Josh Wilson (Fremantle, Australian Labor Party, Shadow Assistant Minister for the Environment) Share this | Link to this | Hansard source

I'm glad to speak in support of the Product Stewardship (Oil) Amendment Bill 2020 and I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House notes the Government's slow and inadequate delivery of meaningful regulatory reform for domestic waste management and product stewardship".

The PSO Act, which this bill amends, is important because it helps achieve the recycling of some 300 megalitres each year of what would otherwise be waste oil and pose risks to the environment. At the outset, I make it clear that Labor will be supporting this bill because it fixes a deficiency in the existing law, a deficiency that has the potential to cost the Commonwealth and therefore the taxpayer a lot of money in the future. Indeed, it has already cost the taxpayer some $8 million. I'm not sure that the loss of that money from the taxpayer to the Caltex oil company is something we should be all that comfortable with, but I'll return to that in due course.

In essence, this bill amends the existing act to improve the legislative definition of 'oils' so it applies only to lubricant oils, fluid oils and other oils and greases manufactured from base oils and to make some corresponding changes to the Excise Tariff Act. That will hopefully mean that the scheme established under these laws can return to normal operation, providing an incentive mechanism through a levy and benefit payment combination to encourage the recycling of non-combustible oils. These changes are being made in response to last year's Federal Court decision, Caltex Australia Petroleum Pty Ltd v Commissioner of Taxation, which overruled the tax commissioner's decision to disallow Caltex from claiming benefits under the scheme for the recycling and the subsequent sale of contaminated diesel. As a result, Caltex was successful in receiving an $8 million benefit payment from the Commonwealth. These amendments that we're dealing with here are absolutely necessary in order to close a legislative loophole that might otherwise allow further claims and further losses. We're supportive of the bill on that basis, and I'm grateful to the assistant minister for his engagement on the legislation and for the departmental briefings he made available.

For the benefit of the public, it's worth noting that the term 'product stewardship' refers to the very sensible idea that a producer should take some responsibility for the life cycle and impacts of their product, especially in relation to what happens when it's no longer useful and needs to be disposed of. Where the disposal of a product has inherent risks in terms of damage to the environment or harm to human health, there should be no question about the requirement for producers to take some responsibility to make sure that doesn't occur. Unfortunately, the fact that this idea would strike almost anyone as being utterly sensible doesn't mean that such demonstrations of responsibility are par for the course. In fact, there are lots of examples where products have been developed with no particular regard or provision for the safe end-of-life reuse, recycling or disposal of these products by companies that have made a profit without accounting for any related impacts or costs. And there are costs. Notwithstanding the fact that those costs and impacts fall directly or indirectly on the community, on all of us, the practice of product stewardship has been rare, which is unfortunate.

Without an effective concept of product stewardship, what do we tend to see? We see products designed and provided in a way that gives little thought to and takes little care of what happens when the product is done with. It means producers don't care about and certainly, in some cases, don't take responsibility for the disposal of their product. That means they don't take responsibility for the environmental and health consequences, where that's relevant, and certainly they don't take responsibility for the waste and resource management costs—because, of course, there are costs involved in even the most benign forms of waste. In many cases, there are also health and environmental impacts. We know that, currently, each year, some 10 million tonnes of plastic waste go into the ocean. Microplastic is accumulating in marine birds and fish. Inevitably, it will be accumulating in us. This scenario—and there are many like it—is a market failure. It's a failure of corporate social responsibility.

The former Labor government began to address these kinds of market failures in the waste and resource management space by introducing product stewardship laws and related schemes in 2011. It's certainly time for us to take that framework forward, to expect more of producers and to ensure we're achieving much better outcomes in terms of waste avoidance, reuse, recycling and related manufacturing. So far, under this government, we've not gone very far down the path. I know that there are some reforms coming in the parliamentary weeks ahead, and we look forward to debating those in this place.

In the case of this bill, it amends a law that established the scheme to encourage the sensible recycling and safe disposal of non-combustible oils through a levy and benefit payment arrangement, as I've described. Basically, everyone pays a levy on the relevant oils, and then, when you ensure the oil is recycled, you can recoup the levy in the form of a benefit payment. Since the scheme's introduction, we've gone from a situation where basically zero oil of the kind covered was recycled to the situation now where more than 320 megalitres are recycled and properly disposed of each year. That's more than half of the total volume.

This bill isn't, unfortunately, a further instalment or a genuine expansion of our product stewardship arrangements, but it's important because it fixes a shortcoming or a loophole that has emerged in the current framework. While the intention of the law, and the scheme it creates, is clearly to deal with non-combustible oils—and while that's a matter of commonsense, to the extent that oils that combust don't present the same kind of disposal issue—it wasn't written in a way that effectively excluded combustible oils. How do we know that? We know it because the Caltex oil company came to the view that it could apply for a benefit payment in relation to diesel fuel. As part of its operations, it used diesel as a kind of cleaning agent in flushing out crude oil from tanks and pipes. The diesel was then cleaned through a further process that allowed it to meet Australian standards and be sold as fuel. But because, in Caltex's view, this could be seen as a kind of recycling, they decided to seek for the first time a benefit payment from the Australian tax office.

There isn't any doubt that the Product Stewardship for Oil Scheme was not established to cover diesel fuel in this way and that the relevant levy is not charged or paid in relation to diesel, which has its own excise arrangements. I think it's quite understandable and I think the public would find it understandable that Caltex was initially rebuffed by the Australian tax office when it sought a benefit payment, but the company decided to take the matter to the Federal Court, and they won. That means they received $8 million from the Commonwealth. As far as I'm aware, no other company in a similar line of business has sought to pull that trick.

Labor has, in examining this bill, sought some information from the government and from elsewhere about whether consideration was given to how the money might be recouped from Caltex. If the definition of 'oils' within the act is wide enough to allow Caltex to claim the benefit, it seems to follow that the government could also apply the relevant levy to the same quantity of diesel and thereby perhaps recoup the funds in the opposite direction to the way the scheme is supposed to work. The advice we've received is simply that this approach wasn't considered likely to succeed. We've asked some questions in trying to better understand whether all the options were explored and why any of those options, if they existed, weren't pursued. That's something for the government to explain.

I want to briefly raise the issue of Caltex's approach in this matter. It's not clear to me why Caltex pursued this payment. I think it's a very reasonable question to ask, and we don't yet have the answer to that question.

Debate interrupted.