Tuesday, 25 August 2020
Product Stewardship (Oil) Amendment Bill 2020, Excise Tariff Amendment Bill 2020; Second Reading
I'm glad to speak in continuation in support of the Product Stewardship (Oil) Amendment Bill 2020, the Excise Tariff Amendment Bill 2020 and the amendment that's been moved in my name.
These bills deal with the Product Stewardship for Oil Scheme. There are two pieces of legislation that give effect to that scheme. It's a scheme designed to see non-combustible oils recycled. If that didn't occur, those oils would be at risk of contaminating the environment. They present a risk to the environment and to human health to some degree, so it's right that we have product stewardship arrangements in place that encourage producers to take responsibility for those oils. Since it was introduced in 2011 by the former Labor government, it's been a very effective scheme. Prior to that time, there was effectively no recycling of non-combustible oils. It's now the case that some 320 megalitres of oil get recycled and properly disposed of each year. That's about half of the total volume of such oil, so it's a very good community, environment and public health outcome.
The reason we are dealing with these bills is that a deficiency has emerged in the scheme and in the legislation that gives effect to the scheme. That became apparent last year when Caltex, soon to be Ampol, decided to see if it could receive a benefit payment under the scheme that it hadn't previously received. In fact, no similar entity had previously sought the kind of benefit that Caltex was interested in pursuing. The scheme works as a levy and benefit payment combination. There's a levy that is applied to all of the relevant oils, and then, when you, as a producer, achieve the proper recycling of the relevant oils, you can claim the benefit payment. So the scheme washes its own face, as some say.
In this case, Caltex believed that a definitional looseness within the legislation might allow them to claim the benefit payment for diesel. They use this diesel to clean pipes and tanks of crude oil. They then put the diesel through a cleansing process and are able to make it reach the Australian standards that allow it to be sold as fuel. It doesn't have the levy applied to it, ordinarily, so it's clearly outside the scope of this scheme. But they came to the view that the law wasn't drafted sufficiently tightly to exclude them from the benefit payment, and they sought that benefit payment. They were initially rebuffed by the Australian tax office, as we might expect. They then pursued it in the courts. The Federal Court found that there was this loophole, and so they received $8 million—$8 million of Commonwealth money; $8 million of taxpayers' money—that is, on any analysis, outside of the intention and purpose of that scheme. Whether there was any opportunity for the Commonwealth to recoup that money is not entirely clear. The government has advice that suggests it couldn't do that, even by the amendments that we are considering in this legislation. I think that's a great shame. I know that my colleague and friend the member for Mackellar will be making a contribution in the debate. He has an interest, in his role as the Chair of the Standing Committee on Tax and Revenue—and just a general interest, I'm sure. The fact that $8 million of revenue has been lost from the Commonwealth in this instance should be a matter of interest and concern to everyone. I assume that he will speak about that.
I want to briefly raise the issue of the approach that Caltex Ampol have taken. I'm not sure why they pursued this benefit payment. Nothing in the briefings or the material that has been shared by the government in relation to these bills makes it clear why they did that. That company would know that it's not the purpose for which the scheme was established. They'd never previously sought a benefit payment. Other companies have not sought that payment. Caltex apparently support the change we are making here to ensure that this doesn't happen again, but they made no submission to the Senate inquiry into these bills. So, unless something very strange is going on, it's pretty clear that the Caltex Ampol business model doesn't depend on this benefit payment, and they mustn't believe it's a payment they deserve going forward. Why did they seek it in the first place? We don't know. It seems the answer is that they thought that they could, that some clever person—or clever-clever person—figured out that this was a loophole that they might be able to exploit. We know the Federal Court found that they're legally entitled to the payment. They are legally entitled to it, but does that make it right? I'm not sure that it does.
I think most people in Australia understand the distinction between the letter and the spirit of the law. Most of us understand that there might be something you can get away with for your own benefit but you wouldn't do that if it was to the detriment of the community as a whole. In this case, it seems that Caltex Ampol have come to the view that they can help themselves to $8 million of taxpayers' money through a legal manoeuvre that is clearly outside the sensible public purpose of the law in question. That's what we have to fix with these bills. I've not heard anything that explains why Caltex thought this was a justified course of action. I've not heard anything that explains how using a loophole to get $8 million of taxpayers' money is consistent with the spirit of the law in question, which is designed to achieve the effective recycling of what would otherwise be toxic, environmentally harmful oil. I'm not sure how Caltex's course of action is in keeping with corporate social responsibility or with the Australian sense of fairness.
On its website, Caltex lists five key corporate values, and the fifth one is:
Never stop caring
Act with integrity, constantly challenge each other to be better and always be safe.
I'm not sure how much integrity there is to be found in exploiting a loophole to enrich yourself at the expense of the Commonwealth. The company also describes itself as 'proudly Australian'. It says:
We're a business that's proudly Australian and our commitment has never been more focused on playing a leading part in our country's future.
I'm not sure how comfortably the conduct we're addressing with the passage of this legislation sits with that sentiment. Eight million dollars is a lot of money. It might not seem like a lot of money when you're a $10 billion corporation. I can tell you that, in the world of public and community services and related funding, it's a lot of money. On that basis, I do believe that Caltex Ampol should reflect on their conduct. If there's something I'm missing, something the government is missing, that explains why exploiting a loophole to help yourself to $8 million that you've never before received—and none of the other companies in the fuel-refining and retail business have ever sought or received—is a form of honourable conduct, then I guess that's for Caltex Ampol to explain. They haven't so far, and it doesn't look like that.
I'd make the general point that we—all of us, especially in this place—need to be very careful that we don't go along with a kind of moral whitewashing when it comes to corporate conduct that seems highly technical and occurs through clever accounting ploys and legal manoeuvres but is, in effect, not any different from an individual realising that they can get something they don't need, that they don't really merit, at the expense of the community's best interests and with the loss of its commonwealth.
In another area of Australian life, if a person found a loophole in a legal definition so they could claim single-parent payments when they weren't a single parent or a disability payment when they didn't have a disability, we wouldn't be sanguine about that. We wouldn't say, 'That's clever; good on you for figuring that out and going down that path.' I'm pretty sure I know how that would be treated in the mainstream media. So I do hope Caltex Ampol gives this matter some further consideration and provides an explanation, if there is one. If there's a good reason why they sought and received the payment, they should say so. If there isn't a good reason, and the only reason is that they thought there was a tricky legal loophole they could exploit to the tune of $8 million, I really hope that the company leadership would consider doing something different now, doing what I would regard as the right thing now.
Eight million dollars is a lot of money, when it comes to funding our healthcare needs, our aged-care needs, our recovery from bushfires, our efforts to do more to address homelessness and domestic violence, especially in the circumstances we currently face. If Caltex Ampol isn't convinced about the rightness of seeking and receiving that benefit payment—I'm not talking about the legality; I'm talking about the rightness of it—I'm sure there are courses of conduct open to them that would put that right. There are a lot of organisations in Australia that could benefit from a show of corporate responsibility, that would be quite different from what Caltex seems to have done to date. In my view, and I'm confident it would be the public's view, any company that took such a course would be thanked for that. It would be to their credit.
In conclusion, Labor supports these amendments bills. They're necessary to ensure that the product stewardship scheme, in relation to the recycling and proper disposal of oils, works as it was intended to work and to prevent the recurrence of a significant loss of taxpayers' money that, on the facts, as we understand them, probably shouldn't have occurred in the first place.
The original question was that this bill be now read a second time. To this, the honourable member for Fremantle has moved as an amendment that all words after that be omitted with a view to substituting other words. Is the amendment seconded?
I'd like to thank my friend the member for Fremantle for pointing out how successful this scheme has been and what great community good it has done. The excise levies amendment is an important step in cutting red tape and standardising sheep and lamb legislation. The livestock industry contributes upwards of $4.5 billion to the economy each year and employs nearly half a million people. Australia is the largest exporter of sheepmeat in the world and the second-largest exporter of lamb and mutton in the world, with over 31,000 agricultural businesses involved in the red meat and livestock industry.
The amendment is an important step in creating a consistent regulatory framework and making life easier for farmers who have been doing it tough. With recent droughts, fires and, more recently, COVID-19, as the party of responsible economic management, small business and a fair go, this legislation is part of a broader vision to create a more competitive industry. Reducing the regulatory burden on farmers is a critical step for an industry that so many Australians and rural communities rely on. As food security continues to be an important issue for our region, the agricultural sector is of particular strategic importance. By supporting our farmers, we are backing a powerhouse industry that has defined our nation for generations.
As part of this government's commitment to cutting red tape and implementing smarter regulation, we are working to support businesses by streamlining regulatory compliance. It is a sad legacy that the bureaucracy of this country has a history of disadvantaging small businesses. This bill works to resolve this issue by unifying definitions across multiple pieces of legislation. Many Australian industries are globally competitive but are hampered by chronically poor and inconsistent regulation. When so many Australians are relying on us to get this right, especially as we emerge from COVID-19, complacency is no longer an option when it comes to our regulatory framework. This amendment reflects our belief in smarter regulation, not just more regulation, which cuts compliance costs and makes doing business in Australia easier. All too frequently, bureaucrats with no industry or business experience are making regulatory requirements that are completely out of step with industry and end up costing jobs and taxpayers money. Rebuilding our economy in the wake of COVID-19 will not be done from the ivory tower of Capital Hill in Canberra but from hardworking Australians starting businesses, innovating and getting ahead.
The agricultural industry has a deep legacy in the history of our country and remains crucial for our national economy. Whilst a lot of attention is given to the tech space, one of the areas Australia can excel at is the agritech sphere, which will be of growing importance, given increasing biosecurity risks across the world. As food security remains a growing concern across the world, Australian farmers not only provide us with an important guarantee for the future of our food security but also enable us to help those in need. That is why amendments like this are so important. They help Australian farmers spend time doing what they do best.
The nature of this legislation is in updating the definition of 'lamb' to keep it in line with other definitional changes that have subsequently taken place in other bills. When there are two definitions for what constitutes a lamb then we can begin to understand the Gordian knot that is Australian bureaucracy. The new definition will be standardised across multiple pieces of—
Oh, okay. Well, as I said, Mr Speaker, the bill goes to some of the conflicts of definitions across multiple pieces of legislation. In unifying it, it should have the purpose of making it easier for industry to manage itself across different levies and charges.
Okay. The way levies are calculated is linked to the classification of the animal as a lamb, with different levies being paid, depending on the maturity of the sheep. When there are multiple definitions for what a lamb is with, and with the levies linked to this definition, it is not surprising that confusion can often lead to incorrect levies being paid. Given the margins that many of these businesses operate on, spending on additional levies that do not need to be paid is not only a gross waste of time but is hindering these employers from hiring more staff.
Our agricultural export industry remains strong, not because of our regulatory environment but frequently in spite of it. That is why the Australian government, at the request of agricultural industry bodies, is changing the definition, after extensive consultation. These definitional changes were also reflected in the industry's AUS-MEAT trade description language and were mirrored in amendments to legislation at the state and territory level, where relevant.
The fact of the matter remains that all too often the vision of a big government which is highly involved continues to pervade much of our Public Service. Government is not the solution to the challenges that this nation faces but more frequently the root of the problem itself. The nations that excel in the 21st century will not be those that have a large public service that tries to tell entrepreneurs how to run their businesses but those that give maximum freedom for innovation. Regulation should always be for minimum standards and levels of protection. We cannot allow ourselves to fall into the trap of thinking government has the capacity to solve our problems. History has shown us that it quite simply cannot.
This bill will ensure the intent and wishes of the sheep- and meat-processing industries are reflected in the definitions which are relied upon for the payment of levies. Current estimates presently indicate that this change will not result in a significant revenue impact on the government's budget. The other advantage of simplifying regulations is the ease with which government departments such as the Department of Agriculture, Water and the Environment are able to process and reconcile payments. Given that this department is frequently tasked with resolving issues when incorrect payments occur, streamlining this process should result in taxpayer money being used more effectively, as they can focus on implementing new initiatives rather than dealing with the fallout of poor policy. The funds raised through these levies are subsequently invested back into the agricultural industry, giving added reason why these funds should be spent on the research and innovation they are earmarked for, rather than funding compliance measures. The revenue is also used for marketing, animal health programs—
Member for Mackellar, I'm not trying to be difficult, but, having listened to you again, I note that these two bills don't—unless you can convince me otherwise—deal with levies. Again, I'm not trying to be difficult, and there is some tolerance in the debate. The first bill deals with oil—
Okay. Thank you.
Mr Clare interjecting—
I thank the member for Blaxland for his encouragement! As a government, we are placing a priority on doing what we can today to help farmers in this challenging economic climate. Whilst we anticipate that the macroregulatory reforms will create a stronger agricultural industry which is more competitive in the international market, it is clear that there is a need to act now, where we can, to help ease the regulatory burden for farmers as a priority industry. We will continue to deliver on our commitment to cutting red tape to support our businesses. For these reasons, I commend this bill to the House.
I would like to thank honourable members who have contributed to the debate on the Product Stewardship (Oil) Amendment Bill 2020 and the Excise Tariff Amendment Bill 2020, and I commend the bills to the House.
The Product Stewardship (Oil) Act is a proud environmental legacy of the coalition. It was Australia's first federal product stewardship law, created by the Howard government, and it's served as a successful model for our product stewardship initiatives around Australia since its inception 20 years ago. The scheme achieves significant environmental protection and significant economic outcomes, including productive manufacturing jobs and the creation of valuable new products by way of recovering and recycling the old used waste oil. In fact, the Product Stewardship for Oil Scheme typifies the circular economy in action. Under the scheme, Australia's oil recyclers collect and recycle used waste oil from almost 50,000 businesses and workplaces—places like mechanics, car dealerships, factories, service stations and heavy industry. It's a highly successful program that these days collects and recycles approximately 300 million litres of waste oil every year, and it turns that dirty used oil back into new, high-grade oil based products that can be used a second time in our cars and in other industrial processes.
The scheme has grown to the point where it now supports 11 oil-recycling facilities all around Australia, directly employing about 600 Australians and indirectly supporting thousands more. When we consider how, when we get our car serviced, the oil change produces about four or five litres of dirty used oil and that just one of those litres could contaminate up to a million litres of river water or groundwater, it really reinforces the critical role that this scheme has been playing in protecting our environment and our precious waterways.
Earlier this year some of Australia's oil recycling facilities began to shut down as the pandemic took hold due to the closure of overseas ports where we export a significant proportion of our recycled oil as well as to various issues around storage and the challenges faced by the collectors and their trucking and logistics chain. Our government stepped in quickly to provide approximately $7 million to support this critical sector and our local oil-recycling jobs through our COVID-19 Relief and Recovery Fund. So I'm pleased to see that, so far, we've avoided mass shutdowns of these facilities during the pandemic. I am especially pleased, of course, to see that the dirty oil is still being frequently collected all around Australia and to know that it isn't building up out the back of mechanics and factories, where there could ultimately be a risk of it getting dumped into waterways or the environment. I've been to visit a number of the oil-recycling facilities around Australia, including the biggest in the country, which is at Gladstone, and the one at Narangba just north of Brisbane. The facilities support an interesting and wide variety of jobs, including technical and high-end manufacturing jobs. All of the employers that I've met during those visits are doing fantastic work. They are very passionate about what they are doing and achieving every day when they go to work, as they should be.
Our government has also brought forward our next scheduled review of the oil product stewardship scheme. Hopefully we can compete that review by the end of the year. That way we can ensure that the entire oil-recycling industry here in Australia is on a sustainable long-term footing and can continue to grow and succeed for the next 20 years of its journey. As I mentioned, that's important not only for the sake of the industry and the jobs it supports; it's equally important for the environmental protection that the scheme achieves.
I'd like to thank those opposite, including the shadow assistant minister, for their broadly constructive approach towards these bills and for recognising that legislative reform is required at this time to close a loophole and to ensure that the scheme continues to operate in the way its drafters intended. As outlined in the explanatory memorandum, these bills are intended to address the implications of the recent decision of the Federal Court in Caltex Petroleum v Commissioner of Taxation by amending the definition of oils in the Product Stewardship (Oil) Act to ensure the scheme applies to lubricant oils, fluid oils and other manufactured oils and greases and excludes diesel and other fuels. Similarly, to ensure legislative consistency, we are amending the Excise Tariff Act to narrow the scope of petroleum based oils and synthetic equivalents for which excise duties are imposed for the purpose of the Product Stewardship (Oil) Scheme to exclude diesel and other fuels. These amendments are necessary to ensure consistency with changes to the definition of oils made in the Product Stewardship (Oil) Amendment Bill 2020 and to ensure no excise duty can be imposed on diesel under the scheme. The amendments to the Product Stewardship (Oil) Act will apply to claims for recycled oil sold or consumed from the day of introduction of the Product Stewardship (Oil) Amendment Bill into the House of Representatives, and the amendments to the Excise Tariff Act will similarly apply in relation to goods entered for home consumption from the day the Excise Tariff Amendment Bill is introduced.
I'd like to again thank those members who have contributed to the debate on these bills, and I commend the bills to the House.
The original question was that this bill be now read a second time. To this the honourable member for Fremantle has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question. There being more than one voice calling for a division, in accordance with standing order 133 the division is deferred until after the discussion of the matter of public importance.