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2022 - 2023
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
EXCISE 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)
EXCISE TARIFF AMENDMENT (PRODUCT STEWARDSHIP FOR OIL) BILL 2023
GENERAL OUTLINE
The Product Stewardship (Oil) Act 2000 (the PSO Act) established the Product Stewardship
(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 an
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. These are intended
to be the same types of oil as those defined in the PSO Act. In the Excise Tariff Act context,
these goods are listed in item 15 of the table in the Schedule to that Act.
The purpose of the Excise Tariff Amendment (Product Stewardship for Oil) Bill 2023 (the
Bill) is to amend the Excise Tariff Act to increase the rate of Excise duty imposed on the
goods in item 15 to 14.2 cents per litre (for the goods listed in sub-items 15.1 and 15.2) and
14.2 cents per kilogram (for the goods listed in sub-items 15.3 and 15.4). This is intended to
return the PSO Scheme to fiscal neutrality.
Equivalent amendments are proposed for the Customs Tariff Act by the Customs 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 the equivalent amendments proposed
to the Customs 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.
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FINANCIAL IMPACT STATEMENT
The Bill, when combined with the proposed amendments to the Customs Tariff Act, will 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).
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EXCISE TARIFF AMENDMENT (PRODUCT STEWARDSHIP FOR OIL) BILL 2023
NOTES ON CLAUSES
Clause 1 - Short title
1. Clause 1 would provide that the Bill, once enacted, may be cited as the Excise Tariff
Amendment (Product Stewardship for Oil) Act 2023.
Clause 2 - Commencement
2. The table in subclause 2(1) would have the effect that the whole of the Bill would
commence on 1 July 2023.
3. The note following the table in subclause 2(1) would explain that the table relates only
to the provisions of the Bill as originally enacted and that it will not be amended to deal
with any later amendments.
4. Subclause 2(2) would clarify that any information in column 3 of the table in subclause
2(1) is not part of the Bill. Information may be inserted in this column, or edited in this
column, in any published version of the Bill.
Clause 3 - Schedules
5. Clause 3 would provide that the legislation that is specified to be amended or repealed as
set out in a Schedule to the Bill has effect according to the terms of the relevant
Schedule.
6. Schedule 1 to the Bill would amend the Excise Tariff Act 1921 (Excise Tariff Act) in the
manner specified in Schedule 1.
Schedule 1 - Amendments
Excise Tariff Act 1921
7. Subsection 5(1) of the Excise Tariff Act imposes Excise duties on the manufacture or
production in Australia of the goods set out in the Schedule to that Act, at the rate of
duty set out in the Schedule for each kind of good.
8. The Excise duties imposed by subsection 5(1) apply to:
• goods manufactured or produced in Australia after the time such duties are
deemed to have been imposed; and
• goods manufactured or produced in Australia before the time or dates when such
duties are deemed to have been imposed, and which were at that time or those
dates subject to the Commissioner of Taxation's control, or in the stock, custody,
or possession of, or belonging to, any distiller or manufacturer thereof, and on
which no duty of Excise had been paid before the time or dates when such duties
are deemed to have been imposed.
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9. Item 15 of the table in the Schedule to the Excise Tariff Act imposes Excise duties on
the following goods:
• petroleum-based oils that are lubricant/fluid/oil products or the synthetic
equivalents of such oils (but not greases) (sub-item 15.1 of table in the Schedule);
• petroleum-based oils that are lubricant/fluid/oil products or greases, or synthetic
equivalents of such oils, that are recycled for use as oils that are lubricant/fluid/oil
products but not recycled for use as greases (sub-item 15.2 of the table in the
Schedule);
• petroleum-based greases and their synthetic equivalents (sub-item 15.3 of the
table in the Schedule);
• petroleum-based oils that are lubricant/fluid/oil products or greases, or synthetic
equivalents of such oils, that are recycled for use as greases (sub-item 15.4 of the
table in the Schedule).
10. However, item 15 of the table in the Schedule is expressed not to apply to any of diesel;
blends of diesel and any other goods; goods for use as a fuel; goods ordinarily used as a
fuel; exempt oils and hydraulic fluids; any other goods prescribed for the purposes of
paragraph (f) of item 15.
11. The rate of Excise duty imposed on the goods specified in item 15 is 8.5 cents per litre
(for the goods listed in sub-items 15.1 and 15.2) and 8.5 cents per kilogram (for the
goods listed in sub-items 15.3 and 15.4).
12. The Product Stewardship (Oil) Act 2000 established the Product Stewardship for Oil
(PSO) Scheme to encourage the environmentally sustainable management and
re-refining of used oil and its reuse, by providing benefits to oil recyclers for the sale or
consumption of oil that has been recycled in Australia. 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.
13. The PSO Scheme is intended to be self-funding by offsetting the benefit payments to
recyclers using revenue collected through the Excise Tariff Act and the Customs Tariff
Act 1995 (Customs Tariff Act) from refineries and oil importers. 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.
14. The goods listed in item 15 of the table in the Schedule to the Excise Tariff Act reflect
the types of oil defined in the PSO Act, and therefore covered by the PSO scheme. As
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such, the purpose of imposing Excise duties on the manufacture or production in
Australia of the goods listed in item 15 of the table in the Schedule is to contribute to
recouping the costs of paying benefits to oil recyclers under the PSO Scheme.
15. The PSO Scheme has been running at a deficit for a number of years with benefit
payments exceeding the amount of duty collected by a considerable amount. This is
primarily due to investments across the oil recycling sector facilitating an increase in
production of products that attract a higher benefit rate.
16. The purpose of the Bill is to increase the rate of Excise duty imposed on the goods in
item 15 to 14.2 cents per litre (for the goods listed in sub-items 15.1 and 15.2) and 14.2
cents per kilogram (for the goods listed in sub-items 15.3 and 15.4). This is intended to
return the PSO Scheme to fiscal neutrality.
17. Existing subsection 5(2) of the Excise Tariff Act would operate to ensure that the
proposed increase in the rates of Excise duty imposed on the goods covered by item 15
would apply to:
• all such goods manufactured or produced in Australia on or after 1 July 2023
(being the date the Bill would commence); and
• all such goods manufactured or produced in Australia before 1 July 2023, being
goods that:
i. on 1 July 2023 were subject to the Commissioner of Taxation's control or
were in the stock, custody or possession of, or belonged to, a manufacturer
or producer of the goods; and
ii. on which no duty of Excise had been paid before 1 July 2023.
Item 1
18. Item 1 would repeal existing section 6L of the Excise Tariff Act.
19. Section 6L of the Excise Tariff Act had the effect of temporarily reducing the rate of
Excise duty payable on the manufacture or production in Australia of the goods listed in
item 15 of the table in the Schedule between 30 March 2022 and 28 September 2022
(inclusive). This was part of the temporary halving of Excise duties on fuel during 2022
to respond to cost of living pressures.
20. As the 28 September 2022 has now passed, the temporary reduction in fuel excise is no
longer in effect. As such, section 6L of the Excise Tariff Act is now spent and can be
repealed.
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Item 2
21. Item 2 would amend the third column (titled rate of duty) in existing sub-item 15.1 of
the table in the Schedule of the Excise Tariff Act to repeal the existing rate of duty and
substitute a new rate of $0.142 per litre.
22. The effect would be to increase the rate of Excise duty on the manufacture or production
in Australia of the goods listed in sub-item 15.1 from 8.5 cents per litre to 14.2 cents per
litre.
Item 3
23. Item 3 would amend the third column (titled rate of duty) in existing sub-item 15.2 of
the table in the Schedule of the Excise Tariff Act to repeal the existing rate of duty and
substitute a new rate of $0.142 per litre.
24. The effect would be to increase the rate of Excise duty on the manufacture or production
in Australia of the goods listed in sub-item 15.2 from 8.5 cents per litre to 14.2 cents per
litre.
Item 4
25. Item 4 would amend the third column (titled rate of duty) in existing sub-item 15.3 of
the table in the Schedule of the Excise Tariff Act to repeal the existing rate of duty and
substitute a new rate of $0.142 per kilogram.
26. The effect would be to increase the rate of Excise duty on the manufacture or production
in Australia of the goods listed in sub-item 15.3 from 8.5 cents per kilogram to 14.2
cents per kilogram.
Item 5
27. Item 5 would amend the third column (titled rate of duty) in existing sub-item 15.4 of
the table in the Schedule of the Excise Tariff Act to repeal the existing rate of duty and
substitute a new rate of $0.142 per kilogram.
28. The effect would be to increase the rate of Excise duty on the manufacture or production
in Australia of the goods listed in sub-item 15.4 from 8.5 cents per kilogram to 14.2
cents per kilogram.
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ATTACHMENT A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Excise 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 (the Excise Tariff Act) and the Customs Tariff Act 1995.
The Bill would make minor amendments to the Excise Tariff Act to increase the rate of duty
on the manufacture of petroleum-based oils and their synthetic equivalents, so as to return the
PSO Scheme to fiscal neutrality.
Assessment of Compatibility with Human Rights
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
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