hazardous waste permits 2016-17 · section 32 of the hazardous waste (regulation of exports and...

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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 The CRGs are available on the Department of Finance website (www.finance.gov.au).

Australian Government

Department of the Environment

1.1

http://www.finance.gov.au/

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1. EXECUTIVE SUMMARY

This Cost Recovery Implementation Statement (CRIS) provides information on how the Department of the Environment (the Department) intends to implement 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 well-designed 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 in-principle 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.

1.2 Costs 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 2015-16 financial year, the total costs incurred by the Department’s hazardous waste permitting team are estimated to be $1.13 million, including both direct and indirect

2 Department of Finance, Australian Government Charging Framework, Resource Management Guide No. 302,

July 2015, p. 4.

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costs. Of these costs, around $1.03 million are considered recoverable (Table 1.2.1).

1.2.1 Budgeted costs for the 2015-16 financial 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.

1.3 Preferred cost recovery arrangement

Various cost recovery options were considered3 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 re-lodgement 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 cap4) 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

3 Maintaining existing charging arrangements or moving to a higher level of partial cost recovery will not be

sufficient to recover costs and maintain the permitting activity over time. Indexing existing fee levels at CPI from 1996 would achieve less than 10 per cent cost recovery and would not reflect the relative costs of assessing different permit types. Setting more cost-reflective changes within the existing regulatory cap could achieve approximately 33 per cent cost recovery. These options would mean that general taxpayers would continue to help fund services that they do not access. 4 The current legislation includes an $8000 cap on charges.

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a flat rate levy. 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 Chart 1.3.1.

1.3.1 Preferred cost recovery arrangement

Data source: Centre for International Economics.

1.4 Proposed 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 achieve greater 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 permits are 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.

No cost recovery

Levy on permit

applicants

Cost reflective permit

fees (including a re-

lodgement fee)

Requires further

consideration

Costs directly linked

to applications:

■ Application

assessment

■ Associated

administrative

matters

Costs not directly

linked to applications:

■ Handling enquiries

■ Compliance and

enforcement

■ Developing

standard operating

procedures and

advisory material

related to the

administration of

the Act.

Policy/advice:

■ Negotiating

international

agreements

■ Policy advice to

Minister

■ Internal

Departmental

administration


to applications:

■ Check for

outstanding

prosecutions

■ Check lawfulness of

receiving facility

■ Check capacity of

local facilities

■ Prepare response

letter

State Government

costs

Full cost recovery Full cost recovery

Commonwealth Government costs

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The levy will be implemented in the form of a flat rate, 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 Table 1.4.1.

1.4.1 Proposed charging structure

1 July 2016a 1 July 2017b 1 July 2018c 1 July 2019c

$ $ $ $

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



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 33 per 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 2.5 per cent per year.

Source: Centre for International Economics.

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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 5 per 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.

1.4.2 Comparison 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)


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

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2. INTRODUCTION

2.1 Purpose of the CRIS

This 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 2012-2014 period5 and Cost Recovery Implementation Statements for 2014-15 and 2015-16.

The Department of Finance released new Cost Recovery Guidelines in July 20146 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 prepared a 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;

5 Australian Government Department of Sustainability, Environment, Water, Population and Communities,

2011, Hazardous Waste Permits: Cost Recovery Impact Statement – January 2012-December 2014. 6 Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No.

304, July 2014 — Third edition. 7 Specifically, the legislation refers to any of the characteristics mentioned in Annex III to the Basel Convention.

8 See Annex 1 of the Basel Convention.

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■ 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 box 2.2.1)

2.2.1 The Basel Convention9

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 non-parties, 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 Convention11 — 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

9 The Allen Consulting Group, The Hazardous Waste (Regulation of Exports and Imports) Act 1989: A National

Competition Policy Review, February 2001, pp. 14-15. 10

Department of the Environment website, http://www.environment.gov.au/protection/hazardous-waste/conventions, accessed 26 October 2015. 11

More formally, the Convention to Ban the Importation into Forum Island Countries of Hazardous and Radioactive Wastes and to Control Transboundary Movement and Management of Hazardous Wastes within the South Pacific Region.

http://www.environment.gov.au/protection/hazardous-waste/conventions


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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

3.1 Policy case for cost recovery

In 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 well-designed 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

12

Department of the Environment website, http://www.environment.gov.au/protection/hazardous-waste/conventions, accessed 26 October 2015. 13

Department of the Environment website, http://www.environment.gov.au/protection/hazardous-waste/applying-permit, accessed 26 October 2015. 14

Department of the Environ ment website, http://www.environment.gov.au/protection/hazardous-waste, accessed 26 October 2015. 15

Productivity Commission, 2001, Cost Recovery by Government Agencies, Inquiry Report No. 15, p. XLII.



http://www.environment.gov.au/protection/hazardous-waste/applying-permit

http://www.environment.gov.au/protection/hazardous-waste/applying-permit

http://www.environment.gov.au/protection/hazardous-waste

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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 cost-effective 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 in-principle 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 Framework and as previously argued by the Productivity Commission, there are circumstances where cost recovery should not be implemented. These circumstances include the following.

■ Cost recovery is not cost effective — some cost recovery arrangements are administratively cumbersome. In some circumstances, the administrative costs on government and business (or the community) may outweigh any efficiency gains, particularly if the revenue collected is small. This consideration is particularly relevant given the Government’s commitment to reducing red tape on business and the community. Given that a hazardous waste permit application process would exist regardless of whether cost recovery applied, the additional administrative costs associated with submitting a payment with the application are negligible.

■ Cost recovery is inconsistent with policy objectives — in some cases, a poorly designed cost recovery arrangement could compromise the achievement of government objectives. Some stakeholders suggested that in some circumstances, cost recovery could potentially lead to worse environmental outcomes.

– Several stakeholders argued that a significant increase in fees or charges could encourage some to operate outside of the regulatory framework.

– One stakeholder argued that high fees (and the cumbersome permitting system more generally) is likely to be a significant barrier for Pacific Island countries wanting to

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export hazardous waste to Australia under the Waigani Convention. The volume of hazardous waste is typically low and high permit fees may discourage proper waste management in these countries.

– Businesses that collect batteries and export them for recovery argued that high permit fees would mean that these activities are commercially unviable. This would result in more batteries ending up in landfill and/or being stored incorrectly, unless these issues are otherwise addressed by the relevant state or territory jurisdiction.

– One stakeholder argued that high permit fees could make Australia’s waste industry less competitive in the Asia-Pacific region.

■ Cost recovery would unduly stifle competition and industry innovation — there were mixed views on whether increased cost recovery would stifle competition or industry innovation.

– Some stakeholders suggested that increased fees would reduce the viability of their battery collection business;

– However, other stakeholders suggested that fees should not impact on competition provided they are applied consistently.

Overall, there are some circumstances where high permit fees could lead to worse environmental outcomes. However, in most circumstances, cost recovery is more likely to improve efficiency.

3.2 Statutory authority to charge

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 Hazardous Waste (Regulation of Exports and Imports) (Fees) Regulations 1990, but may not exceed $8000.

The current fees for hazardous waste permits are summarised in Table 3.2.1. The fee structure differentiates between:

■ the type of application (export, import or transit) ■ whether the permits are:

– Basel permits (permits involving countries that are a party to the Basel Convention)

– Special permits (permits involving countries that are party to a bilateral or multilateral Agreement with Australia under the Basel Convention).

For most applications, there is a fixed application fee; however, for new export permits there is also a variable component based on the number of transit countries covered by the permit.

3.2.1 Current cost recovery arrangements for hazardous waste permits

Basel permit Special permit

$ $

Export permits

New export permit 4440 480

Export permit renewal 420 420

Variation to export permit 370 370

https://www.comlaw.gov.au/Details/F2004C00426

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Basel permit Special permit

$ $

Additional fee per transit country 110 110

Import permits

Import permit for recovery 210 210

Import permit (excluding for recovery) 270 270

Import permit renewal 270 270

Variation to import permit for recovery 210 110

Variation to import permit (excluding for recovery) 210 210

Transit permits

Transit permit 110 110

Variation to transit permit 110 110

Note: Basel permits involve countries that are a party to the Basel Convention. Special permits involve countries that are a party to a bilateral or

multilateral Agreement with Australia under the Basel Convention.

Source: Hazardous Waste (Regulation of Exports and Imports) (Fees) Regulations 1990.

The Cost Recovery Impact Statement for the 2012-14 period estimated that the cost of the Government’s activities in relation to hazardous waste permits would be around $2.8 million (Table 3.2.2). The overall level of cost recovery for these activities was estimated at around 3.2 per cent of the total costs for this period.

3.2.2 Estimated cost recovery — 2012 to 2014

Cost of

activity

Applications Total cost

recovered

Cost

recovery

Cost per

application

$'000 No. $'000 Per cent $'000

Processing an application for Basel export permit 411 9 41 10.0 45.7

Processing an application for Special export permit 775 45 26 3.4 17.2

Processing an application for import permit (Basel or

Special)

720 54 15 2.1 13.3

Varying an import permit (Basel or Special) 50 3 1 2.0 16.7

Varying an export permit (Basel or Special) 90 3 1 1.1 30.0

Renewing an export permit (Basel or Special) 310 9 4 1.3 34.4

Renewing an import permit (Basel or Special) 265 12 3 1.1 22.1

Compliance activity 49 n.a. 0 0.0 n.a.

Stakeholder relationship and legal advisory costs 141 n.a. 0 0.0 n.a.

Total 2 811 135 91 3.2 20.8

Note: Basel permits involve countries that are a party to the Basel Convention. Special permits involve countries that are a party to a bilateral or

multilateral Agreement with Australia under the Basel Convention.

Source: Australian Government Department of Sustainability, Environment, Water, Population and Communities, 2011, Hazardous Waste Permits:

Cost Recovery Impact Statement – January 2012-December 2014, p. 14.

More recent estimates for the 2015-16 financial year suggests that current permit fees will recover around 5 per cent of the total costs incurred by the hazardous waste permitting team. Although partial cost recovery is allowed under Australian Government Guidelines, the Productivity Commission argues there is rarely a case for partial cost recovery on efficiency grounds.16

16

Productivity Commission, 2001, Cost Recovery by Government Agencies, Inquiry Report No. 15, p. XLIV.

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4. COSTS

4.1 Activities related to hazardous waste permitting

To estimate the costs and then identify the most appropriate approach to funding them, it is important to understand the nature of the tasks relating to hazardous waste permitting. The implementation of Commonwealth hazardous waste legislation is primarily undertaken by the hazardous waste permitting team within the Department. However, as waste management is mainly the responsibility of state and territory governments, state and territory government regulators also have a significant role in the permit application assessment process. It is therefore important to understand the nature of the tasks undertaken by the Department’s hazardous waste permitting team as well and state government regulators.

Tasks undertaken by the hazardous waste permitting team

The specific tasks undertaken by the hazardous waste permitting team include the following.

■ Handling enquiries, including that relate to:

– whether a permit is required

– how to apply for a permit

– a more detailed assessment of whether the material under consideration is considered to be hazardous waste for the purposes of the Act.

■ Permit assessment, liaison, decision making and monitoring — this includes:

– receipting monies received for application fees

– initial assessment of whether an application is complete: has adequate information been provided to base a decision on whether to grant a permit (which may involve substantial liaison with applicants, particularly with respect to the Notification Document and matters such as contracts, insurance, financial statements/guarantees and process under the Hazardous Waste Act and/or Basel Convention)

– formal assessment of the application against the requirements of the Act and regulations as relevant (which includes, but may not be restricted to, analysis of the proposed disposal/recovery operation, transport and packaging, environmentally sound management of the waste, a financial risk assessment, assessment of whether the applicant has ‘appropriate insurance’ for the purposes of the Act and its regulations and the contractual arrangements in place for the movement of the waste)

– seeking legal advice on application-specific and general matters of Act administration which includes framing requests, assessing advice and considering its application to the permit scheme

– liaison with states and territories with respect to collecting additional evidence for the ‘suitable person’ test as to whether a permit should be granted to an applicant (such as previous environmental offences and other relevant matters)

– liaison with industry and jurisdictional environment authorities with respect to whether domestic capacity exists to process a waste proposed for export

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– liaison with Competent Authorities of other countries to seek consent to the movement

– clearance of permit application documentation by EL2 and SES Band 1 with respect to formally receiving an application, making a decision on whether to refuse or grant a permit and/or vary a permit

– publishing notices in the Commonwealth Gazette for applications and decisions

– managing objections to a proposed movement

– liaison with the Minister’s office regarding contentious permit applications and with other agencies e.g. Department of Foreign Affairs and Trade

– supporting the Hazardous Waste Technical Group, including by providing secretariat services.

■ Compliance and enforcement activities including education of applicants and potential applicants to encourage compliance with legislative obligations and enforcement activities involving liaison with the Australian Border Force regarding investigations and making orders in respect of suspect shipments.

■ Policy advice to the Minister and the Parliament.

■ International work that will directly affect the administration of the Act (e.g. the negotiation of Basel Convention’s technical guidelines on used electronic equipment that will provide better definition of what is considered waste under the Convention and thus the Act).

■ Administrative matters, including:

– preparation of reports to director on active applications and on permits which have been granted or refused which are continuously updated

– weekly meetings of the permit assessment team designed to be a community of practice

– regularly updating the list of applications received and permits granted on the Department’s website

– records management.

■ Ongoing improvements to internal and external processes, such as:

– development and maintenance of standard operating procedures and other related documentation

– development and maintenance of web material including website, guidance notes and application forms

– the development of evidentiary certificates under the Act that specify what is hazardous waste and environmentally sound management of waste

– professional services/consultancies such as commissioning a standard operating procedure for assessing insurance requirements

– development of an electronic workflow system for the permit scheme

■ Internal Departmental administrative tasks not directly related to the administration of the Act.

Tasks undertaken by state government regulators In addition, consultation with the NSW Environment Protection Authority (EPA) suggested that state governments perform the following tasks in relation to the assessment of

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hazardous waste import and export permits (state government regulators have little involvement with transit permits):

■ check for outstanding prosecutions.

■ for import permits, check lawfulness and capacity of facility proposed to treat or transfer the waste. This could potentially require inspections and negotiations.

■ for export permits, check whether local facilities can treat the waste. In the case of NSW, this involves consultation with EPA regional offices.

■ preparing response letters.

Cost of activities

The total costs projected to be incurred by the hazardous waste permitting team in 2015-16 are summarised in Table 4.1.1. Direct remuneration costs include personal, recreational and long service leave expenses as well as on-costs, such as training, superannuation and workers compensation. Indirect salary costs include overhead costs such as salaries of staff in corporate (e.g. finance, human resources) and technical support (e.g. legal) areas and accommodation costs (e.g. rent, maintenance, utilities).

4.1.1 Hazardous waste permitting team — 2015-16 year costs

Direct costs Indirect costs Total costs

$ $ $

Remuneration 837,637 194,540 1,032,177

Specialist legal advice 20,000 20,000

Hazardous Waste Technical Group 14,751 14,751

Professional services 65,000 65,000

Gazettals 1,091 1,091

Total expenses 858,728 274,291 1,133,019

Source: Department of the Environment, Department of Finance.

In addition, consultation with the NSW Environment Protection Authority (EPA) suggested that the application assessment process can impose significant costs on state government regulators. According to the NSW EPA, the tasks performed by state government regulators in assessing import and export permits and the estimated costs are summarised in Table 4.1.2. State government regulators have a limited role in transit permit applications.

4.1.2 Estimated state regulator costs

Type of permit Tasks Estimated cost

Import permits

Import of waste to

interstate facility not

transiting through NSW

■ Check for outstanding prosecutions

■ Prepare response letter

$250 per application

Import of waste to or

through a NSW facility

■ Check for outstanding prosecutions

■ Check lawfulness and capacity of NSW facility proposed to treat or

transfer the waste (inspections and negotiations may be required)


Variable, but can be

up to $5000 per

application

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Type of permit Tasks Estimated cost

Export permits

Simple (e.g. used lead acid

batteries)

■ Check outstanding prosecutions



Other ■ Check for outstanding prosecutions

■ Consult with EPA regional offices on whether the NSW facilities can

treat the waste

■ Prepare response letter.


Source: NSW EPA.

Allocation of costs An estimated allocation of Commonwealth Government costs across tasks is shown in Table 4.1.3. The costs have been allocated based on staff estimates of the proportion of their time spent on each task. Two other costs (legal advice and costs with issuing gazette notices) can also be directly attributed to the permit assesment process.17

4.1.3 Allocation of Commonwealth Government costs across tasks

Staff cost

allocation

Staff costs Other costs Total costs

Per cent $ $ $

Pre-application enquiries 10 103,218 0 103,218

Application assessmenta

- Initial check 18 185,792 0 185,792

- Assessment 42 433,514 21,091 454,605

Compliance/enforcement 5 51,609 0 51,609

Administrative matters relating to hazardous waste

permitting

10

103,218 0 103,218

Improvements to work practices 5 51,609 79751 131 360

Policy and Departmental administration 10 103,218 0 103,218

Total 100 1,032,171 100 842 1 33 019

a It is estimated that the hazardous waste permitting team spend around 60 per cent of their time on application assessment. Around 30 per cent of

this time is spent on the initial checking process, including liaising with applicants and around 70 per cent of the time is spent on the actual

assessment.


The costs incurred by state government regulators all relate to the assessment of permit applications.

What are the cost drivers? A key aim of an efficient cost recovery mechanism is to align the revenue received from the activity as closely as possible with the costs incurred. It is therefore important to understand the key drivers of cost. Cost drivers vary across the various activities undertaken by the hazardous waste permitting team. The main cost drivers of each activity where there

17

Legal advice concerns the interpretation of the Hazardous Waste (Regulation of Exports and Imports) Act

1989 and the treaty obligations that underpin for the purposes of undertaking the permit function. Each application requires two gazette notices (one notice for the application and one notice for the decision).

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is an in-principle case for cost recovery, are summarised in Table 4.1.4 and discussed in greater detail below.

4.1.4 Key cost drivers

Activities Key cost drivers

Commonwealth Government activities

Handling enquiries The main cost drivers are:

■ the number of enquiries

■ the complexity of the enquiries.

Permit assessment, liaison, decision

making and monitoring.

The main cost drivers are:

■ the number of permit applications

■ the complexity of the application (e.g. domestic capacity issues to be resolved,

contentious issues etc)

■ the type of permit

■ the number of transit countries in the permit application

■ the quality/completeness of the application

■ Whether any objections are received to the application

■ Whether an application is varied.

Compliance and enforcement activities ■ The resources allocated to compliance and enforcement activities have

essentially depended on the available resources.

■ While not directly linked, both the volume of waste crossing the border and the

need for compliance and enforcement activities is likely to increase as the

volume of hazardous waste generated increases.

Administrative matters directly related to

administration of the Act

■ The administrative tasks supporting the permit assessment process is likely to

be closely linked to the number of permits assessed.

Ongoing improvement of processes directly

related to the administration of the Act.

■ The resources allocated to ongoing process improvements has, in the past,

depended on the resources available.

■ No close link between resources allocated to these activities.

State government activities

Permit assessment The main cost drivers are:

■ The number of permit applications

■ The type of permit applications


The main factors driving the amount of resources allocated to assessing applications (including state government resources) and the administrative processes to support these activities are as follows.

■ The number of applications — as the number of applications increase, more resources are required to assess them.

■ The complexity of the application — the consideration of domestic capacity, special requirements of some Competent Authorities (the hazardous waste permit government decision makers in other countries) and other application-specific issues can significantly influence the resources required to asses an application.

■ The type of application — the resources required to assess an application varies significantly depending on the type of application. The hazardous waste permitting team

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estimates that

– Of all the permit types, transit permits require the least resources

– Import permits require around 50 per cent more resources to assess, compared to a transit permit

– Export permits require significantly more resources due to the requirement to assess whether there is domestic capacity to process or dispose of the waste. This can also lead to disputes which require additional resources. The resources required to assess permit applications also depends on whether: … The waste is being exported for recovery operations/further processing — the

resources required to assess this type of permit are estimated at around three times that for a transit permit (or around twice that for an import permit).

… The waste is being exported for final disposal — there are relatively few applications for this type of permit (three in the past four years), but the resources required for this type of permit can vary and are significantly higher than permits to export waste for recovery operations/further processing.

■ The number of transit countries — the waste permitting team estimate that each additional OECD country the waste is transiting through takes an additional two hours, while each additional non-OECD country takes an additional four hours.

■ The quality of the application — the Department receives a significant number of applications that are incomplete or do not include sufficient information for the hazardous waste permitting team to assess. This requires further liaison with the applicant and can require significant resources.

The number of applications (by type) for each calendar year is shown in chart 4.1.5. Despite a small decline in the number of applications in 2014, there has been a general upward trend over the past six years. The number of permit applications has roughly doubled between the 2009-10 period and the 2013-14 period. This is mainly due to an increase in the number of applications for permits to export hazardous waste for recovery operations/further processing and transit permits.

4.1.5 Number of applications over time

Data source: Department of the Environment, Centre for International Economics.

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013 2014

Nu

mb

er

Export for finaldisposal

Export forfurtherprocessing

Import

Transit

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The main factors driving the amount of resources allocated to handling enquiries includes:

■ the number of enquiries — as the number of inquiries increases, the resources required to handle these enquiries also increases.

■ the complexity of the enquiries — some enquiries can be answered relatively easily, while others require a more detailed assessment of whether the material is considered to be hazardous waste for the purposes of the Act.

Resources for the remaining activities — including, compliance and enforcement activities and the development of standard operating procedures and advisory material related to the administration of the Act — have not been specifically allocated. Rather, these activities have been undertaken with any surplus resources allocated to the hazardous waste permitting team. The capacity of the Australian Border Force to undertake monitoring and detection activities (such as container scans at ports) has a direct impact on the number of matters referred to the Department for further investigation.

There is unlikely to be a direct link between these activities and the number of permits or any other measurable variable. Nevertheless, there may be an indirect link; as the volume of hazardous waste generated increases, both the volume of hazardous waste crossing the border is likely to increase, there may also be a greater need for compliance and enforcement activities.

4.2 Which costs should be recovered

The Productivity Commission Inquiry into Cost Recovery by Government Agencies, the Australian Government Cost Recovery Guidelines and the Australian Government Charging Framework provide guidance on what activities should be subject to cost recovery.

■ According to the Commission, cost recovery is generally appropriate for regulatory activities that have a direct link to a particular group of identifiable users or beneficiaries.18 This is also broadly consistent with the Cost Recovery Guidelines. This suggests there is a strong case to recover the costs that can be directly linked to particular applications.

– This includes the costs incurred by the Department in assessing permit applications and the associated administrative tasks.

– The costs incurred by state government regulators outlined above also relate directly to assessing permit applications. In principle, these costs could also be recovered through fees and charges and passed onto the relevant state and territory government regulators. However, even though all state and territory government regulators were invited to comment on the Draft CRIS, only the NSW EPA raised this issue.

■ Cost recovery may also be appropriate for regulatory activities that cannot be directly attributed to a particular applicant,19 but only if there is a link between costs and the basis for collecting the cost recovery charges. The Commission notes that taxpayer

18

Productivity Commission, 2001, Cost Recovery by Government Agencies, Inquiry Report No. 15, p. 157. 19

See Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No. 304, July 2014 — Third edition, p. 37-38.

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funding may be preferable if it is not possible to link the charge to the activity closely enough to generate the desired efficiency and equity effects.20 Costs that cannot be directly linked to particular applicants but still could potentially be recovered include those related to:



– development of standard operating procedures and advisory material related to the administration of the Act.21

■ The Productivity Commission argues that activities aimed at meeting the policy and advice needs of Government and Ministers should not be subject to cost recovery, so that Government policy activity maintains both the appearance and the reality of independence. This is also consistent with the Cost Recovery Guidelines.22 In the context of hazardous waste permitting, this implies that the following costs should not be subject to cost recovery.

– policy advice to the Minister

– negotiating international agreements

– Departmental administration unrelated to hazardous waste permitting.

These estimates suggest that full cost recovery would involve raising $1.03 million from fees and charges, based on budgeted 2015-16 costs. Based on the current fee structure, the Department recovered only $49 110 during 2014-15 (approximately 6 per cent of of all recoverable costs).

Around 72 per cent of the Commonwealth Government costs that were identified as recoverable can be directly linked to applications (Table 4.2.1). The remaining 28 per cent of costs that were identified as recoverable cannot be specifically linked to applications.

4.2.1 Commonwealth Government recoverable costs

Costs

$

Commonwealth Government costs directly linked to applications

Initial check 185,792

Assessment of applications 454,605

Related administrative matters 103,218

Total 743,615

Other recoverable Commonwealth Government costs

Handling enquiries 103,218

Compliance/enforcement 51,609

Ongoing improvements to processes 51,609

20


See Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No. 304, July 2014 — Third edition, p. 38. 22

Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No. 304, July 2014 — Third edition, p. 6.

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Hazardous Waste Technical Group 14,751

Professional services 65,000

Total 286,186

Total recoverable costs 1,029,801


4.3 Level of cost recovery

As discussed previously, there is a sound policy case to recover some regulatory costs incurred by governments. Although the Productivity Commission argues it is generally inappropriate, the Cost Recovery Guidelines allow for partial cost recovery. There may be a case for partial cost recovery, where full cost recovery leads to poor environmental outcomes. As discussed previously, some stakeholders argued that full cost recovery could potentially lead to worse environmental outcomes in the following circumstances.

■ High fees encourage some to operate outside of the regulatory framework.

■ Some companies collect hazardous waste (for example batteries) and then export it for recovery. High fees could make such activities commercially unviable, leading to more hazardous waste ending up in landfill or being stored inappropriately.

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 will still represent a small proportion of the costs of collecting, shipping and treating hazardous wastes. While higher charges may be a barrier for Pacific island countries wanting to export hazardous waste to Australia, fees may be reduced in certain circumstances under section 32 of the Act, including for humanitarian reasons, scientific research and testing, or to encourage activities which further the environmentally sound management of hazardous waste.

In addition, maintaining existing charging arrangements or moving to a higher level of partial cost recover will not be sufficient to maintain the permitting activity over time. Indexing existing fee levels at CPI from 1996 would achieve less than 10 per cent cost recovery and would not reflect the relative costs of assessing different permit types. Setting more cost reflective charges within the existing regulatory cap could achieve approximately 33 per cent cost recovery. These options would involve an arbitrary decision on the allocation of costs between users of the permitting activity and the public and would mean that general taxpayers would continue to fund services they do not use or benefit from.

4.4 Summary of key issues

Identifying the costs that should be recovered is not straightforward and requires some judgement.

■ There is a sound policy case to recover at least some of the costs incurred by the Department in operating the hazardous waste permitting system. This includes the costs directly linked to assessing permit applications and the associated administrative tasks.

■ State and territory governments also incur some costs associated with assessing

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applications for hazardous waste permits. There is a case for the Commonwealth Government to also recover these costs on behalf of state and territory governments. However, the arrangements between the Commonwealth and state and territory governments would first need to be formalised.

■ The Department also incurs some costs that cannot be directly linked to specific applications. These costs include: the handling of enquiries, development of standard operating procedures and advisory material related to the administration of the Act, and compliance and enforcement activities. As the link between these costs and specific applications is not direct, the case for recovering these costs is weaker. Nevertheless, these activities benefit permit applicants and recovery of these costs is consistent with the Cost Recovery Guidelines and the Regulatory Charging Framework. Compliance and enforcement activities ensure that all businesses meet the same regulatory requirements and advisory and procedural guidance ensures the application process is efficient and easy to understand.

■ The costs incurred by the Commonwealth Government associated with: negotiating international agreements; providing advice to the Minister and/or the Cabinet; and Departmental administrative tasks not directly linked to hazardous waste permitting should not be recovered from users.

5. COST RECOVERY MECHANISM

5.1 Type of cost recovery charges

The appropriate design of a cost recovery charge depends on the activity. There are two broad types of cost recovery charges.

■ Fees — these are direct charges for the provision of a service. According to the Cost Recovery Guidelines, a cost reflective fee for service is the preferred option where the activity and its costs can be linked to specific individuals or organisations.23 This implies that the following costs should be recovered through some form of application fee:

– permit assessment costs

– administrative/reporting activities directly related to the administration of the Act.

■ Levies — these are a form of tax imposed on a specific industry or class of persons, in contrast to general taxation that applies more broadly.24 A cost recovery levy can be used for costs that cannot be directly linked to specific applicants. These costs include:



– development of standard operating procedures and advisory material related to the administration of the Act.

23

Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No. 304, July 2014 — Third edition, p. 23. 24

Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No. 304, July 2014 — Third edition, p.2; Productivity Commission, 2001, Cost Recovery by Government Agencies, Inquiry Report No. 15, p. XXXIII.

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5.2 Options for recovering costs directly linked to specific applicants

The following fee structures for recovering the costs directly linked to specific applicants were considered:

■ Flat fee structure — the simplest fee structure would involve charging the same fee for all permit applications.

■ Cost reflective fee structure — at a minimum, a cost reflective fee structure would involve varying the fees by type reflecting the costs associated with assessing them.

In relation to the resources required to assess different types of permit applications, the Department estimates the following:

■ Applications for a transit permit require the least resources to assess.

■ Applications for a permit to import hazardous waste require around 50 per cent more resources to assess, compared with transit permits.

■ Export permits require significantly more resources to process, due in part to the domestic capacity requirements.

– Permits to export waste for further processing require around twice as many resources as an import (or three times as many as a transit permit).

– Permits to export hazardous waste for final disposal are relatively infrequent, but can take significantly more time. As an indicator, the Department estimates these permits may require around three times as many resources as a permit to export hazardous waste for further processing.

■ Applications to vary a permit are also relatively infrequent, but require significantly fewer resources to assess than a new permit application. The Department estimates that:

– applications to vary a transit or import permit require around 80 per cent fewer resources to assess, compared to an application for a new permit

– applications to vary an export permit require around 60 per cent fewer resources to assess, compared to an application for a new permit.

■ As outlined previously, the current fee structure effectively provides applicants with discounted permit renewals. However, due to the dynamic nature of the hazardous waste management industry and the need to fully reassess most elements of an application (for example, insurance, consents etc) there are no cost savings in assessing applications to renew a permit. A discount on renewals would therefore not be cost reflective.

Consideration was also given to:

■ Re-lodgement fees — as poor quality incomplete applications increase the cost of assessing the application, a re-lodgement fee reflecting these additional costs could apply where an application needs to be re-submitted.

■ Additional charges per transit country — as additional transit countries increase the cost of assessing an export permit, a cost reflective charge for each transit country could be considered.

Key advantages and disadvantages of each of these approaches are discussed below.

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Flat fees

The key advantage of a flat fee structure is its simplicity. A simple fee structure can potentially reduce the time spent on administration for both applicants and for the Department.

Nevertheless, a flat fee structure is not cost reflective.25 As discussed above, the resources required to assess different types of applications can vary significantly. A flat fee structure would mean that applicants for import and transit permits that are less resource-intensive to assess are cross-subsidising applicants for export permits that are more resource-intensive to assess.

In general, stakeholders broadly supported the principle of cost reflective fees, although as discussed previously, some held concerns over the level of fees under full cost recovery.

Cost reflective applicant fees

While cost reflective application fees would also involve a significant increase in the existing fees (see Appendix A), they could potentially contribute to greater efficiency in the following ways.

■ Encouraging hazardous waste to be disposed of in the most efficient location — where there are no existing facilities within Australia to process or dispose of some types of hazardous waste, businesses must make a decision on whether to establish such a facility or export the waste to a foreign facility that can. Where applicants bear the full cost of assessing permit applications, they are more likely to choose the most economically efficient option. Stakeholders had mixed views on the extent to which full cost recovery could encourage new facilities to be established in Australia.

– Several stakeholders argued that state-of-the-art waste recovery facilities require multi-million dollar investment and sufficient scale to be viable. The fees outlined in the draft CRIS were unlikely to be high enough to change the viability of establishing such (new) facilities in Australia.

– On the other hand, the Australian Council of Recycling argued that increased fees were certain to encourage new investment in recycling infrastructure.

■ Discouraging the generation of hazardous waste — where permit application fees are ultimately paid for by the generator of the hazardous waste (including being passed onto consumers of goods that produce hazardous waste), full cost recovery could discourage consumers from purchasing such products, or producers to use alternative production processes that do not produce hazardous waste. However, a number of stakeholders argued that the fees were unlikely to discourage waste generation.

Cost reflective application fees including a re-lodgement fee

Incomplete and poor quality applications can significantly increase the cost of assessing a permit application. An option put forward in the draft CRIS was to have a separate lodgement and assessment fee. Under this arrangement, the assessment process would be

25

A fee that is related to the cost of providing the activity is the preferred option where the activity and its costs can be linked to a specific individual or organisation. See: Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No. 304, July 2014 — Third edition, p.20.

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broken into two stages.

1 Initial assessment — this would simply focus on whether the application was complete

2 Comprehensive assessment — this would focus on whether the permit would be granted in accordance with the legislation.

The key advantage of a re-lodgement fee is that it encourages applicants to improve the quality of the applications lodged and reduce the time wasted on incomplete applications. Where an incomplete application is submitted, the additional costs would ultimately be paid for by the applicant, rather than being cross-subsidised by applicants that submit complete applications or subsidised by the taxpayer.

One option is for applicants to be charged a lodgement fee reflecting the cost of the initial assessment.

■ If the application is complete, the applicant would then pay an assessment fee reflecting the cost of the more thorough assessment.

■ If the application is incomplete, the applicant would incur additional lodgement fees when the application is re-submitted.

This fee structure would increase the number of payments that applicants are required to make to the Department, increasing the administrative cost burden on business as well as the Department. Although stakeholders generally argued that the administrative costs associated with making additional payments are negligible, a more efficient alternative approach would involve:

■ Applicants incurring a single application fee (covering both the cost of the initial assessment and the more thorough assessment) when they submit the application for the first time.

■ A re-lodgement fee (covering the cost of the initial assessment only) would apply only if an incomplete application needed to be re-submitted.

Stakeholders were broadly supportive of having separate lodgement and assessment fees to avoid cross-subsidising applicants who put in poor quality applications. However, several stakeholders argued that some discretion should apply in cases where the additional information required was minor. Stakeholders also argued that if additional fees applied, the Department should provide clear feedback to applicants on what additional information is required.

Charges for additional transit countries

The advantage of this fee structure is that, all else equal, the higher the number of transit countries the more costly it is to process a permit application. Also, additional fees for each transit country could notionally encourage applicants to choose a more efficient route when moving hazardous waste. However, several stakeholders argued that the permit applicants have little control over shipping routes, which are set by the shipping companies. Consequently, there are unlikely to be any efficiency gains from an additional fee for each transit country.

The key disadvantage of charges for transit countries is the additional complexity. The cost of an additional transit country is relatively modest compared to the overall cost of assessing the application (although the additional fees could be significant if there were a

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large number of transit countries). As such, the costs associated with additional complexity may outweigh the benefits of any efficiency improvement.

5.3 Options for recovering costs not directly linked to specific applicants

According to the Cost Recovery Guidelines, costs that cannot directly be linked to a specific organisation can be recovered through a levy. This includes the costs associated with handling enquiries26, compliance and enforcement activities and the development of standard operating procedures and advisory material related to the administration of the Act.27Levies must be implemented through a separate taxation Bill.28

The group of organisations to which the hazardous wastes permitting service is provided are companies exporting, importing, or transiting hazardous waste. These organisations cannot be identified as part of a particular industry, as organisations in a variety of industries may need to import, export or transit hazardous wastes. Accordingly, it is proposed that a levy be paid by permit applicants as users of the regulatory system. All organisations exporting, importing, or transiting hazardous waste must apply for a permit, so this is the most efficient way of imposing a levy.

Alternative options include:

■ higher permit application fees

■ no cost recovery.

The key advantages and disadvantages for each of these approaches are discussed below.

Higher application fees

The advantage of this option is that all recoverable costs are recovered with a relatively simple fee structure. As only 28 per cent of recoverable costs cannot be linked directly to the number (and type) of applications assessed, it is arguable that any benefits of a more complex fee structure are limited.

However, the Cost Recovery Guidelines state that only costs that can be directly linked to an individual or organisation are appropriate to include in a fee.29 As such, recovering these costs in the form of higher application fees would be inconsistent with the Guidelines.

No cost recovery

As noted above, the Productivity Commission argued that taxpayer funding may be

26

In principle, the Department could impose a fee for service for enquiries (although this may not be possible under the current legislation). However, this is likely to discourage enquiries, which could have several adverse consequences, including: an increase in the number of poor quality applications (resulting in increased work); or increased non-compliance as businesses unsure about whether a permit is required choose to ignore the regulatory system. 27

Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No. 304, July 2014 — Third edition, p.38. 28

Ibid, p.14. 29

Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No. 304, July 2014 — Third edition, p. 38.

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preferable to cost recovery if it is not possible to link costs closely enough to the activity for cost recovery to generate the desired efficiency and equity effects.30 As there is no direct link between the costs associated with handling enquiries, compliance and enforcement activities and ongoing improvements to work practices, the case for cost recovery is less strong. Furthermore, these costs are estimated to make up a relatively modest share of total cost (28 per cent), raising the question of whether the revenue earned would be worth the increase in the complexity of the fee structure.

On the other hand, less cost recovery through user charges increases the burden on general taxpayers, many of whom may not benefit from the regulatory system.

Options for the form of the levy on applicants

A levy would spread the indirect costs that cannot be linked to a specific permit applicant amongst the users of the permit system. Options for the levy include:

■ a mass/volume based charge

■ a flat rate charge

■ a charge proportional to the cost reflective fee faced by the applicant31

The levy charge would apply to each new permit application and would be additional to the permit application fee.

Table 5.3.1 shows how these three different levy charges would impact upon different movement types (transit, import, export for recycling/recovery and export for final disposal).

5.3.1 Levy comparison

From 1 July 2017 and indexed at CPI

thereafter

Option 1 - mass based

charge

Option 2 – flat rate charge Option 3 –

proportional charge

$2.79 per tonne $4616 per application proportional to fee

Permit applications

Transit permit 11,551a 4,616 2 050

Import permit 332b 4,616 2 764

Export permit for further processing 5,488c 4,616 4 944

Export permit for final disposal 92d 4,616 13 663

a Assumed to be a transit permit covering 4140 tonnes (based on the average over 2013 and 2014). b Assumed to be an import permit (excluding for

recovery) covering 119 tonnes (based on the average import permit over 2013 and 2014). c Assumed to be a special permit to export for further

processing covering 1967 tonnes (based on the average permit to export for further processing over 2013 and 2014) and two transit countries. d

Assumed to be a Basel permit to export for final disposal covering 33 tonnes (based on the average permit to export for final disposal over 2013 and

2014) and two transit countries.

Source: Centre for International Economics estimates.

Mass/volume based charge

A mass/volume-based charge would spread the costs that cannot be directly linked to a specific permit applicant across all permit applicants, such that the largest exporters/importers (by tonnage) of hazardous waste bear the largest cost. As these costs

30


The charge is set at a proportion of the fee at the ratio of 72:28 representing the split between direct costs and indirect costs that can be reasonably attributed to an applicant.

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are likely to be passed onto the generators of hazardous waste, such an arrangement could lead to more efficient outcomes by discouraging the generation of such waste (although most stakeholders suggested this was unlikely).

An issue with the current absence of a mass-based charge is that it may encourage applicants to game the system by submitting inflated tonnage values with export permit applications, as a way of excluding domestic facilities as recipients for the waste, due to their capacity being less than the inflated amount on the application. While such gaming is a rare occurrence, a mass-based charge could provide a financial disincentive for this.

On the other hand, a mass-based charge would also have a disproportionate effect upon industries involving heavy waste. One stakeholder suggested that the type of waste, the destination country and the final fate of the waste and the number of transit countries are more indicative of the costs incurred by the Department than the volume of the waste. If there is only a weak link between the indirect costs and the quantity of hazardous waste exported/imported a mass based charge may not be appropriate and a different form of levy preferable. Alternatively, taxpayer funding may be preferable to full cost recovery if it is not possible to link the levy closely enough to the activity for cost recovery to generate the desired efficiency and equity effects.32

A key focus of the second round of stakeholder consultation in early 2016 was to canvass stakeholder views on the preferred form of the levy. Stakeholder interest in this issue was low with only four responses received. A mass-based levy was preferred by three out of the four respondents, which appeared to reflect industry’s familiarity with that form of levy.

A flat rate charge A flat rate charge could be levied on applicants to recover indirect costs that are reasonably attributed to users of the permit system. This form of levy is simple to administer and would spread the costs that cannot be directly linked to a specific permit applicant equally across all those benefiting from the permit scheme. A flat rate levy does not have any disproportionate effect on particular applicants, such as those shipping heavy wastes.

A flat rate levy was preferred by one out of the four stakeholders that responded to the second round of consultation. Proportional charge

A charge that is proportional to the cost reflective fee faced by the applicant could be levied to recover indirect costs that can be reasonably attributed to permit applicants. The key disadvantage of this levy is its complexity (a separate levy charge is required to be calculated in respect of each permit fee type). The key advantage of a proportional charge is that the overall charge faced in respect of each permit type will be relative to the staff resources involved in the permitting activity. As the majority of the costs being recovered through the levy relate to staff costs, it could be argued that this form of levy may be the most appropriate as it can be more closely linked to the activity for cost recovery than a mass-based or flat charge.

32

Productivity Commission, 2001, Cost Recovery by Government Agencies, Inquiry Report No. 15, p. 177.

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6. PREFERRED COST RECOVERY ARRANGEMENT

6.1 Preferred cost recovery arrangement

In weighing up the cost recovery options outlined in sections 4 and 5 above, consideration was given to the Cost Recovery Guidelines, the Australian Government Charging Framework, the best practice principles set out by the Productivity Commission and the views of stakeholders through targeted consultation. 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 are 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. Different (lower) fees will also apply to applications to vary a permit.

– A separate re-lodgement fee will 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) 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, should be recovered through a flat rate levy, as this is simple to administer and avoids disproportionate impacts on particular applicants. A levy would apply to each new permit application from 1 July 2017.

■ In subsequent years, all fees and the levy are to be increased in line with changes in the national Consumer Price Index (CPI).

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 Chart 6.1.1 and explained below.

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6.1.1 Preferred cost recovery arrangement

Data source: Centre for International Economics.

Cost recovery mechanism – proposed fee structure

In line with the Cost Recovery Guidelines, the costs incurred by the Commonwealth Government that can be directly linked to specific applications should be recovered through cost reflective charges. This implies different fees, based on the estimated cost of assessing the permit — for:

■ permits to transit hazardous waste through Australia

■ permits to import hazardous waste into Australia

■ permits to export hazardous waste from Australia for further processing

■ permits to export hazardous waste from Australia for final disposal.

In addition, there should be a re-lodgement fee in cases where an incomplete or poor quality application is submitted. This is expected to encourage applicants to submit higher quality applications.

Although the Department incurs additional costs from additional transit countries on export permit applications, these costs are generally modest relative to the overall cost of assessing an application. Imposing an additional charge for each transit country therefore makes the fee structure unnecessarily complex. Furthermore, these additional charges are unlikely to encourage hazardous waste exporters to choose more efficient routes. Shipping routes are determined by shipping companies and hazardous waste exporters generally having little control over these routes.

No cost recovery

Flat rate levy Cost reflective permit

fees (including a

re-lodgement fee)

Requires further

consideration


to applications:

■ Application

assessment

■ Associated

administrative

matters

Costs not directly

linked to applications:

■ Handling enquiries

■ Compliance and

enforcement

■ Ongoing

improvements to

work practices

Policy/advice:

■ Negotiating

international

agreements

■ Policy advice to

Minister

■ Internal

Departmental

administration


to applications:

■ Check for

outstanding

prosecutions

■ Check lawfulness of

receiving facility

■ Check capacity of

local facilities

■ Prepare response

letter

State Government

costs

Full cost recovery Full cost recovery

Commonwealth Government costs

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Cost recovery mechanism – levy structure

As there is not a strong relationship between the cost of the activities the levy is intended to fund and any of the levy options, there is not a clear case to prefer one form of the levy over another based on economic principles.

Nevertheless, on balance, a flat rate levy is preferred. This approach is simplest to administer and avoids disproportionate impacts on particular applicants.

The levy charge would apply to each new permit application and would be additional to the permit application fee.

6.2 Implementation issues

The cost recovery charges estimated above imply a significant increase in permit fees from the current level. There is a case to phase the fee increases in over time. Implementation issues are discussed below.

Phasing in higher fees

The proposed fees are a significant increase from the current level and in some cases, exceed the $8000 limit specified in the legislation.

Given the significant increase, these fees should be phased in to:

■ give businesses a chance to adjust to higher fees

■ allow time to make any legislative amendments (where necessary).

The preferred approach would be to phase in any increase over two increments.

■ The first increment to apply from 1 July 2016, is based on 33 per cent cost recovery, subject to the $8000 limit currently specified in the legislation. Given the requirement for a levy to be implemented via a separate taxation bill this will be delayed until the necessary legislative amendments have been made.

■ The second increment to apply from 1 July 2017, could move to full cost recovery, including the removal of the $8000 limit and the introduction of the levy, following the necessary legislative amendments being made.

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.

Arrangements for changing the fees in subsequent years

A key aim of an efficient cost recovery arrangement is to align the revenue received to the cost of providing the service. The estimated cost of the hazardous waste permitting services provided by the Department of the Environment are based on the 2015-16 budget and the average number of permits received in 2013 and 2014 (see chapter 5). The cost of providing these services will vary over time due to changes in both the quantity (and type) of permit applications received and changes in the price of inputs, particularly wages.

While the revenue received under the preferred cost recovery option set out above will

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vary in line with changes in the number of permit applications, it will not keep pace with changes in prices (particularly wages) if the fees are held constant over time. For example, hazardous waste permit fees have not changed since December 1996. Since then, the CPI has increased by around 60 per cent.

To ensure that revenue closely reflects costs, it will therefore be necessary to increase fees in line with measured price increases. The simplest and most transparent approach to do this is by indexing the fees to some objective price measure.

Options outlined in the Draft CRIS included: ■ the Consumer Price Index (CPI) published by the Australian Bureau of Statistics (ABS)

(Catalogue No. 6401.0)

■ a measure of wages — as wages are the main input into the regulatory services provided by the Department, a measure of wages could also be considered. This could include:

– the Wage Price Index published by the ABS (Catalogue No. 6345.0)

– a measure of Australian Public Service wages.

Stakeholders generally supported some form of indexation arrangement. The CPI was the preferred price measure as it is the most widely understood. The fees outlined above should therefore be adjusted on 1 July each year, starting on 1 July 2018.

6.3 Estimated charges under proposed option

The estimated charges under the preferred approach outlined above are shown in table 6.3.1. The estimates for both fees and levy from 1 July 2018 onwards assume the CPI increases at 2.5 per cent per year.

Implementation of the indexation will apply to fee and levy components of the charges.

6.3.1 Estimated charges under preferred option

Rate from 1 July

2016a

Rate from 1 July

2017b

Rate from 1 July

2018c

Rate from 1 July

2019c

$ $ $ $

Permit fees

Transit permits 2,484 5,225 5,355 5,489

Import permits 3,726 7,088 7,265 7,447




Transit permits 497 2,244 2,300 2,357

Import permits 745 2,616 2,682 2,749



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Rate from 1 July

2016a

Rate from 1 July

2017b

Rate from 1 July

2018c

Rate from 1 July

2019c

$ $ $ $

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 33 per 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 that the CPI will increase at 2.5 per cent per

year.

Source: Centre for International Economics.

Table 6.3.2 compares the current fees that would apply to the average permit application of each type submitted in 2013 and 2014 to the fees that would apply under the fee structure proposed above. As the Department is proposing to increase the level of cost recovery from around 5 per cent currently to full cost recovery, the fee structure proposed above involves a significant increase from the current level.

6.3.2 Fee comparison

Current fees 1 July 2016 1 July 2017 1 July 2018 1 July 2019

$ $ $ $ $

New permit

Transit permita 110 2,484 5,225 5,355 5,489

Import permitb 270 3726 7,088 7,265 7,447

Export permit for further processingc 700 7 451 12,667 12,994 13,319

Export permit for final disposald 4 660 8 000 35,035 35,911 36,808

Permit variations

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

7. RISK ASSESSMENT

7.1 Risks

The Cost Recovery Guidelines require an analysis of the risks associated with cost recovery along the following dimensions: ■ Complexity — this relates to the structures, processes and implementation of the specific

activity. ■ Materiality — this relates to the financial value of the activity and covers the total cost

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recovery revenue and the amounts of individual charges. ■ Sensitivity — this relates to the level of interest in the activity from government

stakeholders, non-government stakeholders, the media and the Parliament.33 The main risk associated with the proposed fee structure is the possibility of worse environmental outcomes in some circumstances. 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 will still represent a small proportion of the costs of collecting, shipping and treating hazardous waste.

While higher charges may be a barrier for Pacific Island countries wanting to export hazardous waste to Australia, fees may be reduced in certain circumstances under section 32 of the Act, including for humanitarian reasons, scientific research and testing, or encouraging activities which further the environmentally sound management of hazardous waste. Consideration will also be given to providing a reduction in the levy on similar grounds.

8. STAKEHOLDER CONSULTATION

A Draft CRIS outlining various cost recovery options was circulated among targeted stakeholders via email on 20 May 2015. All stakeholders were invited to provide written comments by 2 June 2015. In addition, selected stakeholders (highlighted in bold below) were invited to discuss the various options with the Centre for International Economics.

■ Commonwealth Government agencies, including:

– Australian Customs and Border Protection

– the Department of Industry and Science

– the Australian Maritime Safety Authority

– the Department of Infrastructure

■ State and territory environmental regulators

– NSW EPA

– Victorian EPA

– Queensland EPA

– Western Australia EPA

– South Australia EPA

– Tasmania EPA

– Northern Territory EPA

– ACT EPA

■ Relevant industry groups, including:

– Waste Management Association of Australia

– The Australian Council of Recycling

– The Australian Industry Group

■ Recent applicants, including:

– Ace Waste Pty Ltd

33

Department of Finance, Australian Government Cost Recovery Guidelines, Resource Management Guide No. 304, July 2014 — Third edition, p. 24-25.

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– Alchemy Trading

– Alcoa Portland Aluminium Pty Ltd

– Beverich Holdings International Pty Ltd

– BOC Limited

– Boyne Smelters Limited

– Caltex

– Cegelec

– Century TS Pty Ltd

– Certified Destruction Services Pty Ltd

– CMA Ecocycle

– Consolidated Alloys

– Decmil

– Department of Defence

– Dodd & Dodd Group Pty Ltd

– EMC SARL

– Geocycle

– Globecare Services Inc

– Halliburton Australia Pty Ltd

– Hazmat Services Pty Ltd

– Hospira Australia Pty Ltd

– Hydromet Corporation Pty Ltd

– Institut Polaire Francais

– Johnson Matthey PLC

– Macauley Metals

– McMahon Services Australia Pty Ltd

– Metalman New Zealand Limited

– Mobil

– Mount Isa Mines Limited

– MRI Australia Limited

– New Zealand Aluminium Smelters Limited

– NQ Resource Recovery (Transpacific)

– Orbitas

– Orica Australia Pty Ltd

– PGM Refiners

– Powercell (Australia) Trading Pty Ltd

– RCN E Waste

– SPE

– Schlumberger Australia Pty Ltd

– Sims E-Recycling (NZ) Ltd

– Sims E-Recycling Pty Ltd

– Sims Group Australia Holdings Ltd

– Sterihealth Pty Ltd

– TES-AMM Australia Pty Ltd

– TES-AMM New Zealand Ltd

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– Toll Remote Logistics

– Tomago

– Toxfree (Australia) Pty Ltd

– Tyre Crumb

– Umicore

– Upcycle Limited

– VH International Holding Pty Ltd T/A V Resource

– Victorian Ferries Pty Ltd

– Viva Energy Australia

– Woodside Energy Ltd

As part of the stakeholder consultation program, discussions were held with representatives from:

■ NSW EPA

■ Dodd & Dodd Group

■ Toxfree

■ ACOR.

Written submissions were received from:

■ New Zealand Aluminium Smelters Limited

■ Hospira Australia

■ Catalyst Environmental Solutions

■ Dodd & Dodd Group

■ JJ Richards and Sons Pty Ltd

■ Powercell

■ Trans Pacific.

The Department of Infrastructure and Regional Development, the Australian Maritime Service and the Department of Defence all advised they had no comments on the Draft CRIS.

A revised draft was circulated among recent applicants via email on 16 January 2016. Stakeholders were invited to provide written comments by 15 February 2016. Responses were received from:

■ Hazchem Pty Ltd and Toxfree Australia Pty Ltd

■ Geocycle

■ ABR Enacellar Pty Ltd

■ Alchemy Trading Company Pty Ltd.

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9. FINANCIAL ESTIMATES

9.1 Revenue estimates

It is estimated that there will be 62 applications for a permit or permit variation in 2015/16 (table 9.1.1). Based on the current fee structure, these permits are estimated to raise $47 860.

9.1.1 Number of applications

2015/16

No.

Permits

Transit permits 9

Import permits 19

Export for further processing 27

Export for final disposal 5

Variations

Transit permits 0

Import permits 0

Export for further processing 2

Export for final disposal 0

Total 62

Basis for other charges

Re-lodgementsa 12

a Assumes 20 per cent of applications will need to be re-lodged.


Future revenue over the forward estimates period depends primarily on the number and type of applications and, to a lesser extent, the number of re-lodgements. As the number of applications can vary from year to year, estimating the number and type of applications is difficult. Furthermore, there are several opposing forces that will influence the number of applications over the forward estimates. For example, work commissioned by the Department estimates that the volume of hazardous waste generated in Australia will grow on average by 2.8 per cent per year over the 20 year period from 2013-14 to 2033-34.34 On the other hand, higher permit fees may discourage some applicants.

The revenue estimates are based on the number (and type) of applications remaining constant over the forward estimates period (Table 9.1.2).

34

Blue Environment, Ascend Waste and Environment and Randell Environmental Consulting prepared for the

Department of the Environment, Hazardous Waste Infrastructure Needs and Capacity Assessment, July 2015 p. xi. Accessed on 6 November 2015 at https://www.environment.gov.au/system/files/resources/8d295260-d9af-46c6-9a3a-824c2fedfb64/files/hazardous-waste-infrastructure-needs-capacity-assessment.pdf

https://www.environment.gov.au/system/files/resources/8d295260-d9af-46c6-9a3a-824c2fedfb64/files/hazardous-waste-infrastructure-needs-capacity-assessment.pdf

https://www.environment.gov.au/system/files/resources/8d295260-d9af-46c6-9a3a-824c2fedfb64/files/hazardous-waste-infrastructure-needs-capacity-assessment.pdf

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9.1.2 Revenue estimates

Forward estimates

2016/17 2017/18 2018/19 2019/20

$ $ $ $

Permits

Transit permits 22 353 47 021 48 197 49 402

Import permits 70 785 134 667 138 034 141 484

Export for further processing 201 178 342 283 350 840 359 611

Export for final disposal 40 000 175 174 179 553 184 042

Variations

Transit permits 0 0 0 0

Import permits 0 0 0 0

Export for further processing 5 961 11 940 12 238 12 544

Export for final disposal 0 0 0 0

Other charges

Re-lodgement fee 0 17 980 18 429 18 890

Levy 0 286 186 293 341 300 675

Total 340 277 1 015 251 1 040 632 1 066 648

Note: Revenue estimates are based on the number of permits shown in table 9.1.1 and the estimated permit fees shown in table 6.4.1.


9.2 Financial estimates

Revenue will remain significantly below costs in 2016/17 as the expected move towards full cost recovery is phased in two increments (subject to the necessary legislative changes) (table 9.2.1). By 2017/18, revenue will broadly match recoverable costs, with expected shortfall reflecting the hazardous waste permitting team’s policy advice functions, which were not considered recoverable.

9.2.1 Financial estimates to 2016-20

Forward estimates

2016/17 2017/18 2018/19 2019/20 Total

$ $ $ $ $

Recoverable expenses 1 029 801 1 036 722 1 043 690 1 050 706 4 160 919

Fee revenue

Levy revenue

Total revenue

340 277

0

340 277

729 065

286 186

1 015 251

747 291

293 341

1 040 632

765 973

300 675

1 066 648

2 582 606

880 202

3 462 808

Balance - 689 524 -21 471 - 3 058 15 942 - 698 111

Source: Department of the Environment, Department of Finance.

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10. KEY FORWARD DATES AND EVENTS

Investment in a new IT system to manage workflows towards during 2016-2017 could potentially reduce the cost of assessing permits applications. Permit fees could be reviewed once the new system has been fully implemented and the impact on the cost of assessing permits can be assessed.

The information in this CRIS will be reviewed on a regular basis of no more than five year intervals to ensure that underlying assumptions and estimates of expenses and revenues are current.

11. CRIS APPROVAL AND CHANGE REGISTER

Date of CRIS change CRIS change Approver Basis for change

22/04/2016 Certification of the CRIS

Secretary, Department of the Environment,

New charging arrangements

27/04/2016 Approval of the CRIS Minister for the Environment

New charging arrangements

APPENDIX

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A. COST RECOVERY CHARGES UNDER VARIOUS OPTIONS

In this appendix, we estimate the cost reflective fees and charges that would apply under each of the cost recovery options outlined in chapters 3 and 4. These estimates are based on the costs from the 2015-16 financial year and the average number of applications received in 2013 and 2014. In some cases, these fees would not be possible under the current legislation due to the $8000 limit.

A.1 Estimating the charges under the preferred option

Cost reflective fees including a re-lodgement fee for incomplete applications

Under the preferred option, the costs that can be directly linked to specific applicants are recovered through cost reflective fees. There will also be a re-lodgement fee that would apply in cases where an applicant submits a substantially incomplete application and then needs to re-lodge it.

The Department estimates that currently, the costs incurred in checking applications for completeness are around $185 792.

Around half of these costs are estimated to be due to incomplete applications. Based on 62 applications per year, this implies that the cost of the initial completeness check is around $1498 per application. It also implies that savings of around $92 896 per year could be realised if all applicants submitted complete applications.

A.1.1 Cost of initial check per permit application

Estimated share

of costs

Cost Cost to be

recovered

Permits Estimated

cost per

permit

Per cent $ $ No. $

Initial assessment 50 92 896 92 896 62 1 498

Subsequent follow-up 50 92 896 0 n.a. n.a.

Total 100 185 792 92 896

Source: Department of the Environment, Centre for International Economics estimates.

This implies that:

■ a cost of $1498 needs to be included in the permit fees to cover the cost of the initial completeness check (on top of the cost of the comprehensive assessment of the application estimated below)

■ where an incomplete application is submitted and needs to be re-lodged, a re-lodgement fee of $1498 should apply to cover the additional cost of re-checking whether the application is complete.

As the cost of assessing different types of application varies, the cost reflective charges need to be set in proportion to those costs. The share of assessment costs for each type of permit is estimated in Table A.1.2. The weightings for each type of permit are based on staff estimates of the comparative time required for assessment of each permit type.

APPENDIX

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A.1.2 Share of resources on each permit type

Permits Weighting Share of costs

No. Per cent

Permit applications

Transit 9 1.0 6.0

Import 19 1.5 19.0

Export for further processing 31 3.0 62.1

Export for final disposala 2 9.0 12.0

Permit variations

Transit 0 0.2 0.0

Import 0 0.3 0.0

Export for further processing 1 1.2 0.8

Export for final disposal 0 3.6 0.0

Total 62 100.0

a The cost of processing an application to export hazardous waste for final disposal can vary significantly. As there are relatively few of these

applications, it is difficult to meaningfully average these costs. For illustrative purposes, we estimate that these costs are around three times that for

an application to export hazardous waste for further processing.

Source: Department of the Environment.

The total cost of assessing applications is around $557 82335 based on 2015-16 estimates. Note that permit variations are received relatively infrequently. Where no permits were received during 2013 and 2014, the costs are estimated using the weightings shown in table A.1.3. The total cost per application is estimated based on the cost of the assessment cost plus the cost of the initial check ($1498 per application) estimated in table A.1.1.

A.1.3 Estimated costs per permit

Share of costs Costs to be

recovered

Permits Estimated

assessment

cost per permit

Total cost

per permit

Per cent $ No. $

New permits

Transit 6.0 33 536 9 3 726 5 225

Import 19.0 106 199 19 5 589 7 088

Export for further processing 62.1 346 543 31 11 179 12 677

Export for final disposal 12.0 67 073 2 33 536 35 035

Permit variations

Transit 0.0 0 0 745 2 244

Import 0.0 0 0 1 118 2 616

Export for further processing 0.8 4 472 1 4 472 5 970

Export for final disposal 0.0 0 0 13 415 14 913

Total 100 557 823 62

Source: Department of the Environment.

35

This figure is the direct costs linked to the permit assessment ($743 615) less the cost of conducting the initial check ($185 792).

APPENDIX

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Levy for indirect costs For 2015-16, costs directly linked to the administration of the Act (handling enquiries, compliance and enforcement activities developing standard operating procedures and advisory material related to the administration of the Act) but that cannot be directly linked to applicants have been estimated at $286,186.

Methodology for estimating a mass/volume based charge On average, over 2013 and 2014, applications to move 102 Kt of hazardous waste per year across Australia’s borders were submitted. However, the quantity of hazardous waste that legally crossed the border is likely to have been less than this because:

■ some applications were ultimately withdrawn

■ some applicants ship less than the permit amount.

Nevertheless, based on the quantity of hazardous waste in permit applications submitted, this implies that a levy of around $2.79 per tonne would be required to achieve full recovery of the costs that cannot be directly linked to specific applicants (Table A.1.4).

If a submitted application for a permit is withdrawn, it is not proposed that the fee be refundable, as most if not all of the assessment work will usually have been completed before any withdrawal takes place.

A.1.4 Calculation of mass-based charge

Commencing

2017/18

Indexed at CPI

2018/19

Indexed at CPI

2019/20

Indirect costs to be recovered ($) 286 186 ... ...

Volume of waste (tonnes) 102 516 ... ...

Charge per tonne for new permits ($) 2.79 2.86 2.93


Methodology for estimating a flat rate charge It is estimated that 62 permit applications will be received over the forward estimates. This implies that a flat fee of $4,616 would be required to achieve full recovery of the costs that cannot be directly linked to specific applicants (Table A.1.5).

A.1.5 Calculation of flat rate charge

Commencing

2017/18

Indexed at CPI

2018/19

Indexed at CPI

2019/20

Indirect costs to be recovered ($) 286 186 ... ...

Estimated number of permits 62 ... ...

Charge for all permit applications (excludes

application for permit variations and re-lodgement)

$4,616 $4,731 $4,850

APPENDIX

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Methodology for estimating a proportional charge The costs to be recovered under the permitting function consist of direct costs (approximately 72%) and indirect costs (approximately 28%). The ratio of indirect costs to direct costs is 28:72 or approximately 39% (Table A.1.6).

A.1.6 Calculation of ratio to be applied in proportional charge

$

Indirect costs to be recovered ($) 286 186

Direct costs to be recovered ($) 743 615

Indirect costs as a percentage of direct costs 38.5%

This ratio of indirect costs to direct costs can be applied to the fee structure to calculate a proportional charge to recover indirect costs (Table A.1.7). For example, the fee faced by an applicant for a transit permit is $5,225. Multiplying this fee by the ratio of indirect costs to direct costs (39%) results in a proportional charge of $2,012.

A.1.7 Calculation of proportional charge to apply to each permit type

Fee from 1 July

2017

Proportional

charge

commencing

2017/18

Proportional

Charge Indexed

at CPI 2018/19

Proportional

Charge Indexed

at CPI 2019/20

$ $ $ $

Permits

Transit permits 5 225 2,012 2,062 2,114

Import permits 7 088 2,728 2,796 2,866

Export for further processing 12 667 4 877 4,999 5,124

Export for final disposal 35 035 13 488 13,825 14,171

Summary of charges under preferred option

The preferred option and estimated revenue collected is summarised in table A.1.8

A.1.8 Charges under preferred option

Fee from 1 July 2017 Number Revenue

$ (rounded to the

nearest whole)

$

Permits

Transit 5 225 9 47 025

Import 7 088 19 134 672

Export for further processing 12 667 27 342 009

Export for final disposal 35 035 5 175 175

Variations

Transit 2 244 0 0

Import 2 616 0 0

APPENDIX

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Fee from 1 July 2017 Number Revenue

$ (rounded to the

nearest whole)

$

Export for further processing 5 970 2 11940

Export for final disposal 14 913 0 0

Other charges

Re-lodgement feea 1 498 12 17 976

Levy 286 186

Total 1 014 983

a Assumes that around 20 per cent of applications submitted would be incomplete.


A.2 Estimated charges under alternative options

The fees that would apply under various alternatives considered are also estimated below.

Flat application fees

Under a flat fee structure, the same charge would apply to each application. The cost per application depends on what costs are to be recovered through the application fees.

■ If only the costs that can be directly linked to applicants are recovered, the cost per application is estimated at around $11 994 (Table A.2.1)

■ If all recoverable costs are to be recovered through application fees, the cost per application would be around $16 610 (Table A.2.1).

A.2.1 Cost per application

Costs to be recovered Applications per year Cost per application

$ No. $ per application

Costs directly linked to applicants 743 615 62 11 994

All recoverable costs 1 029 801 62 16 610


Cost reflective permit fees without re-lodgement fee

The fees that would apply if the re-lodgement fee was not included in the fee structure are estimated below (table A.2.2). The fees depend on whether all costs were to be recovered through the fees, or only the costs directly linked to specific applicants.

APPENDIX

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A.2.2 Estimated cost per application


recovered

Permits Estimated cost

per permit

Per cent $ No. $

Costs directly attributed to applicants

Permits

Transit 6.0 44 706 9 4 967

Import 19.0 141 570 19 7 451

Export for further processing 62.1 461 965 31 14 902

Export for final disposal 12.0 89 413 2 44 706

Permit variations

Transit 0.0 0 0 993a

Import 0.0 0 0 1 490a

Export for further processing 0.8 1 5 961

Export for final disposal 0.0 0 0 17 883a

Total 100 743 615 62


recovered

Permits Estimated cost

per permit

Per cent $ No. $

All recoverable costs

Permits

Transit 6.0 61 912 9 6 879

Import 19.0 196 054 19 10 319


Export for final disposal 12.0 123 824 2 61 912

Permit variations

Transit 0.0 0 0 1 376a

Import 0.0 0 0 2 064a


Export for final disposal 0.0 0 0 24 765a

Total 100.0 1 029 801 62

a For permits where no applications were received, the cost of assessing those permit types were based on the weightings shown in Table A.1.2

above.


Additional fees for each transit country

If there was an additional fee for each transit country on an export permit, the fixed fee for export permits would need to be lowered to maintain cost reflectivity. There would be no change to the cost of transit or import permits. As above, the fees depend on what costs are to be recovered through application fees.

The Department’s hazardous waste permitting team estimates:

APPENDIX

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■ for each additional OECD transit country, a permit application takes an additional two hours to process

■ for each additional non-OECD transit country, a permit application takes an additional four hours to process.

To estimate an indicative cost reflective fee structure, we value each hour at $69.80. This is based on the average hourly total reward36 across APS6 and EL1 levels (Table A.2.3).

A.2.3 Estimated cost per hour

Annual total reward Hourly ratea

$ per year $ per hour

APS6 102 655 62.21

EL1 127 690 77.39

Average 115 173 69.80

a Based on 220 working days per year and 7.5 hours per day.

Source: Australian Public Service Commission, APS Remuneration Report 2014, pp. 65-66.

This implies an additional cost of around $140 per OECD transit country and around $277 per non-OECD transit country (Table A.2.4).

A.2.4 Cost per additional transit country

Hours per transit

country

Cost per transit

country

No. $

OECD countries 2 140

Non-OECD countries 4 279

Note: Time is valued at $69.80 per hour (see Table 5.8).


As the Department would receive additional revenue for each transit country, there would need to be a corresponding reduction in the fixed component of the export permit fee would need to be reduced in order to maintain cost reflectivity. To estimate the extent to which the fixed component of the fee would need to be reduced in order to raise the same revenue we need to understand the average number of OECD and non-OECD transit countries per export permit.

An analysis of a sample of 33 export permit applications included 39 OECD transit countries and 39 non-OECD transit countries. This is an average of around 1.2 OECD transit countries and 1.2 non-OECD transit countries per application. The fixed component of the fee could therefore be reduced by around $503.

36

Total reward is a measure of remuneration that includes base salary, agency superannuation contributions, other benefits and any bonuses.

hazardous waste permits 2016-17 · section 32 of the hazardous waste (regulation of exports and...

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