House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP and the Minister for Immigration and Border Protection, the Hon Scott Morrison MP)

Glossary

The following abbreviations and acronyms are used throughout this explanatory memorandum.

General outline and financial impact

Changes to the Product Stewardship for Oil Scheme

The Excise Tariff Amendment (Product Stewardship for Oil) Bill 2014 and the Customs Tariff Amendment (Product Stewardship for Oil) Bill 2014 amend the Excise Tariff Act 1921 and the Customs Tariff Act 1995 to increase the excise and excise-equivalent customs duty on new and recycled petroleum-based oils, greases and their synthetic equivalents from 5.449 cents to 8.5 cents per litre or kilogram.

Date of effect: The amendments apply from 1 July 2014.

Proposal announced: This measure was announced by the Treasurer in the Budget on 13 May 2014.

Financial impact: The measure is estimated to result in a gain to revenue over the forward estimates period of $79 million comprising:

Human rights implications: These Bills do not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 1, paragraphs 1.11 to 1.14.

Compliance cost impact: The changes to the Product Stewardship for Oil Scheme result in low transitional compliance costs for affected manufacturers and importers.

Chapter 1 - Changes to the Product Stewardship for Oil Scheme

Outline of chapter

1.1 The Excise Tariff Amendment (Product Stewardship for Oil) Bill 2014 (ETAPSO 2014) and the Customs Tariff Amendment (Product Stewardship for Oil) Bill 2014 (CTAPSO 2014) amend the Excise Tariff Act 1921 (ETA 1921) and the Customs Tariff Act 1995 (CTA 1995) to increase the excise and excise-equivalent customs duty on new and recycled petroleum-based oils and greases and their synthetic equivalents (Oils) from 5.449 cents to 8.5 cents per litre or kilogram.

Context of amendments

1.2 The purpose of the Product Stewardship for Oil (PSO) Scheme is to encourage the recycling of Oils. The scheme is funded by imposing excise and excise-equivalent customs duty on certain oils and greases. To encourage re-use and recycling of Oils, stewardship benefits, or rebate payments, are provided for activities that re-use or recycle Oils.

1.3 The PSO Scheme is currently operating at a deficit and the size of the deficit is expected to increase as a significant amount of re-refining capacity comes on-line.

1.4 Amendments to the regulations are being made to increase the rate of the rebate for Oils that cannot be recycled and have a low environmental impact (gazetted oils) from 5.449 cents to 8.5 cents per litre.

Summary of new law

1.5 The ETAPSO 2014 and CTAPSO 2014 increase the rate of excise and excise-equivalent customs duty applying to Oils to 8.5 cents per litre or kilogram to address the cost of the PSO Scheme.

1.6 The change to the rate of duty applies to Oils that are entered for home consumption on or after 1 July 2014, whether manufactured in Australia or imported into Australia.

Comparison of key features of new law and current law

Detailed explanation of new law

1.7 The ETAPSO 2014 and CTAPSO 2014 amend the ETA 1921 and the CTA 1995 to increase the rate of excise and excise-equivalent customs duty for Oils to 8.5 cents per litre or kilogram. This increases the rate of duty by 3.051 cents per litre or kilogram. [ Schedule 1 of ETAPSO 2014, item 1, table subitems 15 . 1 to 15 . 4 of the Schedule to the ETA 1921, Schedule 1 of CTAPSO 2014, items 1 to 103, Schedules 3 to 9 of the CTA 1995 ]

Application and transitional provisions

1.8 The amendments to the rates of excise in the ETA 1921 apply to Oils that are manufactured or produced on or after 1 July 2014. It also applies to goods manufactured or produced in Australia before 1 July 2014 which had not been subject to excise duty before this date. [ Schedule 1 of ETAPSO 2014, item 2 ]

1.9 The amendments to the rates of excise-equivalent customs duty in the CTA 1995 apply to goods imported into Australia on or after 1 July 2014. It also applies to goods imported into Australia before 1 July 2014 which had not been subject to excise-equivalent customs duty before this date. [ Schedule 1 of CTAPSO 2014, item 104 ]

1.10 The amendments to the rates of excise and excise-equivalent customs duty commence on 1 July 2014. [ Clause 2 of ETAPSO 2014, Clause 2 of CTAPSO 2014 ]

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) Bill 2014 and Customs Tariff Amendment (Product Stewardship for Oil) Bill 2014

1.11 These Bills are 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.

Overview

1.12 The Excise Tariff Amendment (Product Stewardship for Oil) Bill 2014 and the Customs Tariff Amendment (Product Stewardship for Oil) Bill 2014 increase the excise and excise-equivalent customs duty applying to petroleum-based oils, greases and their synthetic equivalents from 5.449 cents to 8.5 cents per litre or kilogram.

Human rights implications

1.13 These Bills do not engage any of the applicable rights or freedoms.

Conclusion

1.14 These Bills are compatible with human rights as they do not raise any human rights issues.

Index

Schedule 1: Amendments (Excise Tariff Amendment (Product Stewardship for Oil) Bill 2014)

Schedule 1: Amendments (Customs Tariff Amendment (Product Stewardship for Oil) Bill 2014