Andrew Leigh (Fraser, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

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 condemns the government for eroding market based incentives to protect the environment."

I will return to the specifics of that second reading amendment after briefly outlining the purpose of this bill.

The Excise Tariff Amendment (Product Stewardship for Oil) Bill 2014 will increase the rate of excise and excise equivalent customs duty applying to oils from 5.449 to 8.5 cents per litre or kilogram to address the cost of the Product Stewardship for Oil Scheme. The kinds of oils to which this would apply, as I understand, are oils like kerosene, turpentine and thinners.

The opposition supports any move to ensure thoughtful and sustainable use of our precious natural resources. The Product Stewardship for Oil Scheme—the PSO—encourages increased collection and recycling of used oil in Australia by providing oil recyclers with product stewardship benefits.

But unfortunately, the government's commitment to protecting our natural environment does not extend much further than tokenistic gestures. The government simply has no credibility when it comes to the environment. In fact, the member for Batman beside me will sometimes interject when the Minister for the Environment jumps to his feet, 'He's not the Minister for the Environment! He's the Minister against the Environment!' A government that lacks a minister for science effectively lacks a minister for the environment.

That is why Australia is moving backwards on its reputation for protecting World Heritage icons and it is why the government has disallowed the endangered community listing of the river Murray from the Darling to the sea. Why don't we—against all reason, all advice and sneakily—have the world's largest marine reserve system re-proclaimed to undo the management plans to give them effect? They have begun the process of handing over environmental approval powers to the states, to give Campbell Newman control over the Great Barrier and Colin Barnett control over Ningaloo Reef. But worst of all, the government is moving backwards on climate change—moving from sound science and economic based approaches to approaches that will cost more and do less.

The key point of a carbon price is that it internalises the externalities—a terrific philosophy and, indeed, a philosophy that I see when I turned to the explanatory statements behind this bill on the Department of the Environment's website. On that site I see:

The levy offsets the costs of benefits paid to oil recyclers as an incentive to undertake increased recycling of used oil.

This ensures that some of the costs of used oil recycling are borne by the markets that gain the benefits from the production and use of that oil rather than from public monies and other markets. In economic terms, it internalises the externalities—a terrific idea. If only this government could do it not only for oils but also for carbon pollution. We know that Australia has a carbon price which is working well. It is not an economy-wide carbon price as some of those opposite would have you believe. It covers about 60 per cent of domestic emissions, excluding largely agriculture and transport.

But the electricity sector, the industry most directly covered by the carbon price, has seen its emissions fall 7.6 per cent, 14.8 million tonnes, in the first year of the carbon price. So let no-one tell this House that the carbon price is not working already. And so much for $100-roasts and whale being wiped off the map. We have seen strong economic activity in the period since the carbon price was put in place. There are challenges to consumer confidence in retail sales at the moment but, in the immediate period after the introduction of the carbon price, there was no evidence that it was going to lead to the economic Armageddon that those in the coalition were suggesting. It is particularly ironic that we have a Treasurer who says in his budget speech:

I look at my children and I say there is no way on God's earth I am going to leave you with a debt …

Yet this desire for dealing with deficits has not extended to, for example, reducing the deficit, because compared to PEFO, as the member for Cook yesterday pointed out, the government has increased the deficit—this year, next year and over the forward estimates. But if you are focused on intergenerational equity, why on earth would you kick the can down the road on climate change? Why would you eschew a measure which, in economic terms, internalises the externalities? It is good enough for oils; it should be good enough for tackling climate change.

Standing beside President Obama, the head of the Environmental Protection Agency, Gina McCarthy, said recently:

This is 'not just about disappearing polar bears or melting ice caps. This is about protecting our health and our homes.

This is about protecting local economies and this is about protecting jobs. And that is exactly what a carbon pricing scheme does. It ensures that we get least-cost abatement and are therefore able to keep up with the rest of the world, which is moving significantly faster than us on climate change. We know now the United States is aiming for 17 per cent emissions by 2020. Australia will struggle to hit the five per cent emissions reduction target.

How are the United States doing it? Those opposite will have you believe that the United States are purely committed to direct action; President Obama loves nothing more than direct action. But of course President Obama's first option for dealing with climate change was to take a cap and trade bill, co-sponsored by John McCain, to the congress. That was killed off. Some of the more extreme elements of the Republican Party killed off his ideal cap and trade scheme. President Obama is now going to 'pivot', as he puts it, to a cleaner energy future via strict limits on carbon emissions from power generators and through cap and trade schemes that will place a commercial price on carbon permits.

As the shadow environment spokesman, Mark Butler, noted,

Tony Abbott's refusal to accept the magnitude of climate change is sending Australia backwards while the rest of the world moves forward.

As OECD Secretary-General, Angel Gurria, pointed out:

You make a more business friendly, labour friendly and greener friendly tax structure.

It was precisely what Labor did in government in introducing the carbon price. We put in place a scheme which increased the taxes on pollution and lowered the tax on work, because we wanted more opportunities for people to work but less carbon pollution and that is exactly the outcome we saw. The OECD Secretary-General has acknowledged, as the explanatory memorandum to this bills does, that in economic terms you want to internalise the externalities.

As the Prime Minister heads to the United States, he has been roasted by John Oliver on HBO's satirical news program Last Week Tonight. A part of that is his flip-flopping on issues of climate change. The Prime Minister, as the member for Wentworth has noted, has been a weather vane on climate change, has held every possible position on climate change. He supported what he called a carbon tax—'why don't we just deal with it with a simple tax'—not while he was at university but while he was a member of this House. Flipping again—the weather vane that he is—he said on 27 July 2009 on the 7:30 Report:

I am, as you know, hugely unconvinced by the so-called settled ... Atmospheric concentrations of carbon dioxide have significantly increased ... of industrialisation, but it seems that noticeable warming has only taken place between the 1970s and 1990s.

It would be news to the Prime Minister that 13 of the 14 hottest years on record have occurred since the year 2000. Australia has just had its hottest year on record. We have had the hottest winter on record. We have had the hottest summer on record and we have just seen record hot spells across Australia. So the climate deniers have the lie put to them by the Bureau of Meteorology. I know there are members of this House who think the Bureau of Meteorology is part of a great big conspiracy with NASA, CSIRO and some of those other wicked folks that have dreamed up climate science. But to serious public policy players, this is a serious problem that demands a solution. What kind of solution? A solution that, in economic terms, internalises the externalities. What solution is this government proposing? They are proposing a $40 billion slope. According to modelling by the Climate Institute, the Emissions Reduction Fund, if it is to do the job of just getting a five per cent emissions reduction target, would need to spend $40 billion by 2020. If the government spends less than that then, as a consequence, they will not even hit that five per cent emissions reduction target. So we will undershoot five per cent while the US gets 17 per cent.

What do experts think when they look at the government's Direct Action Plan? A survey by Fairfax's Matt Wade and Gareth Hutchens found that 33 out of 35 economists rejected the government's Direct Action policy. Internationally renowned economist Justin Wolfers of the Brookings Institution at the University of Michigan—I should disclose that Justin is a friend of mine—said that he was surprised that any economist would opt for Direct Action. BT Financial's Chris Caton said any economist who did not opt for emissions trading 'should hand his degree back'. When confronted with this sort of evidence in a survey of the Economic Society of Australia, Mr Abbott, in 2011, said: 'Maybe that's a comment on the quality of our economists rather than on the merits of argument.' The Prime Minister has never seen an expert that he did not want to trash-talk. He has never seen an expert committee he did not want to shut down.

There is of course some wisdom on the other side of the House, but you have to go back a while. You do not have to go back to 2003; no, you have to go back a long way before that. In order to get to the member for Flinders' thesis, you have to go back to 1990. Greg Hunt's thesis was titled A tax to make polluters pay: the application of pollution taxes within the Australian legal system. It argued that: 'A pollution tax is both desirable and, in some form, inevitable.' It noted that 'even if some Liberals'—and he got the apostrophe wrong but let's not worry about that—'constituents do respond negatively, a pollution tax does need to be introduced to properly serve the public interest.' It goes on to say:

Ultimately it is by harnessing the natural economic forces which drive society that the pollution tax offers us an opportunity to exert greater control over our environment.

There is the member for Flinders in 1990, making the same point that the explanatory memorandum makes. Let me quote from the explanatory memorandum again: 'In economic terms, it internalises the externalities.' If it's good enough for oil, it should be good enough for carbon pollution.

Alas, the member for Flinders has moved away from that position. He moved away from it surprisingly quickly. The parliamentary secretary was impugning my motives for shifting my view on a GP co-payment; I now take the view held by the Australian Medical Association and the Medical Journal of Australia. But the member for Flinders cannot find a single serious economist to back Direct Action. What was the point at which he changed—or, dare I say it, the tipping point? Of course it was the one-vote change in the Liberal Party room, from Malcolm Turnbull to Tony Abbott as leader of the Liberal Party.

There are now climate deniers run rampant. We have the Liberal member for Dawson, George Christensen, saying that 'a number of Liberals disagree that climate change is real'. The Prime Minister's chief business adviser, Maurice Newman, disagrees with 97 per cent of the world's scientists—apparently Mr Newman is a better judge of science than 97 per cent of the world's scientists—and he thinks there is no evidence of man-made climate change or of any climate change at all. The Direct Action is a policy that pays polluters to pollute, which is more expensive and which will not do the job.

We still do not have details about the policy. As the shadow minister for the environment has pointed out, we do not have the fundamental details of a policy which the coalition took to the last election. We do not know the penalties that would apply to overpolluters. We do not know anything about the government's so-called 'safeguard mechanism'. We do not know how contracts allocated under the Emissions Reduction Fund could be for a five-year period, as the government claims, off a four-year funding base. We do not know how we can have crediting periods under the Emissions Reduction Fund for three to 15 years with a financial commitment of four years. The Minister for the Environment, Mr Hunt, has not explained how Australia could meet its target without applying a cap on pollution. And he has not made it at all clear why polluters should participate, given that there is insufficient incentives and no indication of what the benchmark auction price should be.

Prime Minister Abbott should leave his Direct Action joke at home when he goes to the United States. While President Obama is taking action on climate change, hitting a 17 per cent emissions reduction target, Mr Abbott is running in the opposite direction with a policy that will not even achieve a five per cent emissions reduction. And to equate Direct Action with President Obama's Clean Power Plan, frankly, is to insult our American friends, who are fully aware that serious action on carbon pollution needs to involve a market based mechanism. I quote again from the explanatory memorandum: 'In economic terms, it internalises the externalities.'

This is a policy which is good for oils. The policy we are debating, this bill, the product stewardship for oil bill, will increase the levy for certain oils in order to encourage the use of recycled oils and encourage the increased collection and recycling of used oils. It will put a price on oils, which will achieve an environmental outcome. Let's take that policy and let's put it to work with carbon pollution. Let's internalise the externalities and let's actually make a difference to carbon pollution.

Mr Katter interjecting—

The member for Kennedy's constituents will be as affected by this as anyone else. The significant hit to the environment in Queensland could mean the destruction of the Great Barrier Reef, a great asset for future generations. This can be dealt with if the world moves on climate change. But, while President Obama is tackling climate change, Australia is a laggard. The philosophy that underpins this bill is a good one. It is a market based one, and I commend it to the House.

Nickolas Varvaris (Barton, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in favour of the Tariff Amendment (Product Stewardship for Oil) Bill 2014 and related bills. The Tariff Amendment (Product Stewardship for Oil) Bill 2014 seeks to secure the cost neutrality of the Product Stewardship for Oil Scheme, safeguarding the work that it has been doing in the fields of environmental sustainability and resource creation over the past 13 years.

It was the Howard government that introduced the Product Stewardship for Oil Scheme in 2001—a self-sustaining scheme that uses the revenue raised by excise and custom tariffs on petroleum based oil imports to pay for benefits ranging between 3c and 50c per litre to incentivise the recycling of used oil. In the months following the implementation of the scheme, rates of proper oil deposits by consumers was on the rise and a new industry in oil recycling and refining emerged. This demonstrates the effectiveness of the PSO scheme in providing significant incentives for the recycling of used oil.

The recycling and reuse of resources stimulates and diversifies the economy by carving out a space for re-refiners and recyclers of oils to provide an innovative service to the industry. The government has been pleased to watch a vigorous industry for the collection and sale of used oils emerge, especially in the eastern states. However, at the heart of the government's intent for the financial mechanism of the scheme was that the excise levy's purpose was to fully fund the benefit scheme, As the original intent for the scheme to finance itself has been breached, with the PSO running at a deficit, this bill seeks to increase customs and excise levies from 5.449c per litre or kilogram to 8.5c per litre or kilogram.

This increase to 8.5c per litre is in line with Aither's independent report to the government's recommendation that the levy be increased to at last 7c per litre or kilogram. It comes after PricewaterhouseCoopers' report in 2009 that the financial position of the PSO scheme had 'deteriorated' and that the excise would soon need to be increased. This measure is estimated to result in a gain to revenue over the forward estimates period of $79 million, bringing the scheme into a cost-neutral position and continue to provide significant, costed incentives for the recycling of used oil.

The PSO is a levy-benefit system, intended to finance itself by offsetting the cost of benefits with excises on imports. In this way, the oil industry in Australia finances its own risk management and removes significant health and environmental risks inherent in the improper disposal of oil. The cost of paying scaled benefits to recyclers has now outstripped the revenue the government secures by applying the excise and customs tariffs. The challenge that this places on the scheme is discussed in the third independent report to the government prepared for the Department of Environment in September 2013. That states that the review found:

A major structural imbalance in the levy-benefit arrangement that is resulting in current annual deficits, which will be compounded by known increases in re-refining capacity, and is financially unsustainable in the long term.

… surpluses generated by changes to levy-benefit arrangements could be redistributed towards investment in new or renewed collections infrastructure and more directly incentivising collections activity.

Annual deficits have partly been due to an increase in claims of the highest benefit scale, category 1, which pertains to large re-refining ventures. In consultation with the industry, government had concerns that category 1 claims were difficult to police and subject to frequent or even double claims. There may be further potential to tighten legislation around this area, but the increase in excise will mean that the scheme is not so financially vulnerable to sudden fluctuations or increases in particular categories of benefit claims.

According to the third independent report to the government, it is small to medium enterprises that are the biggest beneficiaries of this incentive scheme. The coalition has always prided itself on our commitment to the flourishing of small to medium enterprises, which is another reason why this bill is commendable in securing beneficial economic schemes like the PSO. My own electorate of Barton is host to a resource recovery centre administrated by SITA in Rockdale—an innovator and job creator in the area. The recovery centre provides residents and commercial bodies with a safe and environmentally responsible means of disposing of their household or business oil, which is then recycled by the centre.

Disposing of petroleum based oil such as motor oil through small enterprises like SITA is becoming much more common since the introduction of the PSO scheme. The Australian Bureau of Statistics found that, between 2009 and 2012, Australians taking their oil to businesses to dispose of in the proper way jumped by 10 per cent. This kind of increase became evident in 2001, shortly following the scheme's introduction. In 2012 to 2013, approximately 311 megalitres of oil were collected through responsible recycling schemes. The amount actually recycled has gone from nil in the year 2000 to approximately 80 megalitres in 2011-12.

It is the passion of collection and recycling initiatives such as the Rockdale Resource Recovery Centre to turn waste into a resource. To demonstrate just how radically the scheme has shifted the way we look at used oil and increased consumer respect for environmental hazards over the past 13 years, I will quote from the third independent report to the government:

The Scheme incentivises the recovery and re-use of used oil, at low overall cost to the Australian community, and with low implementation and compliance costs. In large parts of the country, used oil is no longer regarded as a waste but instead as a resource. More broadly, environmental and public health costs due to improper disposal of used oils and lubricants have been reduced or eliminated.

By incentivising individuals, businesses and recyclers to cooperate in ensuring that oil is recycled, the government is fulfilling its obligations to all citizens who benefit from the continued use and reuse of oil as well as its obligations to the environment.

Australians understand that oil is both a precious and an easily mishandled resource. Supply is valuable and finite but integral to our way of life in this advanced nation of ours. Equally so, Australians are well aware that disposing of oil in waterways or drains can be dangerous. In recycling used oil, both problems are addressed in one fell swoop. So easily mishandled is the disposal of oil that Professor Jean-Daniel Saphores, an expert in natural resource economics, declared in 2002 that used oil is 'the single largest environmentally hazardous recyclable material'. Once exposed to waterways or the natural environment more generally, used oil exerts a damaging pollutant effect and is difficult to remove. Used oil is often contaminated and much more hazardous to the environment than new oil, which is why recycling used oil is such a priority.

It is a measure of a responsible government to provide incentives and guidance to the community and enterprise with regards to the proper disposal and recycling of hazardous materials. In fact, oil industries and consumers face penalties and compliance measures from the Environmental Protections Agency if they do not dispose of oil correctly. With the PSO scheme, the government instead rewards initiative and responsibility rather than punishing noncompliance. The transitional assistance provided to industries by the government as part of this scheme has been integral to its success.

It is clearly in the best interests of the environment, public health, the growing recycling industry and the public purse that this legislation receives the support of the House. It is a sensible and simple measure, which has been a long time coming. After all, in 2009, after consultation with the industry and detailed reports by PricewaterhouseCoopers advising the government of sustainability doubts, there was no legislative action taken to restore the viability of the scheme.

The coalition can be proud that we are legislating in this area at last to safeguard this important scheme. By getting on with the job, we are restoring certainty and viability to the industry after doubts have accompanied its operations since its inception, especially over the last half-decade. Supporting this legislation comes down to the fact that, when schemes are running at a deficit, the government must act. The PSO scheme was never intended to run at a loss, but should be able to self-finance. This is true of the nation's balance sheet as a whole. It is not normal or excusable to be running levy-benefit systems such as the PSO at a loss. We can and should be working towards cost-neutral positions for our programs as we take the road to surplus.

The fact that the financial state of this scheme has been rolling into deficit and out of the government's full control warns of the way in which numerous other government programs became untenable and unsustainable over the past six years. The government is committed to ensuring that good schemes such as the Product Stewardship for Oil scheme do not go the same way. We are committed to the future of the oil recycling industry and to the future of this scheme.

I look forward to seeing the implementation of a clear, costed and viable measure for the resources and recycling industry and strongly commend this bill to the House.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

Is the motion seconded?

Bernie Ripoll (Oxley, Australian Labor Party, Shadow Minister Assisting the Leader for Small Business) Share this | Link to this | Hansard source

I second the motion.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Fraser has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the amendment be agreed to. The question now is that the amendment be agreed to.

Ken O'Dowd (Flynn, National Party) Share this | Link to this | Hansard source

I would like to join my colleague the member for Barton to talk about this legislation and to give it the thumbs up. We are here to talk about the Excise Tariff Amendment (Product Stewardship for Oil) Bill 2014 and the Customs Tariff Amendment (Product Stewardship for Oil) Bill 2014. These bills amend the Excise Tariff Act 1921 and the Customs Tariff Act 1995 to restore the PSO scheme to being budget neutral. The scheme has got out of hand of late and is $10 million in deficit. What we are proposing in this legislation will bring the scheme back to being budget neutral over the forward estimates by increasing the levy payable by oil producers and importers for petroleum products, oils and greases and their synthetic equivalents, to move the price to 8.5 centres per litre on oil or kilogram of grease. The current scheme offers a subsidy for the proper recycling of used oil—that is, companies into re-refining of oils get a subsidy of about 50 centres a litre. This is currently funded by the 5.449c per litre or kilogram but that is not enough. This legislation proposes that we increase the 5.449c per litre to 8.5c. As I said before, that will make the budget neutral and no money will change hands at the end of the day. So the importers of the oil will pay for the re-refining of the lubes, which have great benefit, as I will mention down the track. That is what this bill is all about.

Why do we support this scheme and why did we come up with this bill? Three hundred and fifty million litres of waste oil is created every day in Australia. The full recycling of used lubes requires a very substantial industrial and market investment by companies willing to put up the hard funds to build re-refineries. The 50c a litre incentive is needed to make the full recycling of these lubes a viable business operation. It is good for the environment and it is sustainable because we are using more and more oil in Australia. Recycling used oil has many environmental advantages. Used motor oil contains various contaminants including lead, cadmium, chromium, arsenic, dioxins, benzene and polycyclic aromatics. These are hazardous to humans, plants, animals, fish and shellfish.

Oil scum on water reduces the health of plants. It kills fish, frogs and any animal that breaths on the water surface. If we can rid ourselves of as much bad surface oil, the better we are going to live. One litre of oil will contaminate about one million litres of water. That is why it is such a hazard and that is why it is so important that we have a clean-up operation. Every tonne of burnt oil in Australia releases more than three tonnes of carbon dioxide or its equivalent. That is why recycling of used oil is so important for our environment and health. Through recycling, used oil can be cleaned by removing all the impurities. It refines the oil back to its original state and the oil can be used again and again, put back into the engines of tractors, trucks and earthmoving equipment. When it is used, the impurities drop out of the oil and it is time for an oil change. That is where this program comes into its full force. Then the trucks go out to the different collection points around the nation and pick up this waste oil, bring it back to the re-refineries and go through the process again. As I said, that can be repeated many times. Oil is not destroyed in any way, shape or form in an engine. It is the impurities, the additives, that go into the oil to make grease—and oil, originally. With all this thickening and hardening of an oil it becomes grease. That is how grease is made. There are a lot of impurities and other chemicals in that oil to make it a grease, a heavy oil or a light oil, depending on what you want. I can speak from some experience on this because I was a fuel distributor, and I have sold a lot of oil in my day.

What is good news for central Queensland, Queensland and the rest of Australia is a company called Southern Oil. They are in the members for Riverina's country in Wagga Wagga. They do a tremendous job across the nation. They built a plant, and it was only open in March of this year, at a cost of about $55 million. It is a huge plant. It is well designed. You could eat your lunch off the floor of the plant; it is a very cleanly operated plant. It is a credit to that company, Southern Oil in partnership with J.J. Richards. They call the plant in Gladstone the Northern Oil Refinery. In the member for Riverina's seat it is called Southern Oil. Whatever it is called, it is a company that is owned by the same guys, and they do a fantastic job. The plant in Gladstone can process a million litres of waste oil every year. That is 30 per cent of the Australian waste lube oil. It provides significant environmental benefits, as I mentioned before. It employs about 45 permanents in Gladstone and five or six other contract type people who run around in trucks and pick up the oil. It is a great asset for Gladstone and a great asset for Queensland.

Previous to re-refining oil, some terrible things happened in the old days. Mainly it was burnt off in refineries and things of that nature. Some of it was—and of course we all realise it now—simply thrown on the ground. They actually used to settle down the sand on racetracks with waste oil. That practice, as of now, has been wiped out for very good reasons, so we do not use waste oil on racetracks anymore. So the incentive to recycle oil is getting stronger and stronger.

I have just got to commend this bill. It is a wonderful bill. It will do a lot for looking after our waste oil, not putting it into the furnaces, not throwing it on the ground. Oil is getting very precious. There is less and less oil. We can have gas. We can have coal-fired power stations. We can have all sorts of other different energy—wind and solar—but you cannot run an engine on those sorts of energy supplies. It has to be oil. They say, 'Oils ain't oils, mate.' But that is what they need. The oil as it comes out of this refinery is as clear as crystal. It is a beautiful product, actually, when you see it in its raw state. I commend this bill to the House.

Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Link to this | Hansard source

I commend the member for Flynn for his interest in re-refining oil. We just heard a very wide-ranging speech from the member for Flynn. In his true style he talked about the bills before us. He also talked about racing. I know his galloper Territory is running in Sydney this weekend. May it well win. Certainly oil used to be used to smooth down racetracks. I know the member for Flynn has more than a passing interest in racing. He certainly has more than a passing interest in his electorate of Flynn and the progress thereof.

I very much welcomed joining him at Yarwun on 12 March this year where, indeed, the Wagga Wagga based company Southern Oil expanded into the city of Gladstone. That came about as a result of some concerted lobbying by both the member for Flynn and me to see this fantastic Riverina company expand. It does, as the member for Flynn pointed out, re-refine oil. A good friend of both the member for Flynn, Ken O'Dowd, and me is Tim Rose, the Southern Oil Managing Director, who has expanded its operations and called it Northern Oil Refinery. They are doing a great job. The Northern Oil Refinery opened, as I said, on 12 March. The Queensland Minister for Environment and Heritage protection, Andrew Powell, joined the federal Minister for Industry, Ian McFarlane, the member for Groom, as well as the member for Flynn and me at the opening. What a novelty. We had an LNP minister for the environment and a Commonwealth minister for industry coming together to celebrate, to commemorate, to open an industry. That would not have happened under Labor, would it, member for Flynn?

Ken O'Dowd (Flynn, National Party) Share this | Link to this | Hansard source

No.

Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Link to this | Hansard source

No, it would not have happened. What a shame that sort of cooperation did not happen when we talked about the Murray-Darling Basin. What a shame that, when the then Prime Minister went to Goolwa to announce additional water for South Australia prior to the last election—before she was knifed by the member for Griffith—she did not take the agriculture minister with her to undertake this sort of collaboration and cooperation between industry and the environment. It is something our own Minister for the Environment, who has just joined us at the table, is so interested in doing: getting out of the way and making sure that these industries, with the right restrictions in place, get on with the job of making sure that Australia is open for business.

I know the many projects that the Minister for the Environment in the Abbott-Truss coalition has given the tick of approval to. He, like the member for Groom, our Minister for Industry, and like the Queensland Minister for Environment and Heritage Protection, certainly very much approves of this Northern Oil Refinery. It goes to the heart of the particular legislation before us—the Excise Tariff Amendment (Product Stewardship for Oil) Bill 2014 and the Customs Tariff Amendment (Product Stewardship for Oil) Bill 2014—which is there to ensure the environmentally sustainable management, re-refining and re-use of used oil and to support economic recycling options for used oil.

The scheme currently operates by offering a subsidy for the proper recycling of old oils, funded by a 5.44c per litre levy on new oil or per kilogram of grease sales, as the member for Flynn indicated. In 2013-14, the scheme is estimated to run a deficit of about $10 million, and this is expected to grow. The benefit for category 8 oils provides a refund mechanism for producers of oils which are specifically declared by the Minister for the Environment—the good minister at the table—because they do not create a recyclable user stream and are of low risk to the environment.

In the last parliament, all we ever heard about with the environment was what the Greens wanted. It was Labor being led by the nose by the Greens. Everything was at the behest of the Greens, and industry was being held up. Business was being stymied at every turn by the Labor-Greens alliance.

It was so refreshing to hear Mr Rose at the opening on 12 March in Gladstone, in the electorate of the member for Flynn, talk about what a unique event he was attending. 'You are here to help Southern Oil and JJ Richards and Sons launch a project which represents an investment in manufacturing, an investment in regional Australia and an investment in a better environmental future,' Mr Rose said. 'It will not be a day the joint-venture partners will forget. We hope for all of you it will be something to remember to be at the start of a new industrial enterprise.' And indeed it was. He said, 'At a time in Australia where much of the news is about how tough it is, particularly in manufacturing, we have stood up and committed to a significant investment in the future.' Indeed they have. It is an investment that is pumping millions of dollars into the electorate of the member for Flynn and dozens of jobs into that very vibrant city of Gladstone, a city that is going ahead in leaps and bounds under the stewardship and the representation of the member for Flynn.

The plant and equipment that are installed on the site are state-of-the-art. I am very proud to say that they have been painted in a mustardy colour which Tim Rose calls 'Wagga Wagga wheat'. It resembles the wonderful wheatfields in my electorate. 'To the uninitiated,' as Tim Rose pointed out, 'lube oil may not sound too sexy, but it is essential'—as we heard the member for Flynn say. Mr Rose said it is the stuff that 'keeps your cars running, planes in the air, mining and farming equipment going—it literally lubricates the wheels of commerce and industry' right here in Australia. He said: 'Lubricating oil doesn't wear out; it just gets dirty and the additives in the oil lose effectiveness over time. Here we will re-refine waste lube oil for reuse as lube oil, restoring the oil to its original condition, which is at its highest, best and most environmentally responsible use.'

There was an excellent article, just after the opening, written by Mara Pattison-Sowden in the local Gladstone Observer. She said:

Gladstone will house the second plant in the country—

the other one being at Wagga Wagga, of course—

with a refinery three times the size that can process 100 million litres of oil a year—the same amount of waste oil that Queensland produces annually.

It will slash the need to dig for more oil while cutting carbon emissions by 300 million tonnes a year.

Three hundred million tonnes a year! That is a great success story, and it is a success story promoting business, promoting industry, and at the same time looking after the environment. You can do things which are good for the environment and things which help protect our clean, green image whilst at the same time adding jobs, adding investment and adding money into a regional city such as Gladstone. The Yarwun based site had many, many construction jobs, and a lot of the training came from Wagga Wagga. Of course, the construction phase is now over, and it is the production phase at full tilt. It is a great success story.

According to Mr Rose, Southern Oil injects $15 million into the region's economy each year. That is just tremendous. Interestingly, I also have a media release from Mr Rose, who says:

Australia's world-class oil re-refining industry has been saved from potential disaster in the Abbott Government's Federal Budget.

Here is an industry leader talking about the coalition's recent budget, brought down by the member for North Sydney, the Treasurer, and how his industry has been helped by that budget. The media release from Southern Oil. says:

A decision by the Government to continue to support Australia's oil recycling industry through the Product Stewardship for Oil (PSO) Scheme means the successful environmental scheme will be properly funded into the future.

Southern Oil, which owns and operates two of Australia's four oil re-refining plants, said the Budget announcement would make a significant, positive difference to continuing the support for Category One oil recyclers (re-refiners).

Southern Oil Managing Director Tim Rose, who operates the Southern Oil Refinery in Wagga Wagga, NSW, and the Northern Oil Refinery in Gladstone, Queensland, with joint venture partner J.J. Richards and Sons, said the Budget outcome was a great relief.

He praised the Minister for the Environment, Greg Hunt, who is here at the table; the Minister for Industry, Ian Macfarlane, who was there at the 12 March opening; and the member for Flynn; as well as me, for our 'commitment to ensure the oil re-refining industry was protected'. Here is an interesting quote:

For the past few months the oil re-refining industry has been working hard to ensure the PSO scheme was not changed to the detriment of re-refiners …

The Northern Oil Refinery was built based on a policy which Tim Rose and JJ Richards and Sons hoped would continue. They put in the faith, based on information that they had received from the previous Labor government, and Mr Rose was so thankful that our government is not only looking after the environment but looking after industry as well by backing his particular venture. He says:

A recent report to the Federal Government had made recommendations to change the PSO which would be a disaster for true oil re-refining, so we told the government loud and often about our concerns.

And indeed he did. I know he talked to the member for Flynn. He also talked to me. The Minister for the Environment, who is at the table, also had discussions with this company because he knew how important it was not just for industry but for the environment. As Tim Rose said:

The Government has listened and kept its PSO Scheme promises that were made before the Abbott Government was even elected.

So here again we have an industry leader talking about how we keep our promises, how we keep our commitments that we made and certainly commitments that are good to the environment and good for business and industry. Tim Rose went on to say:

The Budget outcome means re-refiners like Southern Oil can continue to recycle lube oil and remove hundreds of thousands of greenhouse gas emissions from the Australian environment every year.

That is a great success story.

The Southern Oil and Northern Oil re-refining process is a 'cradle to cradle' treatment of oil and the highest form of recycling—keeping a lube oil in productive use, delivering improved oil security through avoided imports and a lower carbon footprint compared to the production of imported crude. We heard Ken O'Dowd talk before about how good the re-refined oil looked. I will just hold up this sample—I know it is a prop—to show this looks almost as good as this water on the table here. It is quite incredible way that they take used oil, take out the additives and nasties, as Ken O'Dowd said, and convert it into oil that can be reused over and over again. How good is that for the environment? How good is that for industry, particularly for a regional city like Gladstone, right in Central Queensland at the heart of so much of Australia's valuable mining and manufacturing industries. It is the next generation in waste oil management.

The Northern Oil Refinery is a first for Queensland, and I do not think they have finished yet, Member for Flynn. Thanks to your great support and advocacy and the great support of the Minister for the Environment, I think we will see this firm expand, possibly into Western Australia and even into South Australia in the future. They can see a niche market to convert used oil into oil that can be used over and over again. That is going to be good for industry and it is certainly going to be good for the environment. The re-refining plant at Gladstone can process 100 per cent of Queensland's annual production of used lube oil. That represents a wonderful environmental opportunity for the state, for industry and particularly for Central Queensland, which is so well represented in the seat of Flynn by Ken O'Dowd. It is the only facility capable of recycling waste lube oil back into base lube oil in Queensland.

I know how much value the Deputy Prime Minister—currently the Acting Prime Minister—places on the Northern Oil Refinery. I know how interested he was in seeing this facility was open, as was the member for Groom, the Minister for Industry, who is getting on with the job of showing that Tony Abbott is the infrastructure Prime Minister and making Australia open for business. At both Wagga Wagga and Gladstone there has been strong support from waste oil producers such as mines and local governments in directing that their waste lube oil is re-refined rather than burnt and wasted, which happens all too often right throughout Australia. We use a lot of oil and the carbon footprint is very high. That is why plants such as these are getting on with the job of re-converting it. Tim Rose said:

Our re-refining process produces no waste—every component is reused and 99 per cent of the lube oil component in the waste oil is recovered as high quality lube oil for reuse.

What a fantastic outcome. What a great economic and environmental story this is. It is happening in Gladstone, in regional Queensland, providing 40 direct jobs and supporting many more jobs. I know they did not just do the training in Wagga Wagga. Advanced Communications, a good Wagga Wagga firm, helped put in some of the communications at the Gladstone facility. Tim Rose needs to be commended on his initiative and his entrepreneurship.

This bill deserves support. I know it has the support of the member for Flynn. I know it has the support of the Minister for the Environment, who, as I said, is doing a fantastic job ensuring that jobs that are environmentally safe and good for industry are being ticked off so that we can be open for business and we can fix up the debt and deficit we have inherited from Labor.

Greg Hunt (Flinders, Liberal Party, Minister for the Environment) Share this | Link to this | Hansard source

I particularly want to take this opportunity to speak in relation to the Excise Tariff Amendment (Product Stewardship for Oil) Bill 2014 and the Customs Tariff Amendment (Product Stewardship for Oil) Bill 2014, which are part of the government's overall economic strategy announced in the budget. We made the point that we would restore the Product Stewardship for Oil scheme to being budget neutral over the forward estimates period. What does it mean in practice? It means that there was a problem we inherited, a mess which needed to be fixed, and we have done that. And what that means is that the product stewardship sector will be able to continue, which will bring good environmental benefits, and it will have a certain basis for industry and investment going forward. The member for Flynn and the member for Riverina have both spoken in this debate and contributed to this outcome significantly.

In practice, this bill achieves what we have sought by increasing the rate of levy payable under the scheme to 8½c per litre of oil or kilogram of grease as generated or brought into Australia, because it is primarily brought into Australia, from 1 July 2014. It puts the industry and the product stewardship process on a stable footing.

What does it mean for the environment? We have a problem at the moment where used oil is insoluble, persistent and slow to degrade and evaporate. It does great damage to the system. Secondly, used oil often contains contaminants such as toxic chemicals and heavy metals. It poses a greater environmental risk then new oil. Improper disposal of this used oil can have catastrophic effects on the environment and public health and can pollute land, waterways and underground reservoirs. As a consequence of that, through the product stewardship scheme we are reducing environmental and other impacts of products by encouraging or requiring manufacturers, importers and distributors to take responsibility for these products.

The Product Stewardship for Oil scheme was established in 2001 by the Howard government. It continues today, with strong support from industry and environmental stakeholders

It was, however, not operating in a way which was budget neutral and so the changes we have made seek to ensure that the investment, which has occurred in areas such as the Riverina and Gladstone, is on a full and sustainable basis going forward.

Prior to the Product Stewardship for Oil Scheme being introduced, it was estimated that 160 million litres of used oil were collected annually, compared to 270 million litres today. So an additional 100 million litres of waste oil is being collected. As a consequence of this scheme and, in particular, as a consequence of the stability which we have built into it, 16 oil recyclers are now operating in Australia. It is estimated that their collective turnover is at least $3 billion.

In Gladstone, Southern Oil Refinery and J.J. Richards have just opened a new $55 million used-oil refinery, which is able to process up to $100 million litres of used oil a year. It has created 70 jobs. In Wagga Wagga, the Southern Oil Refinery employs around 30 people. Only today I met with representatives of Transpacific, which is a $1.6 billion ASX-listed Australian waste and recycling company. Their plants in Brisbane, Rutherford and Wetherill Park collect around 160 million litres of oil. So accessing the Product Stewardship for Oil Scheme is critical to the viability of these environmentally sustainable businesses. We have made a change; it is an important change. It puts the industry on a sustainable basis. It is the right thing to do by the environment, it is the right thing to do for job certainty, investment certainty and the future in this space. I commend the bill to the House.

Steven Ciobo (Moncrieff, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

I would like to thank those members who have contributed to the debate on the Excise Tariff Amendment (Product Stewardship for Oil) Bill 2014 and cognate bill. These bills restore the Product Stewardship for Oil Scheme to being budget neutral over the forward estimates. This fulfils a commitment given by the government in the budget. The Product Stewardship for Oil Scheme offers a benefit for the proper recycling of old oils, funded by a levy on new oils and greases.

This ensures the environmentally sustainable management, refining, re-refining and reuse of used oil and supports the economic recycling options for used oil. The Product Stewardship for Oil Scheme was intended to be self-funding but, in the 2013-14 year, the scheme is estimated to run a deficit of approximately $10 million and this is expected to grow. To ensure the scheme is budget neutral over the forward estimates these bills amend the Excise Tariff Act 1921 and the Customs Tariff Act 1995 to increase excise levy and excise equivalent customs duty on petroleum-based oils and their synthetic equivalents from 5.449c per litre of oil or a kilogram of grease to $8.05c.

These changes ensure the ongoing sustainability of the scheme. The government of course does not support the amendment moved by the opposition. We do not support the passionate defence by the shadow Assistant Treasurer of Labor's carbon tax. Once again, we find ourselves faced with a situation where Labor have attempted, through an amendment to this bill, to once again reassert their complete myopic approach to both economic policy and environmental policy in Australia.

It is quite extraordinary that the Labor Party, through the shadow Assistant Treasurer, have moved an amendment, seeking to once again attempt to justify their approach to their failed carbon tax. This carbon tax, which was the world's largest carbon tax, has put a dampener on economic activity. We saw the consequence, with the election of the coalition government, on consumer confidence. We saw the consequence, with the election of the coalition government, of the then optimistic view of the people of Australia following the successful election of the coalition. Unfortunately, instead of respecting the mandate that the Australian people gave the coalition, almost primary among them the fact that we would repeal the world's biggest carbon tax that was introduced by the Labor Party, we now have the shadow Assistant Treasurer moving an amendment to this bill, attempting to justify the carbon tax, saying that the carbon tax is the right approach to protecting Australia's environment.

We saw only yesterday the President of the United States outline, through the EPA, an approach to dealing with climate change which, virtually in all respects, mirrors the approach of the coalition government. We have seen a sound approach put forward by the environment minister through the Emissions Reduction Fund and through Direct Action to Australia actually making a contribution to improving the environment but not sacrificing Australia's economic competency or our international economic competitiveness as a consequence. The fact that the United States' approach accords with the coalition's approach and the fact that the Australian people recognise that we have a mandate and indeed provided us with the very mandate that we seek to exercise in this parliament just underscores how completely out of touch the Australian Labor Party continues to be.

To have an amendment moved to this bill by the shadow Assistant Treasurer, which attempts to portray the carbon tax as, in some way, shape or form being in Australia's interests just demonstrates that Labor has not learnt a single thing at the last election.

It is even more jarring that the Australian Labor Party earlier today, in numerous debates in this chamber, railed against what they believe to be an attack on the living standards of impoverished Australians and various strata of Australian society and yet in this amendment to the bill actually attempt to defend their approach to the carbon tax, which is imposing on Australian households an additional $550 a year. So, fundamentally, the coalition's approach to this bill is to put us back on a sustainable economic footing.

But, more importantly, the coalition rejects the amendment that has been moved by the Labor Party because it underscores Labor's failed approach. It disrespects the mandate the coalition has with respect to the carbon tax and that is to repeal it. Fundamentally, if Labor's carbon tax stays in place, it simply puts more pressure on battling Australian households, for no environmental benefit whatsoever and, for that reason, we reject the amendment. I commend the bill to the House.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Fraser has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The immediate question isthat the amendment be agreed to.

Question negatived.

Original question agreed to.

Bill read a second time.