Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

There are a couple of major issues facing Australia which nicely intersect and which the government has the means to positively improve without imposing a heavy-handed tax on an unsuspecting public. These issues are carbon pollution reduction and lubricating oil supply. A carbon tax will not reduce global temperatures by one degree nor decrease sea levels by one millimetre. But positive measures such as that proposed by this side of politics, and one I am about to explain in more detail, will reduce Australia's carbon footprint.

With the closure of the Kurnell lubrication oil plant, Australia now must import 90 per cent of its lubrication oil. This issue has been raised by senior Labor figures such as Paul Howes as a serious sovereignty concern. Lubrication is vital to a productive modern economy. Lack of lubrication is the main failure mode of all plant and equipment. It is an essential component of every machine. Without it our mining and industrial sectors would grind to a halt, not to mention the impact on anyone who drives a car, takes a bus or a train. Without a reliable local source of supply we are exposing our economy to risk. This risk is compounded by the fact that if you believe that we have reached peak oil, as the Greens assert, then oil supplies will start to decline in coming years.

Fortunately there are still two manufacturers of lubrication oil left in Australia. Both of these facilities exist because of the Product Stewardship (Oil) Act, also known as the PSO. This act was passed by the federal parliament in 2001. The act allows for a levy to be collected from the consumers of all new oil lubrication products sold in Australia. The money is collected by the Australian Taxation Office and the scheme is administered by the Department of Sustainability, Environment, Water, Population and Communities. Funds are paid out of the scheme to encourage the collection and recycling of used oil. By all measures the scheme has been operating successfully. Since the scheme's inception, collection rates have increased from 40 per cent to 60 per cent of all oil sold and two re-refineries have been built

Re-refining of used oil provides significant environmental benefits. The chief amongst these is a substantial reduction in carbon pollution. It is estimated that Australia could reduce its greenhouse footprint by 600,000 tonnes per year if all the used oil currently collected was re-refined. That figure does not include the carbon pollution produced from digging up the crude oil overseas, transporting it to an overseas oil refinery and then to Australia. Add this into the equation and you are talking about savings in the order of millions of tonnes per year. The solution to positively address two significant issues for our country is within our control. With some minor modifications to the PSO, the government would create the conditions to encourage greater investment in re-refineries to secure local supply of a vital commodity, produce significant environmental benefits and help insulate Australia against the impact peak oil will have on us in the future.

On 7 April this year, I visited the Australian owned Southern Oil Refineries in Wagga Wagga and its re-refinery situated at the progressive Bomen industrial business park. It was great to see things in action. I came away with small sample bottles of used oil and base oil. These illustrate the beginning and end process of the refinery's unique used oil re-refining process. Used oil is collected from service stations, fleet workshops and industry. It is contaminated with water, sludge, soot and fuels. It looks like a thick product in the bottle and is black in colour. The base oil features complete removal of contaminants and is even more stable than virgin base oils. It is ready for blending with additives for superior performance. Almost unbelievably, it is the same colour as oil you would purchase from the supermarket.

I was shown around this facility by the managing director Tim Rose, refinery manager David Onions and Jennifer Parsons, the director of J.J. Richards and Sons. This refinery produces a large range of base oil products, all manufactured from previously used lube oils rather than crude oil as at traditional oil refineries. The re-refinery also produces a range of fuels and oils as by-products. Southern Oil Refineries manufacture two grades of group 1 oil for a wide range of hydraulic oil and lubrication oil blending applications. Tests have demonstrated that these oils are at least as good as, and in some specific ways better, than base oils made from crude oil.

One of our 2010 election priorities was for incentives to be provided for more widespread use of alternative fuels and renewable energy. If we expect Australians to change their attitudes and take practical measures against dangerous climate change—as those on that side hysterically term it—then the government should be setting an example, not placing yet another unnecessary tax on ordinary, everyday, hardworking Australians. (Time expired)