Ozone Protection and Synthetic Greenhouse Gas Management
Program
COST RECOVERY IMPACT STATEMENT
January 2012 to June 2016
Page 1 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
Version Control
Version
0.1
0.2
0.3
0.4
0.5
1.0
Author
Date
Comments
Initial draft for review by Department of Finance and
Deregulation (Finance)
Update following review by Finance
Update following receipt of revised data
Update after 2nd Review by Finance
Certified by Chief Executive Officer of Agency
Agreed by Minister
Page 2 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
Table of Contents
1.
OVERVIEW
1.1
1.2
1.3
2.
POLICY REVIEW – Analysis of Activities
2.1
2.2
2.3
2.4
2.5
3.
Projected Expenses and Revenue
MONITORING MECHANISMS
6.1
6.2
6.3
7.
Cost Recovery Activities
Costs Components
Changes in Cost Base
Volume and Demand Assumptions
Summary of Charging Arrangements
PROJECTED EXPENSES AND REVENUE FOR THE CRIS
5.1
6.
Design of the Cost Recovery Arrangement
Basis of Charging – Fee or Levy
COST RECOVERY MODEL
4.1
4.2
4.3
4.4
4.5
5.
Policy Authority
Legal Requirements for the Imposition of Charges
Description of Cost Recovery Activities
Users and Stakeholders
Conclusion
DESIGN
3.1
3.1
4.
Purpose
Background
Australian Government Cost Recovery Policy
Monitoring Mechanisms
Stakeholder Consultation
Periodic Review
CERTIFICATION
Page 3 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
1.
OVERVIEW
1.1
Purpose
This Cost Recovery Impact Statement (CRIS) is prepared as part of the Department’s
5-year review of cost-recovery arrangements in accordance with the Australian
Government’s Cost Recovery Policy.
The purpose of this CRIS is to demonstrate the Department’s compliance with the
Australian Government’s Cost Recovery Guidelines in relation to the licensing of
imported or manufactured ozone depleting substances (ODS) and synthetic greenhouse
gases (SGGs) (or products containing these substances) and the permit scheme for the
use of these substances in the refrigeration and air conditioning and fire protection
industries and associated compliance activities.
1.2
Background
The Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 (the Act) is
the legislative mechanism under which Australia meets its obligations to phase-out ODS
under the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal
Protocol), and its obligations under the Kyoto Protocol, to limit greenhouse gas
emissions by controlling the use of SGGs.
Purpose of the Act
The purpose of the Act is to:

implement the provisions of the 1985 Vienna Convention for the Protection of
the Ozone Layer (Vienna Convention) and the 1987 Montreal Protocol;

institute specific controls on the manufacture, import, export, distribution and
the use of ODS;

encourage Australian industry to replace ODS and achieve a faster and greater
reduction in their use than provided for in the Vienna Convention and the
Montreal Protocol to the extent that such replacements and achievements are
reasonably possible within the limits imposed by the availability of suitable
alternate substances and appropriate technology and devices;

control the manufacture, import, export and use of SGG that are used to replace
ODS to give effect to Australia’s obligations under the United Nations
Framework Convention on Climate Change (UNFCCC); and

promote the responsible use of ODS and SGG to minimise their effect on the
atmosphere.
Licensing
The Act applies consistent controls on the use of ODS and the SGGs used to replace
them to meet Australia’s legally binding requirements under the Montreal Protocol and
Kyoto Protocol, including to minimise the emission of these substances to the
atmosphere. The Act:
Page 4 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program

prohibits the import, export or manufacture of chlorofluorocarbons, halons,
carbon tetrachloride, methyl chloroform, bromochloromethane and
hydrobromofluorocarbons, without either an essential use licence or a used
substance licence;

establishes a system of controlled substance licences and reporting
requirements
for
the
import,
export
or
manufacture
of
hydrochlorofluorocarbons (HCFCs), methyl bromide, hydrofluorocarbons (HFCs)
and perfluorocarbons (PFCs), consistent with Australia’s obligations under the
Montreal Protocol and the UNFCCC; and

establishes a licensing system for the import of refrigeration and air
conditioning equipment that contains a HFC or HCFC refrigerant (pre-charged
equipment), thereby applying the same conditions and responsibilities for these
substances when imported in equipment, as applying to the importation in bulk
form.
End-use Regulations
The Act creates regulation-making powers to allow the Australian Government to
develop end-use regulations on: acquisition; purchase; sale; handling; use; storage; and
disposal of ODS and SGG.
End-use regulations under the Ozone Protection and Synthetic Greenhouse Gas
Regulations 1995 (the Regulations) have been implemented for the use of ODS and
SGG in refrigeration and air conditioning and fire protection industries. These
Regulations assist Australia to meet its phase-out obligations under the Montreal
Protocol. They also lead to reduced emissions of ODS and SGG through the
establishment of minimum industry standards.
The Australian Refrigeration Council (ARC) and the Fire Protection Association of
Australia (FPAA) were appointed to administer the permit schemes in the refrigeration
and air conditioning industry, and the fire protection industry, respectively.
The Regulations establish a competency based permit scheme for the refrigeration and
air conditioning, and fire protection industries and limit access to ODS and SGGs to
authorised businesses and handling to licenced technicians.
Revenue
The Act establishes administrative fees for licences and permits applied for under the
Act and the Regulations. The Act also establishes the Ozone Protection and SGG
Account (the Ozone Account) to allow revenue from the licensing and permit scheme
to be directed towards the cost of the Act’s administration. Licence and permit fees are
set at the level estimated to be the cost to the Australian Government of administering
the legislation.
Levies on imports and manufacturing activity under a controlled substance licence are
payable each quarter under the Ozone Protection and Synthetic Greenhouse Gas
(Import Levy) Act 1995 and the Ozone Protection and Synthetic Greenhouse Gas
Page 5 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
(Manufacture Levy) Act 1995 according to the quantity and ozone depleting potential
(ODP) of HCFCs imported or manufactured, or the quantity of methyl bromide, HFC or
PFC imported or manufactured. Australia has not manufactured ODS since 1996 and
has never manufactured HFCs or PFCs.
The intention of the fee arrangements is that the net effect of licence and permit
application and levies on departmental revenue should be neutral. This means that all
reasonable costs incurred by the Department in administering its obligations under the
Act should be covered through contributions from industry.1 More specifically, it
requires that sufficient fees be generated from licence and permit applications to cover
the reasonable costs of the licence and permit scheme administration, and that
sufficient funds be generated from levies to cover the reasonable costs of a programs
to assist the phase out of ozone depleting substances and to minimise emissions of
ODS and SGG.
1.3
Australian Government Cost Recovery Policy
In December 2002, the Australian Government adopted a formal cost recovery policy to
improve the consistency, transparency and accountability of its cost recovery
arrangements and promote the efficient allocation of resources. The underlying
principle of the policy is that agencies set charges to recover all the costs of a product
or service where it is efficient and effective to do so, where the beneficiaries are a
narrow and identifiable group and where charging is consistent with Australian
Government policy objectives. The Cost Recovery Policy is administered by the
Department of Finance and Deregulation and is detailed in the Australian Government
Cost Recovery Guidelines (Cost Recovery Guidelines).
The policy applies to all Financial Management and Accountability Act 1997 (FMA Act)
agencies and to relevant Commonwealth Authorities and Companies Act 1997 (CAC Act)
bodies that have been notified. In line with the policy, individual portfolio ministers are
ultimately responsible for ensuring agencies’ implementation and compliance with the
Cost Recovery Guidelines.
The Australian Government Cost Recovery Guidelines and the accompanying Finance
Circular can be found at: http://www.finance.gov.au/financial-framework/financialmanagement-policy-guidance/cost-recovery.html
1
Explanatory Memorandum, Ozone Protection and Synthetic Greenhouse Gas Management Amendment Bill 2003
Page 6 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
2.
POLICY REVIEW - ANALYSIS OF ACTIVITIES
The three activities under the Act and the Regulations which are subject to cost
recovery are:
2.1

Import, export and manufacture licences applied for under the Act (Activity 1.1)

Refrigeration and air conditioning, and fire protection permits applied for under
the Regulations (these are managed by the RAC Industry Board and the Fire
Protection Industry (Ozone Depleting Substances and Synthetic Greenhouse
Gas) Board, respectively). The Australian Refrigeration Council (ARC) and the
Fire Protection Association of Australia (FPAA) have been appointed as the
respective industry boards by the Minister. They were each selected through a
competitive tender process and they are contracted to the Department for a
finite period (Activity 1.2); and

Levy-related activities (Activity 2) that cover the costs associated with:
o
phase-out programs for all ODS;
o
emission reduction programs for all ODS and SGG;
o
storing and destroying seized or forfeited goods;
o
reporting to the Montreal Protocol and UNFCCC Secretariat on annual
ODS and SGG activity
o
awareness raising directly related to regulatory activity
o
general policy related to ODS and SGG
o
research into ODS and SGG, and
o
halon management.
Policy Authority
In 2003, the Australian Government authorised the Department to charge for licensing
applications and an activity fee relating to ODS and SGG import or manufacture on a
cost recovery basis. In 2004, the Australian Government authorised the Department to
charge for permit activities relating to the refrigeration and air conditioning, and fire
protection industries on a cost recovery basis (these authorisations were provided by
the then Prime Minister, Treasurer and Minister for Finance).
2.2
Legal Requirements for the Imposition of Charges
The legal authority for the charging of licence fees is provided under section 14 of the
Act. The legal authority for charging of permit fees is provided under regulations 121
and 313 of the Regulations.
Page 7 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
The legal authority for charging import levies for ODSs and SGGs is provided under
Section 4 of the Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Act 1995
(Import Levy Act).
The legal authority for charging levies on the manufacture of ODSs and SGGs is
provided under Section 4 of the Ozone Protection and Synthetic Greenhouse Gas
(Manufacture Levy) Act 1995 (Manufacture Levy Act).
Subsection 65D(a) of the Act provides that it is a purpose of the Ozone Account set up
in section 65B to receive money for reimbursing the Commonwealth’s costs associated
with the administration of the Act and the Regulations. Subsection 65D(b-ca) provides
that is it a purpose of the Ozone Account to pay or reimburse the Commonwealth’s
costs associated with furthering programs (or information about programs) that
address the phase out of ODSs, and emission minimisation programs for ODSs and
SGGs; the Commonwealth’s costs associated with management of the National Halon
Bank (NHB); and the Commonwealth’s costs associated with research relating to
substances that deplete the ozone in the atmosphere or synthetic greenhouse gases.
Section 45A provides that the Australian Government may make regulations for the
sale, use, storage, handling and disposal of controlled substances (Activity 1.2).
2.3
Description of Activities
For Activity 1.1, there are currently around 1,500 ODS and SGG importers licenced
under the Act.
Four types of licence can be issued under the Act:

Controlled Substance Licence, which allows the holder to manufacture, import
or export HCFCs, methyl bromide or SGGs;

Essential Use Licence, which allows the holder to manufacture, import or export
scheduled substances, which have been phased out, for essential uses approved
through the Montreal Protocol;

Used Substance Licence, which allows the holder to import or export recycled
or used scheduled ODS substances; and

Pre-charged Equipment Licence, which allows the holder to import refrigeration
and air conditioning equipment containing HCFCs or HFC refrigerants.
Importers who could be considered personal importers, ie, those who import five or
less pieces of equipment containing 10 kilograms or less of refrigerant can apply for a
partial waiver of the application fee, reducing the fee to $400. This would be to cover
the licence application only, as the Department would not expect to apply monitoring
and compliance, information or enforcement activities (discussed below) on low
volume importers. The fee is based on only the cost of assessing and processing the
licence.
Page 8 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
There are currently almost 70,000 permit holders in the refrigeration air conditioning,
and fire protection industries under the Regulations.
For Activity 1.2, nine types of permits are issued under the Regulations:

Refrigerant Handling Licence, which allows the holder to handle controlled
refrigerants in the refrigeration and air conditioning industry;

Refrigerant Trading Authorisation, which allows the holder to acquire, possess
and dispose of controlled refrigerants;

Restricted Refrigerant Trading Authorisation, which allows the holder to
acquire, possess and dispose of controlled refrigerant, but only where they have
been reclaimed from end-of-life refrigeration and air conditioning equipment,
and only where the refrigerant is supplied to the operator of an approved
refrigerant destruction facility;

Refrigeration Equipment Manufacturers Authorisation, which allows the
holder to acquire and use controlled refrigerants in the manufacture of
refrigeration and air conditioning equipment;

Extinguishing Agent Handling Licence, which allows the holder to handle
controlled extinguishing agents in the fire protection industry;

Extinguishing Agent Trading Authorisation, which allows the holder to acquire,
store or dispose of controlled extinguishing agents that are for use, or has been
used, in fire protection equipment;

Halon Special Permit, which allows the holder to possess halon that is for use in
fire protection equipment; and

Special Purpose Exemption, which grants an exemption to a person, entitling
the person to the privileges of the holder of an Extinguishing Agent Handling
Licence, Extinguishing Agent Trading Authority, or a Halon Special Permit.
The activities which take place within the Department and its appointed Industry
Boards in relation to the licensing and permit scheme include:

Regulatory activities:
o
Registration and approvals:

providing advice on requirements;

inviting applications;

assessing licence and permit applications;

assessing exemption applications;

issuing licences and permits;
Page 9 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
o
o

Monitoring ongoing compliance with the Act and Regulations:

monitoring licence and permit activity including desktop and onsite audits;

keeping records of quota allocations and import, export and
manufacture activity;

quarterly reporting and levy compliance;

policy development directly related to the Act and Regulations;
Administration and enforcement:

contract management of Industry Boards;

investigating possible breaches of the Act and Regulations;

enforcing the Act and Regulations; and
Information activities:
o
newsletters, bulletins, brochures etc. to industry and consumers;
o
liaison with training providers.
The above activities qualify for cost recovery under the Australian Government’s Cost
Recovery Guidelines. There are no free rider effects and each licence or permit holder
receives an exclusive commercial benefit by holding that licence or permit.
Charging for the above activities is consistent with policy goals. The Act and Regulations
prescribe that an application for a licence or permit be accompanied by the relevant
application fee as set out in the Regulations. These fees are to be deposited in the
Ozone Account for the purposes of paying or reimbursing the Commonwealth’s costs
associated with the administration of the Act and Regulations.
Charging for the above activities is considered to be efficient. It is easy to identify a fee
which accurately links the costs of the activities to the regulated individuals through
the costs incurred by the Department and its Industry Boards for salaries, on-costs,
direct materials and section overheads. An activity-based costing model has been
developed to determine the specific costs for each component of the cost recovery
arrangement and is included in Section 4.2 below.
Charging for the above activities is considered to be cost effective. The fee charged to
importers, manufacturers and end-users reflects the entire cost to the Department in
administering the scheme. The Department and its Industry Boards collect the relevant
fee at the time of application, thus minimising collection costs.
Page 10 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
2.4
Users and Stakeholders
The relevant stakeholders are:
2.5

the 1500 importers of ODS, SGG and pre-charged equipment licenced under the
Act; and

the 70 000 businesses and technicians in the refrigeration and air conditioning,
and fire protection industries, permitted under the Regulations.
Conclusion
The charging of licence and permit fees complies with the principles outlined in the
Cost Recovery Guidelines. It is appropriate and equitable that those individuals and
organisations that apply for a licence or permit meet the estimated costs of regulating
them. Further policy approval has been obtained that the estimated costs of regulating
licence and permit holders be recovered through a licence or permit fee.
Page 11 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
3.
DESIGN
3.1
Design of Cost Recovery Arrangement
The licence and permit scheme is administered both within the Department (import,
export and manufacture licences) and by two Industry Boards contracted by the
Department, the ARC and FPAA (end-use permits). Application fees collected by and on
behalf of the Department are paid into the Ozone Account where they are used to pay
or reimburse the Department’s costs of administering the licence and permit scheme.
Who should pay cost recovery charges?
The licence and permit scheme is fully funded by the individuals that have created the
need for regulation. These individuals are the importers, exporters and manufacturers
of bulk ODS and SGGs, importers of pre-charged equipment, and businesses and
technicians in the refrigeration and air conditioning, and fire protection industries.
Regulatory activities
The fees applied to the individual licences and permits reflect the costs of
administration and regulation of that licence or permit to the Australian
Government.
Information activities
The fees applied to the individual licences and permits include the costs of
information and education programs for industry. Information activities which do
not directly relate to licence and permit holders are funded from other sources.
Funding for regulatory activities and information activities undertaken as a result of the
scheme are included as part of the licence fee or permit fee.
3.2
Basis of Charging – Fee or Levy
Fees are the appropriate mechanism to recover the costs incurred by the
Commonwealth in administering and regulating the licence and permit scheme.
Identifying the users of the scheme is straightforward as individuals must hold a licence
or permit to import, manufacture, handle or trade in ODS or their replacement SGG
and are therefore registered with the Department.
In regards to the levy related activities, it is appropriate to charge these activities based
on the actual amount and types of gas imported or manufactured.
Page 12 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
4.
COST RECOVERY MODEL
4.1
Cost Recovery Activities
The activities under the Act and the Regulations which are subject to cost recovery are:
1) Import, export and manufacture licences issued under the Act; and
2) Refrigeration and air conditioning, and fire protection permits issued under the
Regulations; and
3) Levies applied to the importation or manufacture of ODS and SGGs.
Table 1 includes a list of cost recovery activities associated with the licence and permit
scheme and the associated fees.
Table 1: List of Cost Recovery Activities and associated Charges
Ref Activity Name
Description
Charge Title
1.1
Import, Export and
Manufacture Licences
Licence and permit
application fees
1.2
Refrigeration and Air
Conditioning and Fire
Protection Permits
Expenses associated with registration and
approval of licences and permits, monitoring
compliance with Act and Regulations,
administration and enforcement, and information
and educational activities
2
Import and Manufacture
Levies
Expenses associated with phase-out programs for
all ODS; emission reduction programs for all ODS
and SGG; storing and destroying seized or
forfeited goods; reporting to the Montreal
Protocol and UNFCCC Secretariat on annual ODS
and SGG activity; and awareness raising directly
related to regulatory activity, general policy
development, halon management and research
Import and
Manufacture Levies
4.2
Cost Components
The cost components of the licence and permit scheme (Activities 1.1 and 1.2) each can
generally be broken down into four cost components:

Registration and approvals, includes the costs incurred by the Department and
Industry Boards to assess and register applications including salaries and oncosts, database design and integration and depreciation of capital;

Monitoring and compliance, includes the costs incurred by the Department and
Industry Boards to monitor compliance with the Act and Regulations including
salaries and on-costs, database design and integration, depreciation of capital,
policy development directly related to compliance issues and amendments to
the Act and Regulations where necessary;
Information and communication, includes the costs incurred by the
Department and Industry Boards to provide programs, newsletters and bulletins
to licence and permit holders including salaries and on-costs, printing
consumables and electronic media;
Page 13 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program

Administration and enforcement, includes the costs incurred by the
Department to administer the contracts of the Industry Boards, provide
administrative oversight to the scheme and investigate and enforce compliance
with the Act and Regulations; and,

Capital costs and depreciation, which are incurred over a number of activities,
are allocated between each activity based on the staffing level of that activity.
These costs are part of the ‘other expenses’ as depicted in Table 2 Activity
Expenses.
Table 2: Component Costs for the CRIS Period
Activity 1.1: Import, Export and Manufacture Licences
Jan12Jun12
($'000)
2012-13
($'000)
2013-14
($'000)
2014-15
($'000)
2015-16
($'000)
394
350
339
338
333
1,754
67
139
143
148
153
650
7
14
14
15
15
64
20
42
43
45
46
196
Other1
3002
156
138
131
118
843
Monitoring & Compliance
394
811
838
867
895
3,805
289
596
616
637
658
2,796
Direct expenses (excluding salaries)
26
54
55
57
59
251
Outsourced expenses
25
51
53
55
56
240
Other
54
110
114
118
122
518
Information &
Communication
37
76
79
81
84
357
Salaries & on-costs
37
76
79
81
84
357
Direct expenses (excluding salaries)
-
-
-
-
-
-
Outsourced expenses
-
-
-
-
-
-
Other
-
-
-
-
-
-
Administration &
Enforcement
74
152
157
163
168
714
Salaries & on-costs
74
152
157
163
168
714
Direct expenses (excluding salaries)
-
-
-
-
-
-
Outsourced expenses
-
-
-
-
-
-
Other
-
-
-
-
-
-
899
1,389
1,413
1,449
1,480
6,630
Cost Components
Registration & Approvals
Salaries & on-costs
Direct expenses (excluding salaries)
Outsourced expenses
Salaries & on-costs
Total Activity Cost Per Year
1.
Total
($'000)
Other expenses include ad hoc expenses over the CRIS period, mostly for the development of a
licensing database for Registration and Approvals.
Page 14 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
2.
Initial setup costs lead to high other expenses in year one. Subsequent maintenance costs are
steady.
Activity 1.2: Refrigeration and Air Conditioning and Fire Protection Permits
Jan12Jun12
($'000)
2012-13
($'000)
2013-14
($'000)
2014-15
($'000)
2015-16
($'000)
1,403
2,773
3,254
3,363
3,472
14,265
Salaries & on-costs
582
1,154
1,343
1,388
1,433
5,900
Direct expenses (excluding salaries)
476
942
1,099
1,136
1,173
4,826
Outsourced expenses1,2
151
296
355
367
379
1,548
Other
194
381
457
472
487
1,991
904
1,774
2,125
2,195
2,266
9,264
Salaries & on-costs
613
1,202
1,440
1,488
1,536
6,279
Direct expenses (excluding salaries)
251
492
589
608
628
2,568
-
-
-
-
-
-
41
80
96
99
102
418
Information &
Communication
470
921
1,103
1,140
1,176
4,810
Salaries & on-costs
207
405
486
502
518
2,118
Direct expenses (excluding salaries)
262
513
613
634
654
2,676
Outsourced expenses
-
-
-
-
-
-
Other
2
3
4
4
4
17
280
580
597
618
639
2,714
186
385
397
411
424
1,803
4
8
8
8
9
37
Outsourced expenses
39
80
82
85
88
374
Other
52
107
110
114
118
501
3,056
6,048
7,079
7,316
7,553
31,052
Cost Components
Registration & Approvals
Monitoring & Compliance
Outsourced expenses
Other
Administration &
Enforcement
Salaries & on-costs
Direct expenses (excluding salaries)
Total Activity Cost Per Year
1.
2.
Total
($'000)
The outsourced expenses cover the monies paid to the Industry Boards to undertake these activities
on the Department’s behalf. The Industry Boards were appointed following a Request for Tender.
The ARC is a not-for-profit organisation. The fees charged by the ARC are transparent and are
primarily costs associated with staffing and other associated costs. The fees reflect the operating
costs of the ARC and do not include a profit margin. The budget of the ARC is reviewed and
approved annually. The FPAA’s budget is similarly reviewed annually for operating the fire
protection system.
It is considered more cost effective by the Department to outsource these activities. For example,
the ARC employs approximately 50 people, and the costs associated with this are more effective
than employing a similar number of staff (including SES staff) to manage the operation in-house.
Page 15 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
Similarly, some of the ARC staff are experts in the refrigeration and air conditioning industry, who
the Department may not be as able to attract, were these activities were to be undertaken in-house.
The costs relating to Import and Manufacture Levies (Activity 2) cover activities relating
to emission reduction programs for all ODS and SGG (including the ongoing operation
of the National Halon Bank (NHB), which has policy approval to operate until 2030);
storing and destroying seized or forfeited goods; reporting to the Montreal Protocol
and UNFCCC Secretariat on annual ODS and SGG activity; and awareness raising directly
related to regulatory activity (including the sponsorship of training programs), general
policy development and related research.
The levy arrangements provides funds which are used for a range of activities, with
programs developed based on the amount of funding collected.
Spending of levy receipts is less in the earlier years to provide smoother funding over
the full life of the program as levy receipts decrease in later years as ozone depleting
substances are progressively phased out. Levies from methyl bromide used for nonquarantine and pre-shipment purposes ceased in 2003, while the amount of levy
collected from HCFCs decreases by $180,000 every two years and will essentially cease
in 2016.
4.3
Changes in Cost Base
Labour and on-costs make up the majority of expenses for the licence and permit
scheme (Activity 1.1 and Activity 1.2). Therefore, increases in cost components will
likely be driven by increases in labour and on-costs. An estimate of 3.3 per cent per
annum has been used for departmental costs across the entire CRIS period, based on
the average increase in the labour price index since 2002.2 The Department is currently
preparing an expression of interest for the refrigeration and air conditioning industry
board contract as the current contract expires in August 2012. The Fire Protection
Industry (Ozone Depleting Substances and Synthetic Greenhouse Gas) Board costs have
been estimated to increase in line with departmental costs.
The Department will also incur costs in relation to the ongoing development of a new
licensing system for imports, exports and manufacture, which includes the provision of
ongoing support and maintenance services. These costs have been incorporated into
the activity expense estimates.
The design of a penalty infringement notice scheme is currently underway, although at
this early stage of development, costs are not able to be accurately estimated. These
costs have not been incorporated into the activity expense estimates as penalties and
fines are not cost recovery for the purposes of the policy.
It should be noted that industry generally has been calling for an increased level of
compliance activity in the refrigeration and air conditioning and fire protection fields,
which may lead to an increase in monitoring and compliance costs if implemented
during the CRIS period. These costs have not been quantified and would be reflected in
a new CRIS, if required.
2
Further information can be found at:
http://abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6345.0Sep%202010?OpenDocument, Table 20.
Page 16 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
Further changes to the cost base will occur on 1 July 2012, when SGGs become subject
to an equivalent carbon price under the Clean Energy Future (CEF) Plan. The range of
pre-charged equipment subject to a licence application will expand to cover all
products containing SGGs (rather than for refrigeration and air conditioning equipment,
as is currently the case). The likely impact on revenue and expenses has not yet been
determined although the increased costs associated with monitoring and compliance,
and administration and enforcement will be budget funded. This reflects the
substantial revenue impact of the CEF. If there are any significant impacts arising from
the CEF on the cost recovery process, an updated CRIS will be prepared.
For activities relating to the levies scheme (Activity 2), the National Halon Bank (NHB)
will take an increasing share of the levies, and it will require to be relocated in 2012.
Associated with this will be the costs associated with physical relocation of the halon
stock and necessary infrastructure; lease fees for a new site; and the management fees.
The Department is in the process of negotiating with a preferred tenderer for the lease
of the new site of the NHB, as well as for management services for the NHB.
Further to this, there are training and awareness activity related to the regulatory
activities. In recent years, activities were reduced in anticipation of new Government
policies, including the Clean Energy Future (CEF). The Department has not commenced
significant activity until the makeup of the scheme is clear. As the CEF package was
passed by the Senate on 8 November 2011, there is now certainty, and programs can
now be developed, refined as appropriate, and delivered. However costs for these
programs are yet to be determined. Once this is ascertained, the levy required can be
refined and, if necessary, a new CRIS prepared.
4.4
Volume and/or Demand Assumptions
Forward estimates of demand for licences are based on historical data, which indicate
that, whilst bulk import and pre-charged equipment licence applications remain
relatively stable, low-volume import licence applications have been growing at a rate of
approximately 10 per cent per annum since their introduction in 2009.
Forward estimates of demand for permits are based on historical data and Industry
Board estimates.
Table 3 includes the estimated volume of licences and permits demanded under the
scheme.
Table 3: Volume and demand assumptions
Activity 1: Licence and Permit Scheme
Ref
1.1
1.2
1
Activity Name
Import, Export and Manufacture Licences
Refrigeration and Air Conditioning and Fire
Protection Permits
Licence and permit scheme
Jan12Jun12
2012-13
201314
2014-15
201516
Total
626
1,291
1,336
1,386
1,440
6,079
33,568
67,173
67,232
67,294
67,337
302,603
34,194
68,464
68,568
68,680
68,778
308,682
Page 17 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
For Activity 2, Import and Manufacture Levies, the forward estimates of levies may
reduce. This in part due to the legislated phase out of HCFCs (the HCFC industry limit
for importation or manufacture is 70 ODP tonnes in the 2011 calendar year (equivalent
to $210,000 collected per annum for HCFCs), dropping to 40 ODP tonnes in 2012-2013
calendar years (equivalent to $120,000 collected per annum), 10 tonnes in 2014-2015
calendar years (equivalent to $30,000 collected per annum), and 2.5 tonnes in 20162029 calendar years (equivalent to $7,500 collected per annum)).
The amount of methyl bromide imported into Australia is variable each year, as it is
used for agricultural purposes and the amount imported depends on agricultural
production and the requirements of international trading partners for importation of
produce treated with methyl bromide. That said, Australia imports, on average, around
500 tonnes of methyl bromide per year (equivalent to $67,500 per year). Depending on
the success of information activities to users of methyl bromide, and encouraging them
to adapt to alternative chemicals, the amount of revenue collected each year may
decrease.
The levy amount of SGGs (HFCs and PFCs) imported each year makes up the remaining
amount of revenue collected under this activity. A work program will be developed
once the levy revenue can be more accurately estimated and then developed to
address the impact of the equivalent carbon price on SGGs under the Ozone Act3. One
factor that may impact on this is that importers may not import as much SGG into
Australia, due to decreased demand or due to the industry undertaking more recovery
and recycling activities of SGGs. However, this will not be known for some time after
the implementation of the equivalent carbon price on SGGs.
Activity 2: Import and Manufacture Levies
Jan12Jun12
($ ‘000)
2012-13
($ ‘000)
2013-14
($ ‘000)
2014-15
($ ‘000)
2015-16
($ ‘000)
Total
($ ‘000)
HCFCs
88
120
75
30
30
343
Methyl Bromide
34
68
68
68
68
306
HFCs and PFCs
479
958
958
958
910
4,263
TOTAL
601
1,146
1,101
1,056
1,008
4,912
There are not expected to be any changes to the levy amounts relating to the Import or
Manufacture Levies (Activity 2). To change the amount of these levies would require
legislative amendment. The Department is not contemplating seeking approval for
legislative amendment to adjust the Import or Manufacture Levies.
The funds collected from the application of the equivalent carbon price to these levies
(commencing in July 2012) will not be accredited to the Ozone Account, rather they will
be directed to the Consolidated Revenue Fund. As such, the Department will not be
cost recovering for these additional levies, and this is excluded from this CRIS analysis.
3
Sulfur hexafluoride (SF6) will also be included under the Ozone legislation due to the equivalent carbon price,
however there will be no levy associated with the importation or manufacture of this gas.
Page 18 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
4.5
Summary of Charging Structure
Table 4 contains the current fees and duration of licences and permits.
Table 4: Licence and permit fees
Type
Duration
Fee
Activity 1.1 Import, Export and Manufacture Licences
Controlled substance licence
2 years
$15,000
Used substance licence
2 years
$15,000
2
years
Essential use licence
$3,000
Pre-charged equipment licence
2 years
$3,000
Section 40 exemption
2 years
$3,000
Low Volume Fee Waiver
1 year
$400
Activity 1.2 Refrigeration and Air Conditioning and Fire Protection Permits
Handling permit - refrigerant
2 years
$100
Handling permit - refrigerant
1 year
$50
Handling permit - refrigerant – transitional
1 year
$50
Handling permit - refrigerant - trainee
1 year
$20
Handling permit - extinguishing agent
2 years
$200
Handling permit - extinguishing agent
1 year
$100
Trading permit - refrigerant
2 years
$320
Trading permit - refrigerant
1 year
$160
Trading permit - refrigerant - restricted
1 year
$100
Trading permit - extinguishing agent
2 years
$300
Halon special permit
1 year
$200
Special purpose exemption
1 year
$200
Fee structure
The fee structure of the licence and permit schemes is such that each licence and
permit application fee reflects the resources used by the Department or its Industry
Boards to approve, register and monitor each licence or permit holder. For example,
bulk importers of ODS and SGG incur the same fee as the administration and regulation
process impose similar costs on the Department, whereas importers of pre-charged
equipment incur a lesser fee due to the uniform nature of the products imported and
the gases and charges contained in them. The key difference between the fees charged
for the Controlled Substances Licence and the Pre-charged Equipment Licence are the
need for more focussed audit, compliance and quarterly reporting activity due to the
complexity of imports of bulk substances, including the range of species and the
greater risk of non-compliance due to the volume and nature of imports.
The main cost driver of the licence and permit scheme is salaries and on-costs.
The fee structure of the import and manufacture levies scheme is based on the actual
amount of gas imported or manufactured4. It depends on the type of gas:
4
Australia has not manufactured ODS since 1996 and has never manufactured HFCs or PFCs. However,
manufacture is referred to here, as it is covered by the legislation.
Page 19 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
HCFCs
$3,000 per Ozone Depleting Potential (ODP) tonne
HFCs and PFCs5
$165 per metric tonne
Methyl Bromide6
$135 per metric tonne
Table 5 shows the breakdown of the licence fees into the various components:
Table 5: Import, Export and Manufacture Licences – Cost per component (Activity 1.1)
Registration and Approval
Monitoring and Compliance
Information and Communication
Administration and Enforcement
Controlled and
Used
Substances ($)
800
13,600
200
400
15,000
PCE, Essential
Uses and S40
Exemptions ($)
600
1,800
200
400
3,000
Low Volume
($)
400
0
0
0
400
Controlled substances licences are more complex to register and approve as they
generally also have requests for the export of substances. Additional effort is required
for monitoring and compliance of all licences and is considerably higher due to larger
volume of imports and exports and the intricacies of dealing with individual gas species
in bulk form.
The partial fee waiver for low volume imports reflects the lower assessment effort
required as well as no requirement for on-going monitoring, communication or
enforcement activities.
Table 6 shows the breakdown of the Refrigerant and Air Conditioning permit fees into
the various components:
Table 6: Refrigerant Handling Permits and Refrigerant Trading Authorisations – One year cost
per component (Activity 1.2)
Registration and Approval
Monitoring and Compliance
Information and Communication
Administration and Enforcement
Refrigerant
Handling Permit
($)
25
0
20
5
50
Refrigerant
Trading
Authorisation
($)
64
80
8
8
160
5
Fees for HFCs/PFCs are calculated at a rate equivalent to that levied for HCFCs they replace (most commonly
HCFC-22). As HFCs/PFCs do not deplete the ozone layer, the levy cannot be calculated according to their ODP.
6
Methyl bromide levies are calculated on a metric tonne basis rather than an ODP tonne.
Page 20 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
The permit applications vary between licences and authorisations. There is an
increased verification requirement for Refrigerant Trading Authorisations to ensure
that the conditions for the Authorisation approval are met. Additionally, monitoring
and compliance activity is focussed at the business level due to the supply controls for
refrigerants. There are a higher percentage of Refrigerant Handling Permit holders, and
these holders are also the public face of the scheme, as they are the technician that will
maintain refrigeration and air conditioning systems for the general public. Therefore it
is considered important that an increased amount be spent on communications
activities to increase the public’s awareness of the scheme and how it applies to
Refrigerant Handling Permit holders. The costs for Refrigerant Handling Permits –
trainee are discounted to recognise the importance of encouraging people to enter the
industry. The reduced fee is supported by the industry.
Table 7 shows the breakdown of the Fire Protection permit fees into the various
components:
Table 7: Extinguishing Agent Handling Licences, Extinguishing Agent Trading
Authorisations and Halon Special Permits– One year cost per component (Activity 1.2)
Trading
Handling
Authorisation Halon Special
Licence ($)
($)
Permit ($)
Registration and Approval
90
144
90
Monitoring and Compliance
5
8
5
Information and Communication
5
8
5
Administration and Enforcement
0
0
0
100
160
100
The permit applications vary between licences and authorisations as there is an
increased verification requirement for Extinguishing Agent Trading Authorisations to
ensure permit conditions are met. As with the Refrigeration and Air Conditioning
scheme, the audit and compliance activity is focussed at the business level due to the
supply controls required for extinguishing agents.
Halon Special Permits are a lower cost structure than other agents as the effort is
focussed on only halon, with the conditions being less complex.
It should be noted that the fire protection system is new, whereas the refrigeration and
air conditioning system is an established system. Minimum skills competencies are
being established and delivered to the fire protection industry. As such significant
effort is made towards permits to assist industry participants meet the qualification
requirements. Once the competency rollout is complete there will be a significant shift
towards compliance activity
Table 8 includes the estimated revenue that is expected to be generated by licences
and permits applications under the scheme.
Page 21 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
Table 8: Volume - Revenue Projections
Activity 1.1: Import, Export and Manufacture
Licences
Licence Type
Licence
Annual fee
Jan12-Jun12
Quantity
Revenue
($'000)
2012-13
Quantity
Revenue
($'000)
2013-14
Revenue
Quantity
($'000)
2014-15
Quantity
Revenue
($'000)
2015-16
Quantity
Revenue
($'000)
Total
Quantity
Revenue
($'000)
Controlled substance licence
7,500
19
143
38
285
38
285
38
285
38
285
171
1,283
Used substance licence
7,500
1
8
2
15
2
15
2
15
2
15
9
68
Essential use licence
1,500
1
2
2
3
2
3
2
3
2
3
9
14
Pre-charged equipment licence
1,500
392
588
783
1,175
783
1,175
783
1,175
783
1,175
3,524
5,288
Section 40 exemption
1,500
8
12
15
23
15
23
15
23
15
23
68
104
400
205
82
451
180
496
198
546
218
600
240
2,298
918
Sub-Total
Activity 1.2: Refrigeration and Air Conditioning and
Fire Protection Permits
Permit Type
Permit
Annual fee
626
835
1,291
1,681
1,336
1,699
1,386
1,719
1,440
1,741
6,079
7,675
Low-volume fee waiver
Jan12-Jun12
Quantity
Revenue
($'000)
2012-13
Quantity
Revenue
($'000)
2013-14
Revenue
Quantity
($'000)
2014-15
Quantity
Revenue
($'000)
2015-16
Quantity
Revenue
($'000)
Total
Quantity
Revenue
($'000)
Handling permit - refrigerant
Handling permit - refrigerant trainee
50
22,901
1,146
45,802
2,291
45,811
2,291
45,821
2,291
45,821
2,291
206,156
10,310
20
1,383
28
2,765
56
2,765
56
2,765
56
2,765
56
12,443
252
Trading permit - refrigerant
Handling permit - extinguishing
agent
Trading permit - extinguishing
agent
160
8,547
1,368
17,094
2,736
17,103
2,737
17,113
2,739
17,113
2,739
76,970
12,319
100
605
61
1,249
125
1,290
129
1,332
134
1,375
138
5,851
587
150
115
17
230
35
230
35
230
35
230
35
1,035
157
Halon special permit
100
17
2
33
4
33
4
33
4
33
4
149
18
33,568
2,622
67,173
5,247
67,232
5,252
67,294
5,259
67,337
5,263
302,603
23,643
Total Revenue Activity 1.1 and 1.2
34,194
3,457
68,464
6,928
68,568
6,951
68,680
6,978
68,778
7,004
1. A number of these licences and permits are issued on a two-yearly basis (see Table 4 for details). The cost is broken down to an annual basis, where applicable.
308,682
31,318
Sub-Total
Page 22 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
Table 9 includes the estimated expenses and revenue that is expected to be generated
by licences and permits applications under the scheme over the entire CRIS period, if
the fees are not amended.
Table 9: Summary of cost recovery activity
Activity Name
Method of
Recovery
Total
Cost of
Activity
($'000)
1.1 Import and Manufacture Licences
Fee for
application
$6,630
6,079
1.2 Refrigeration and Air Conditioning
and Fire Protection Permit
Fee for
application
$31,052
302,603
Volume
of
Activity1
Cost
Recovery
Charge
($'000)
Total Cost
Recovered
for Activity
($'000)
Various
$7,675
Various
Total fee
for
applicatio
n
Minus
cost of
activity
$23,643
$31,318
$37,682
($6,364)
TOTAL
1.
Calculated by the expected sum of licences or permits to be issued (based on historical data)
As listed above in 4.4: Volume and Demand assumptions, for Activity 2, Import and
Manufacture Levies, the forward estimates of levies may reduce. This in part due to the
legislated phase out of HCFCs (the HCFC industry limit for importation or manufacture
is 70 ODP tonnes in the 2011 calendar year (equivalent to $210,000 collected per
annum for HCFCs), dropping to 40 ODP tonnes in the 2012-2013 calendar years
(equivalent to $120,000 collected per annum), 10 tonnes in 2014-2015 calendar years
(equivalent to $30,000 collected per annum), and 2.5 tonnes in 2016-2029 calendar
years (equivalent to $7,500 collected per annum)).
The amount of methyl bromide imported into Australia is variable each year, as it is
used for agricultural purposes and depends on agricultural production and the
requirements of international trading partners for importation of produce treated with
methyl bromide. That said, Australia imports, on average, around 500 tonnes of methyl
bromide per year (equivalent to $67,500 per year).
The amount of SGGs (HFCs and PFCs) imported each year makes up the remaining
amount of gas imported, and the associated revenue. Due to the impact of the
equivalent carbon price on SGGs under the Ozone Act), importers may not wish to
import as much SGG into Australia. However, this will not be known for some time after
the implementation of the equivalent carbon price on SGGs. Table 10 shows the
current estimate of Activity 2 volume and demand.
Page 23 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
5.
PROJECTED EXPENSES AND REVENUE FOR DURATION OF CRIS
5.1
Projected Expenses and Revenue
Table 10 illustrates that, based on existing expenses and expected revenue, the licence
and permit scheme is forecast to generate an under-recovery of approximately $7
million from over the period 2011-12 to 2015-16.
Table 10: Projected expenses and revenue for Licences and Permits
Activity 1.1: Licence and Activity 1.2: Permit Scheme
Jan12-Jun12
($'000)
2012-13
($'000)
2013-14
($'000)
2014-15
($'000)
2015-16
($'000)
Expenses
3,955
7,437
8,492
8,765
9,033
37,682
Revenue
3,457
6,928
6,951
6,978
7,004
31,318
Registration & Approvals
1,571
2,910
2,941
2,948
2,951
13,321
Monitoring & Compliance
1,134
2,408
2,425
2,437
2,451
10,855
Information & Communication
442
929
967
972
977
4,287
Administration & Enforcement
310
681
618
621
625
2,855
(498)
0
(509)
0
(1,541)
0
(1,787)
0
(2,029)
0
(6,364)
0
Budget Funding
Balance
Total
($'000)
Table 11 contains the projected revenue and expenses of the licence and permit
scheme if the proposed permit application fees including LPI are introduced on 1 July
2012.
Table 11: Projected expenses and revenue with increased permit application fees from 1
July 2012 for Licences and Permits
Activity 1.1: Licence and Activity and Activity 1.2: Permit Scheme
Jan12Jun12
2012-13
2013-14
2014-15
($'000)
($'000)
($'000)
($'000)
Expenses
3,955
7,437
8,492
8,765
3,457
Revenue
8,528
8,554
8,809
(498)
1,091
62
44
Operating Balance +/Ongoing Operating
Balance +/(498)
593
655
699
2015-16
($'000)
9,033
9,075
42
741
Total
($'000)
37,682
38,423
741
741
Licence fees (Activity 1.1) however, are currently showing adequate recovery on
expenses, and at this stage DSEWPaC does not intend to seek approval to increase
licences over the forward period.
Page 24 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
Based on historical data, it is expected that expenses for permits (Activity 1.2) will
increase over the 2011-2016 period. DSEWPaC proposes to increase the permit
application fees under the Regulations to address the under-recovery shown in Table
11 (Permit application fees have not increased since their inception in 2005). DSEWPaC
intends that permit application fees would increase by between 25 and 40 per cent, to
address the existing shortfall in the cost recovery for Activity 2, then increase annually
in line with the labour price index (LPI) (this is due to the vast majority of the costs
being related to staffing and associated costs). (For the purposes of projecting revenue
over the CRIS period, LPI is assumed to be 3.3 per cent per annum for the entire
period).
The proposed permit application fees are shown in Table 12.
Increasing the permit application fees from 1 July 2012 calculated from 1 July 2010 and
indexed to LPI results in a projected potential over- recovery of approximately
$200 000 over the CRIS period. This provides a modest buffer against any changes in
licence and permit application demand, as may be expected with the implementation
of an equivalent carbon price for synthetic greenhouse gases.
The Cost Recovery Guidelines indicate that expenditure can be spread over multiple
years. As mentioned previously, it is expected that expenses for levies (Activity 2) will
increase over the 2011-2016 period, but would meet the revenue collected under this
Activity. This can be managed as the activities funded through the levy are not demand
driven, rather the activities can be planned based on the amount of funds collected
through the levy. Expected expense items associated with Activity 2 include:
 Methyl Bromide (Quarantine and Pre-shipment (QPS) Uses)
o Project to enhance the data
o Disseminate information to industry
o Develop an information program focusing on alternatives to methyl
bromide
o Develop a QPS policy approach
 HCFC phase out
o Activities to encourage the phase out of uses of HCFCs in refrigeration,
fire protection and solvents industries
o Information to end users on the HCFC phase out as it reaches its critical
2016 point
 HFC and PFC Uses
o Review the end uses of HFCs and PFCs. This has been postponed until
the nature of the Clean Energy Future Plan became clearer
 SGGs used in Foams, Aerosols and Solvents
Page 25 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
o Identify and undertake mitigation activities, including the use of
alternatives
o Develop Environmental Improvement Plans for the industries that
produce or use foams, aerosols and/or solvents in which SGGs are
present
 SF67
o Develop Environment Improvement Plans for the electricity production
sector for handling SF6
o Identify other uses of SF6, and if appropriate, develop Environmental
Improvement Plans for the industries that use SF6
The activities associated with HFC and PFC uses, SGGs used in foams, aerosols and
solvents and SF6 will be able to commence, given that the legislation has been passed
by the Senate (the legislation was passed on 8 November 2011, however the package is
still waiting Royal Assent). However, given that approval for this legislation, and
therefore approval for the program is less than three weeks old, it is premature to
provide a detailed outline of the nature of the programs, much less a breakdown of the
associated costs for the CRIS review period. A considered program can now be
developed as there is a clear policy direction for both SGGs and ODS.
It should be reiterated that the Department expects that expenses associated with
these activities will match the levies recovered over the review period.
7
Although no levies will be recovered from the import or manufacture of SF6, the Department will undertake
activities in relation to the regulation of this gas.
Page 26 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
Table 12: Revenue by licence type – Future fees
Licence/Permit Type
Annual fee
2011-12
Quantity
Controlled substance licence
$7,500
Used substance licence
Revenue
($'000)
Annual
fee
19
143
$7,500
$7,500
1
8
Essential use licence
$1,500
1
Pre-charge equipment licence
$1,500
Section 40 exemption
2012-13
Quantity
2013-14
Quantity
Revenue
($'000)
Annual
fee
38
$285
$7,500
38
$285
$7,500
2
$15
$7,500
2
$15
2
$1,500
2
$3
$1,500
2
$3
392
588
$1,500
783
$1,175
$1,500
783
$1,175
$1,500
8
12
$1,500
15
$23
$1,500
15
$23
$400
205
82
$400
451
$180
$400
496
$198
Handling permit - refrigerant
$50
22,901
1,146
$65
45,802
$2,977
$65
45,811
$2,978
Handling permit - refrigerant - trainee
$20
1,383
28
$26
2,765
$72
$26
2,765
$72
Trading permit - refrigerant
$160
8,547
1,368
$210
17,094
$3,590
$210
17,103
$3,592
Handling permit - extinguishing agent
$100
605
61
$125
1,249
$156
$125
1,290
$161
Trading permit - extinguishing agent
$150
115
17
$210
230
$48
$210
230
$48
Halon special permit
$100
17
2
$125
33
$4
$125
33
$4
34,194
3,457
68,464
$8,528
68,568
$8,554
Low-volume fee waiver
Total
Revenue
($'000)
Page 27 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
Table 12. Revenue by licence type – Future fees (cont.)
Permit Type
Annual fee
2014-15
Quantity
Controlled substance licence
$7,500
Used substance licence
2015-16
Quantity
Annual
fee
38
$285
$7,500
38
$285
171
1,283
$7,500
2
$15
$7,500
2
$15
9
68
Essential use licence
$1,500
2
$3
$1,500
2
$3
9
14
Pre-charge equipment licence
$1,500
783
$1,175
$1,500
783
$1,175
3,524
5,288
Section 40 exemption
$1,500
15
$23
$1,500
15
$23
68
104
$400
546
$218
$400
600
$240
2,298
918
Handling permit - refrigerant
$67
45,821
$3,077
$69
45,821
$3,180
206,156
13,358
Handling permit - refrigerant - trainee
$27
2,765
$74
$28
2,765
$77
12,443
323
Trading permit - refrigerant
$217
17,113
$3,713
$224
17,113
$3,837
76,970
16,100
Handling permit - extinguishing agent
$129
1,332
$172
$133
1,375
$184
5,851
734
Trading permit - extinguishing agent
$217
230
$50
$224
230
$52
1,035
215
Halon special permit
$129
33
$4
$133
33
$4
149
18
Low-volume fee waiver
Revenue
($'000)
Total
Quantit
Revenue
y
($'000)
Revenue
($'000)
Total
68,680
$8,809
68,778
$9,075 308,682
38,423
Note: From 1 July 2012, it is anticipated that the Regulations will be amended to increase the fees as depicted by bolded figures in the table above.
Page 28 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
6.
ONGOING MONITORING
6.1
Monitoring Mechanisms
The Department monitors the cost recovery arrangements by comparing licence and
permit income against Departmental and Industry Board costs on a regular basis.
Through the proposed linkage of permit fees and the LPI, the Department is able to
automatically match the increases in regulatory costs with increases in application fees.
For licences, the Department will adjust the licence fees where necessary to align with
the actual costs of licencee regulation, documenting these adjustments where required
by the cost recovery policy.
Cost recovery revenue will be reported in the DSEWPaC Annual Report in accordance
with the Finance Minister’s Orders.
6.2
Stakeholder Consultation
The Department consulted with permit holders through its Industry Boards in 2009,
when the permit application fee increases were first proposed.
Both the ARC and FPAA contacted their members in proposing an increase in permit
fees from 2010. Respondents were generally supportive of the fee increases.
Motor Trades Association of Australia (MTAA)
MTAA acknowledged and supported the ARC’s proposal to increase its fees in order to
meet the increased costs it faces.
Refrigeration and Air Conditioning Contractors Association (RACCA)
RACCA noted that whilst it would generally oppose fee increases, they do understand
fees must inevitably increase and that linking the fees to CPI is a fair method to
increase them by.
Air Conditioning and Refrigeration Wholesalers Association (ARWA)
ARWA unanimously agreed with the proposed fee increases.
Automotive Air Conditioning, Electrical and Cooling Technicians of Australasia (VASA)
VASA supported in principle the proposed permit fee increases on the proviso that
there is no reduction, or preferably, an increase in the ARC audit regime.
National Electrical and Communications Association (NECA)
NECA supported the proposed fee increase on the basis that fees have not increased
since the scheme’s inception and the need for the ARC to maintain their current service
levels.
6.3
Periodic Review
The licence and permit fees are reviewed on a regular basis in accordance with the
Australian Government’s Cost Recovery Policy. A new CRIS for the scheme will be
prepared to commence from 01 July 2016.
It is noted that the Clean Energy Future Program, which will commence on 1 July 2012,
will impact on this program. Therefore the Department will undertake a review of the
cost recovery arrangements during 2012-14. If there are material changes required to
Page 29 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
the arrangement, a new CRIS will be prepared. As such, the Department will liaise with
the Department of Finance and Deregulation to ensure continued compliance with the
Australian Government’s Cost Recovery Guidelines during this interim period and
determining the relevant impacts of the equivalent carbon price on the operation on
the Ozone Protection and Synthetic Greenhouse Gas Management program.
Page 30 of 31
2011 CRIS for Ozone Protection and Synthetic Greenhouse Gas Management Program
7.
CERTIFICATION
I certify that this CRIS complies with the Australian Government Cost Recovery Guidelines.
[Signed 13/1/2012]
Malcolm Thompson
A/g Secretary
Department of Sustainability, Environment, Water, Population and Communities
Date: 13
January 2012
Page 31 of 31