Hazardous Waste Permits 2016-17
COST RECOVERY IMPLEMENTATION STATEMENT
Hazardous Waste Permits
2016-17
Cost recovery involves government entities charging individuals or non-government organisations some or all of the efficient costs of a specific government activity. This may include goods, services or regulation, or a combination of them. The Australian Government Cost Recovery Guidelines (the CRGs)[1] set out the overarching framework under which government entities design, implement and review cost recovered activities.1. EXECUTIVE SUMMARY
This Cost Recovery Implementation Statement (CRIS) provides information on how the Department of the Environment (the Department) intends toimplement cost recovery for hazardous waste import, export and transit permitting.1.1 Policy case for cost recovery
The regulatory services provided by government can be funded through either general taxation revenue or through some form of cost recovery arrangement. A welldesigned cost recovery arrangement for hazardous waste permitting could have several advantages over funding from general taxation revenue, including improved efficiency, improved equity, reduced call on general taxation revenue and instilling cost consciousness in the Department’s hazardous waste permitting team.[2]
There is a sound inprinciple case to recover the costs incurred by the Government in operating the hazardous waste permitting activities. Section 32 of the Hazardous Waste (Regulation of Exports and Imports) Act 1989 provides the legislative basis for the imposition of permit fees. The specific fees are prescribed in the regulations, but currently may not exceed $8000.
1.2Costs of relevant activities
The hazardous waste permitting system is administered by the Department’s hazardous waste permitting team. The Department’s costs in relation to the hazardous waste regulatory framework can be broadly divided into three categories:
■Costs directly linked to the assessment of applications and related administrative processes — there is a strong case to recover these costs.
■Costs related to the operation of the regulatory framework that cannot be directly linked to specific applications — although the case for recovering costs that cannot be linked to specific applications is weaker, there is still a case to recover these costs, which include those related to:
–handling enquiries
–compliance and enforcement activities
–developing standard operating procedures and advisory material related to the administration of the Act.
■Costs associated with the Department’s policy functions, including advice to the Minister, negotiating international agreements and Departmental administrative tasks not related to the operation of the hazardous waste permitting system — these costs should not be recovered.
For the 2015-16financial year, the total costs incurred by the Department’s hazardous waste permitting team are estimated to be $1.13million, including both direct and indirect costs. Of these costs, around $1.03 million are considered recoverable (Table 1.2.1).
1.2.1Budgeted costs for the 2015-16financial year
Costs
$
Recoverable costs
Cost directly linked to applications / 743,615
Costs not directly link to applications / 286,186
Total recoverable costs / 1,029,801
Non-recoverable costs
Policy-related costs / 103,218
Total / 1,133,019
Source: Department of the Environment, Centre for International Economics.
1.3Preferred cost recovery arrangement
Various cost recovery options were considered[3] and the Cost Recovery Guidelines, the Australian Government Charging Framework, the best practice principles set out by the Productivity Commission and the views of stakeholders were taken into consideration in the assessment of these options. A draft CRIS outlining various cost recovery options and containing a set of questions to help focus stakeholder responses, was circulated among targeted stakeholders via email on 20 May 2015. A revised draft covering a narrower set of options was circulated to stakeholders on 19 January 2016.
The preferred cost recovery arrangement for hazardous waste permitting is as follows:
■The full costs incurred by the Department that can be directly linked to assessing applications to be recovered through cost reflective permit fees.
–This includes separate fees for permits to transit, import, export for further processing and export for final disposal.
–A separate relodgement fee should also apply in cases where an applicant submits an incomplete application.
–The move to a cost reflective fee structure is to occur in two increments, with the first to apply from 1 July 2016 (subject to the $8000 legislative cap[4]) and the second to apply from 1 July 2017 (subject to an amendment to the legislation to allow permit fees to exceed $8000).
■The remainder of the full costs incurred by the Department in operating the regulatory framework, but that cannot be linked to specific applicants, are to be recovered through aflat ratelevy. This would apply to all new permit applications from 1 July 2017.
■Beyond July 2017, permit fees and the levy will be adjusted annually, based on movements in the Consumer Price Index (CPI), so that the fees remain broadly cost reflective over time.
The costs incurred by the Department in providing policy advice to the Minister and negotiating international agreements should not be recovered. Arrangements for recovering the costs incurred by state and territory governments in assessing permit applications could be considered further in the future. These arrangements are summarised in Chart1.3.1.
1.3.1Preferred cost recovery arrangement
Data source:Centre for International Economics.
1.4Proposed permit charges
The proposed charging structure is for all direct costs associated with issuing hazardous waste permits to be recovered through cost reflective fees and that indirect costs are to be recovered through a levy on applicants for each new permit application.
Proposed fee changes involve both increasing the rate of fees to achievegreater cost recovery and simplifying the fee structure. At present, different fee scales apply to new permits and variations to permits depending on whether Basel permits or special permitsare involved (a permit sought pursuant to an agreement made by Australia under article 11 of the Basel convention). It is proposed that this distinction be removed so that the fees for different permit types (transit, import or export) apply regardless of whether they relate to a Basel or special permit.
The levy will be implemented in the form of a flatrate, levied across all permit types. From 1 July 2017, the levy will be a flat rate of $4616 per new permit application. A flat rate levy was preferred over a charge proportional to the cost-reflective fee faced by the applicant, or a mass-based levy, as being the option that avoids disproportionate impacts on particular applicants as well as being simplest to administer.
The implementation of changes to the charging structure will be staged. The first stage will involve amendments to the regulations to restructure and increase fees so they more accurately reflect the costs involved in processing applications (subject to an $8000 cap currently in the Act). The second stage will amend the Act and regulations to remove the $8000 cap and will require a separate taxation Bill to impose the levy.
This staged approach is to assist industry to plan for and adjust to the increase in charges. The proposed charges will be indexed annually so that revenue may keep pace with costs over time.
There may be some limited circumstances where the increase in permit charges leads to adverse environmental outcomes by discouraging compliance with the regulatory framework, which could lead to an increase in the improper disposal of waste. However, there are substantial penalties for illegal activity (up to 5 years imprisonment for an individual and a fine of up to 1.8 million for a body corporate) and permit charges are expected to represent a small proportion of the overall costs of collecting, shipping and treating hazardous waste.
The charges that will apply under the preferred option are summarised in Table1.4.1.
1.4.1Proposed charging structure
1 July2016a / 1 July2017b / 1 July2018c / 1 July2019c
$ / $ / $ / $
Permit fees
Transit permits / 2,484 / 5,225 / 5,355 / 5,489
Import permits / 3,726 / 7,088 / 7,265 / 7,447
Export for further processing / 7,451 / 12,667 / 12,994 / 13,319
Export for final disposal / 8,000 / 35,035 / 35,911 / 36,808
Permit variation fees
Transit permits / 497 / 2,244 / 2,300 / 2,357
Import permits / 745 / 2,616 / 2,682 / 2,749
Export for further processing / 2,980 / 5,970 / 6,119 / 6,272
Export for final disposal / 8,000 / 14,913 / 15,286 / 15,668
Other charges
Levy- flat rate charge on each new permit application / Nil / 4,616 / 4,731 / 4,850
Re-lodgement fee / Nil / 1,498 / 1,536 / 1,574
a These estimates are based on 33per cent cost recovery, up to a limit of $8000 and assume the levy would be delayed until 1 July 2017. b These estimates assume that the legislated $8000 limit would be removed by 1 July 2017. c Estimates assume the CPI increased by 2.5per cent per year.
Source:Centre for International Economics.
Table 1.4.2 compares the current charges that would apply to the average permit application of each type submitted in the calendar years 2013 and 2014 to the charges that would apply under the charging structure proposed above. As the Department is proposing to increase the level of cost recovery from around 5per cent currently to full cost recovery, the charging structure proposed above involves a significant increase from the current level.
Numbers in parentheses in Table 1.4.2 indicate the total charge per permit application, once the flat rate levy has come into effect.
1.4.2Comparison of current and proposed charges
Current charges / 2016-17 / 2017-18 / 2018-19 / 2019-20
$ / $ / $ / $ / $
Permit fees
Transit permit / 110 / 2,484 / 5,225
(9,841) / 5,355
(10,086) / 5,489
(10,339)
Import permit / 270 / 3,726 / 7,088
(11,704) / 7,265
(11,996) / 7,447
(12,297)
Export permit for further processing / 700 / 7,451 / 12,667
(17,283) / 12,994
(17,725) / 13,319
(18,169)
Export permit for final disposal / 4,660 / 8,000 / 35,035
(39,651) / 35,911
(40,642) / 36,808
(41,658)
Permit variation fees
Transit permit / 110 / 497 / 2,244 / 2,300 / 2,357
Import permit / 210 / 745 / 2,616 / 2,682 / 2,749
Export permit for further processing / 370 / 2,980 / 5,970 / 6,119 / 6,272
Export permit for final disposal / 370 / 8,000 / 14,913 / 15,286 / 15,668
Other charges
Re-lodgement fee / NA / Nil / 1,498 / 1,536 / 1,574
Levy – flat charge on each new permit application / NA / Nil / 4,616 / 4,731 / 4,849
2. INTRODUCTION
2.1 Purpose of the CRISThis Cost Recovery Implementation Statement (CRIS) provides information on how the Department of the Environment (the Department) will implement cost recovery charges for hazardous waste import, export and transit permitting.
The Department completed a Cost Recovery Impact Statement for the 20122014 period[5] and Cost Recovery Implementation Statements for 2014-15 and 2015-16.
The Department of Finance released new Cost Recovery Guidelines in July 2014[6] and the Australian Regulatory Charging Framework came into effect on 1 July 2015. In line with this framework, charging for the hazardous waste permitting activity is being revised to reflect recoverable costs. The Department has therefore prepareda revised CRIS for 2015-16 onwards. The Department will maintain the CRIS until the activity or cost recovery for the activity has been discontinued.
2.2 Description of the activity
Regulation of international movements of hazardous waste
In Australia, the regulation of waste management is generally the responsibility of state and territory governments. However, the Australian Government has some regulatory responsibilities, including in relation to transboundary movements of hazardous waste. The Hazardous Waste (Regulation of Exports and Imports) Act 1989, and associated regulations, define hazardous waste as waste having the following characteristics:[7]■explosive
■flammable liquids/solids
■poisonous
■toxic
■ecotoxic
■infectious substances.
This will generally include, among others, the following wastes (unless they do not have any of the characteristics outlined above):[8]
■clinical wastes;
■waste oils/water, hydrocarbons/water mixtures, emulsions;
■wastes from the production, formulation and use of resins, latex, plasticisers, glues/adhesives;
■wastes resulting from surface treatment of metals and plastics;
■residues arising from industrial waste disposal operations; and
■wastes which contain certain compounds such as: copper, zinc, cadmium, mercury, lead and asbestos.
International obligations
Australia has various international obligations in relation to the management and transboundary movements of hazardous waste. In particular, Australia is a party to the Basel Convention (see box2.2.1)2.2.1The Basel Convention[9]
Concerns over the risks to human health and the environment associated with uncontrolled international movements of hazardous waste led to the development of the Basel Convention in the early 1990s. The key objectives of the Basel Convention are:
■to minimise the generation of hazardous waste
■to ensure the availability of adequate disposal facilities for the environmentally sound management of hazardous wastes
■to reduce transboundary movements of hazardous wastes to a minimum consistent with their environmentally sound and efficient management.
The Convention places obligations on countries that are party to it to:
■minimise generation of hazardous waste
■ensure adequate disposal facilities are available
■control and reduce international movements of hazardous waste
■ensure environmentally sound management of wastes
■prevent and punish illegal traffic.
The Convention establishes a global control system for transboundary movements of hazardous waste.[10] Prior written notification by the State of export to the competent authorities of the States of import and transit are required before transboundary movements of hazardous waste can take place.
The Basel Convention allows parties to enter into bilateral, regional or multilateral arrangements with nonparties, provided these arrangements are consistent with the environmentally sound management of such wastes as required by the Convention. Australia is a signatory to three such agreements:
■The Organisation for Economic Cooperation and Development (OECD) Control System — the OECD has special rules for shipments of waste for recovery purposes.
■The Waigani Convention[11] — the main effect of this Convention is to ban the import of all hazardous and radioactive wastes into South Pacific Forum Island Countries. It also enables Australia to receive hazardous wastes exported from South Pacific Forum Island countries that are not parties to the Basel Convention.[12]
■A bilateral agreement with East Timor is also in place.
Permitting system for international movements of hazardous waste
To comply with Australia’s international obligations, the Australian Government operates a permitting system for exports and imports of hazardous waste, including hazardous waste transiting through Australia. Anyone wishing to import or export hazardous waste to, through, or from, Australia must apply for a permit from the Department of the Environment. There are several types of permits depending on what country the hazardous waste is going to or coming from.[13]In addition to processing permit applications, the Department also undertakes compliance and enforcement activities, as well as undertaking various policy advice functions.[14]
3. POLICY AND STATUTORY AUTHORITY TO COST RECOVER
3.1Policy case for cost recoveryIn broad terms, the regulatory services provided by government can be funded through either general taxation revenue or through some form of cost recovery arrangement. A welldesigned cost recovery arrangement for hazardous waste permitting could have several advantages over funding from general taxation revenue. These advantages include the following:
■Improved efficiency — a fee or charge could force generators of hazardous waste, as well as firms further down the disposal chain to take into account the cost of operating the regulatory framework (for example, waste collection service providers) in making their economic decisions, leading to a more efficient allocation of resources. According to a Productivity Commission Inquiry into Cost Recovery by Government Agencies, improved economic efficiency should be the main reason to implement a cost recovery arrangement.[15]This objective is also a key part of the new Cost Recovery Guidelines and the overall charging framework of the Australian Government. Fees or charges for hazardous waste permitting could potentially improve efficiency in the following ways:
–Discouraging the generation of hazardous waste — hazardous waste permit fees increase the cost of disposing of hazardous waste (where the waste is exported from, imported into or transited through Australia). Where the costs are passed onto the waste generator, this may discourage the generation of hazardous waste.
–Encouraging the establishment of domestic facilities — hazardous waste is generally exported from Australia only when there is insufficient domestic capacity to process or dispose of the waste in an environmentally sound way. If industry bears the full cost of operating the regulatory framework for transboundary movements of waste, it may become more costeffective to establish domestic capacity. While several stakeholders argued that the permit fees were unlikely to be high enough to make world class recovery facilities viable, the Australian Council of Recycling (ACOR) argued that higher permit fees would almost certainly encourage investment in new facilities.
–Discouraging applicants from submitting poor quality applications — poor quality or incomplete applications use more of the hazardous waste permitting team’s resources than better quality applications. A cost recovery arrangement that encourages applicants to submit better quality applications could reduce the costs incurred by the Department’s hazardous waste permitting team.
■Improved equity — a fee or charge can ensure that the users or beneficiaries of the regulatory framework pay for it, rather than the general taxpayers, who may not use or benefit from it. Hazardous waste permit fees that are commensurate with permitting administration costs pass the cost of operating the regulatory framework onto generators of hazardous waste.
■Reducing the call on general taxation revenue — all taxes have efficiency costs. Funding regulatory services through an efficient cost recovery arrangement reduces the burden on general taxpayers and minimises the associated efficiency losses.
■Instilling cost consciousness in regulatory agencies — cost recovery arrangements can improve the transparency of regulators and make them more accountable to users of the regulatory system.
There is a sound inprinciple case to recover the costs incurred by the Government in operating the hazardous waste permitting activities. However, as recognised in the Cost Recovery Guidelines, the Australian Government Charging Frameworkandas previously argued by the Productivity Commission, there are circumstances where cost recovery should not be implemented. These circumstances include the following.