, 127,
128, 129, 130, 131 and 133
6 (Thai originating goods) 75, 76, 87, 88, 99, 100, 159, 160, 161, 162, 163, 164,
165, 166, 167, 168 and 170
6A (Peruvian originating 89, 90, 104, 105, 118, 119, 133, 134, 135, 136, 137,
goods) 138, 139, 140, 144, 145, and 147
7 (Chilean originating 74, 75, 86, 87, 98, 99, 106, 107, 108, 109, 110, 111,
goods) 112, 113, 114, 115, and 117
8 (ASEAN-Australia-New 80, 81, 92, 93, 104, 105, 115, 116, 117, 118, 119, 120,
Zealand (AANZ) 121, 122, 126, 127 and 129
originating goods)
8A (Pacific Islands 81, 82, 96, 97, 110, 111, 122, 123, 124, 125, 126, 127,
originating goods) 128, 129, 130, 131 and 133
8B (Trans-Pacific 82, 83, 97, 98, 111, 112, 126, 127, 128, 129, 130, 131,
Partnership originating 132, 133, 141, 142 and 144
goods)
9 (Malaysian originating 79, 80, 94, 95, 108, 109, 120, 121, 122, 123, 124, 125,
goods) 126, 127, 128, 129 and 131
9A (Indonesian originating 87, 88, 102, 103, 116, 117, 128, 129, 130, 131, 132,
goods) 133, 134, 135, 136, 137 and 139
10 (Korean originating 79, 80, 94, 95, 108, 109, 120, 121, 122, 123, 124, 125,
goods) 126, 127, 128, 129 and 131
10A (Indian originating 88, 89, 103, 104, 117, 118, 129, 130, 131, 132, 133,
goods) 134, 135, 136, 137, 138 and 140
11 (Japanese originating 79, 80, 94, 95, 108, 109, 120, 121, 122, 123, 124, 125,
goods) 126, 127, 128, 129 and 131
12 (Chinese originating 85, 86, 100, 101, 114, 115, 127, 128, 129, 130, 131,
goods) 132, 133, 134, 136, 137 and 139
13 (Hong Kong 87, 88, 102, 103, 116, 117, 128, 129, 130, 131, 132,
originating goods) 133, 134, 135, 136, 137 and 139
14 (Regional 151, 152, 166, 167, 180, 181, 241, 242, 243, 244, 245,
Comprehensive Economic 246, 247, 248, 271 and 272
Partnership (RCEP)
originating goods)
27. The purpose of these proposed amendments is to increase the rate of customs duty that
applies to those originating goods covered by column 2 of Table 3, from $0.085 per
litre or $0.085 per kilogram to $0.142 per litre or $0.142 per kilogram, respectively. To
this effect, originating goods so covered and imported would be subject to the increased
rate of customs duty.
Item 290
28. This item would repeal and substitute the cell under column 3 (which sets out the rate
of duty) of table item 276 of Schedule 14 to the Customs Tariff Act.
29. The proposed changes in rate of preferential customs duty would be applicable to
Regional Comprehensive Economic Partnership (RCEP) originating goods that are
classified to tariff subheading 3819.00.00 (relevant RCEP originating goods). These are
goods that are hydraulic brake fluids and other prepared liquids for hydraulic
transmission, not containing or containing less than 70% by weight of petroleum oils or
oils obtained from bituminous minerals.
30. The proposed changes to the rate are set out below:
Previous rate New rate
2%, and $0.085/L 2%, and $0.085/L
From 1 January of year 2: 1%, and From 1 January of year 2: 1%, and
$0.085/L 0.085/L
From 1 January of year 3: $0.085/L From 1 July of year 2: 1% and $0.142/L
From 1 January of year 3: $0.142/L
31. Under subsection 16(4A) of the Customs Tariff Act, a reference to year 2 in Schedule
14 is a reference to the first calendar year beginning after the commencement of the
subsection, which commenced 1 January 2022. Year 2 for the purposes of Schedule 14
to the Customs Tariff Act began on 1 January 2023.
32. As existing table item 276 of Schedule 14 to the Customs Tariff Act phases out the
percentage ad valorem duty component of the customs duty at the beginning of
calendar years and Schedule 1 to the Bill commences 1 July 2023, the rate of customs
duty proposed to be substituted by item 290 of the Bill would reduce ambiguity for
goods imported between 1 January 2023 and 30 June 2023.
33. Item 290 of the Bill would provide that the applicable customs duty for relevant RCEP
originating goods is:
(a) prior to 1 January 2023 - 2% of the value of the goods and $0.085 per litre;
(b) from 1 January 2023 until but not including 1 July 2023 - 1% of the value of the
goods and $0.085 per litre;
(c) from 1 July 2023 until but not including 1 January 2024 - 1% of the value of the
goods and $0.142 per litre; and
(d) from 1 January 2024 - $0.142 per litre.
Item 291
34. This item would provide that the amendments made by Schedule 1 to this Bill apply in
relation to:
(a) goods imported into Australia on or after 1 July 2023; and
(b) goods imported into Australia before 1 July 2023, where the time for working out
the rate of import duty on the goods had not occurred before that day.
Schedule 2 - Contingent Amendments
Customs Tariff Act 1995
35. Schedule 1 of the Customs Tariff Amendment (Australia-United Kingdom Free Trade
Agreement Implementation) Act 2022, which will commence at the same time as
Schedule 1 to the Customs Amendment (Australia-United Kingdom Free Trade
Agreement Implementation) Act 2022, inserts Schedule 15 into the Customs Tariff Act.
Schedule 15 of the Customs Tariff Act will provide for preferential rates of customs
duty for UK originating goods.
Items 1 to 17
36. These items would amend Schedule 15 to the Customs Tariff Act, replacing references
to '$0.085/L' and '$0.085/kg' with '$0.142/L' and '$0.142/kg', respectively. Table 4
sets out the table items of Schedule 15 that would be amended.
Table 4 - table items in Schedule 15 amended
93 94 108 109 122
123 134 135 136 137
138 139 140 141 142
143 145
37. The purpose of these proposed amendments is to increase the rate of customs duty that
applies to those originating goods covered by Table 4, from $0.085 per litre or $0.085
per kilogram to $0.142 per litre or $0.142 per kilogram, respectively. To this effect,
originating goods so covered and imported would be subject to the increased rate of
customs duty.
Item 18
38. This item would provide that the amendments made by Schedule 2 to this Bill apply in
relation to:
(a) goods imported into Australia on or after the commencement of this Schedule;
and
(b) goods imported into Australia before the commencement of this Schedule, where
the time for working out the rate of import duty on the goods had not occurred
before that commencement.
ATTACHMENT A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Customs Tariff Amendment (Product Stewardship for Oil) Act 2023
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of Human Rights (Parliamentary Scrutiny) Act
2011.
Overview of the Bill
The Product Stewardship (Oil) Act 2000 (PSO Act) establishes the Product Stewardship for
Oil Scheme (PSO Scheme) to encourage the environmentally sustainable management and
re-refining of used oil and its reuse, by providing incentives to oil recyclers for the sale or
consumption of oil that has been recycled in Australia.
Benefits payments made under the PSO Act are offset by revenue collected under the Excise
Tariff Act 1921 and the Customs Tariff Act 1995 (Customs Tariff Act).
The Bill would make minor amendments to the Customs Tariff Act to increase the rate of
duty on the import of petroleum-based oils and their synthetic equivalents, so as to return the
PSO Scheme to fiscal neutrality.
Human Rights implications
The Bill does not engage any of the applicable rights or freedoms.
Conclusion
The Bill is compatible with human rights as it does not raise any human rights issues.
The Hon. Tanya Plibersek MP
Minister for the Environment and Water