Coalition faces legal battle to stop CEFC’s green investments

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New advice says government not able to prevent CEFC from doing its work. Meanwhile, Hunt sacks Flannery and orders closure of Climate Change Authority.

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The newly installed Coalition government faces a potential legal battle over its plans for the Clean Energy Finance Corporation, and may not be legally entitled to instruct the green investment bank from ceasing new investments.

The Tony Abbott government has vowed to close the CEFC, and other institutions and policy initiatives relating to climate change, carbon pricing and clean energy investment.

On Thursday, environment minister Greg Hunt signed executive orders to close the Climate Change Authority, which provides independent advice on emission reduction targets and renewable energy policies, and ordered the immediate closure of the Climate Commission, which provided scientific advice, and the sacking of its commissioners, including Tim Flannery. (See also our story on HSBC warning Australia swimming against the tide and risking stranded assets).

However, to close the CEFC (and the CCA) the Abbott* government  needs to introduce legislation into parliament. This cannot happen until late October at the earliest, and in any case is unlikely to be supported in the Senate.

In the meantime, the new government is trying to stop the CEFC from investing more funds – it still has $1.5 out of its $2 billion budget for 2013/14 available. On Wednesday, Treasurer Joe Hockey wrote to the CEFC board asking it to cease making new investments – something it had volunteered to do during the “caretaker” period leading up to the September 7 poll.

However, Australian Conservation Foundation and The Environment Defenders Office Victoria say they have received legal advice from Stephen Keim, SC, on whether or not the CEFC’s operations, which are established by law, can be stopped by the direction of a minister.

The legal advice from Stephen Keim QC states: “Administrative law principles clearly dictate that, to be lawful, any exercise of discretion by the responsible ministers should be exercised in good faith for the purposes of the CEFC Act, and not designed to frustrate or prevent the achievement of the purposes of the CEFC Act.”

It says further: “A direction to cease activities or cease investments, or to cease payments, would frustrate the legislative purpose of the CEFC Act, would be inconsistent with the CEFC Act and would not be authorised by s 64(1) of the CEFC Act.

“The CEFC’s activities cannot be terminated by executive action. If given some unlawful direction by the responsible ministers (or anyone else) to cease operations or some aspect of its operations, the board would be obliged to ignore that direction.”

This is consistent with the CEFC board’s own legal advice, and which is why it has been seeking – so far unsuccessfully – meetings with the new government to see how that can be addressed. As the Seim advice says, and as we have reported here, there is ministerial discretion to influence how the CEFC invests, but not if it invests, and the board is keen to seek common ground as at least an interim measure.

The CEFC said on Wednesday that it is seeking a way to work with the new Government “which realises their policy objectives” with respect to CEFC and ensures viable projects progress that reduce carbon emissions and lower energy costs for business.

CEO Oliver Yates said the CEFC will not approve new investments pending these discussions.

“The CEFC will continue to operate within its legislative framework to meet its existing legal and contractual obligations, including in relation to payments,” he said in a statement.

“The CEFC wishes to engage in consultations about the transition and looks forward to engaging with the new Government concerning how its activities can best be supportive of their policy priorities under Direct Action.”

“The CEFC Board and the executive officers appreciate the Government’s stated intentions and are committed to working with the Government in accordance with the correct and proper legal processes.  In this regard, it is important that any changes are implemented in a way that meets the respective legal obligations under the CEFC Act and the Commonwealth Authorities and Companies Act 1997.”

The CEFC is seeking meetings with Hockey and/or his staff. However, the new Treasurer is expected to leave Australia next week for a G20 meeting.

ACF climate change program manager Tony Mohr said the legal advice is clear that the CEFC  must keep investing in clean technology unless or until there is legislation that changes its functions.

“We call on the Federal Government to respect the law and not attempt to stop the CEFC from continuing its good work. The CEFC is helping emerging technologies such as solar thermal, geothermal and wave power graduate from universities and research centres into a clean, national electricity market.”

So far, the CEFC has announced loans for wind farms, a solar PV project and various energy efficiency measures – although it is believed to be looking at investments in other new technologies.

(* This story has been corrected to say the Abbott government rather than Howard government, although sometimes it is hard to spot the difference).

 

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10 Comments
  1. Chris Fraser 6 years ago

    Thank you Prof. Flannery for your contribution to the Commision, and I hope to read more of your expertise and good works soon.

  2. Lex 6 years ago

    Howard government?! Not sure if that was accidental… I hope not, that’s gold!

    • Coaltopia 6 years ago

      Yeah, I loved “Howard government”.

  3. Peter B 6 years ago

    What about an amendment to Budget Documents to reduce the allocation of funds to the CEFC? While it would need to go through both Houses of Parliament, it would be a “brave” Director/CEO who continued to make loans during the “interregnum.”

    • Giles 6 years ago

      So, here’s the thing. Under the current Act, the directors are obliged to meet their legal requirements, so they will either go ahead, or resign, as one media suggested, because of the pressure/conflict not to act. The CEFC is not on the budget, because it is self-funding, so scrapping it saves only the admin costs of the agency.

  4. Name 6 years ago

    I wonder how serious Abbott and Hunt are – is the Climate Change Authority such a threat it has to be closed. Who will now advise the Government on these matters?

    Perhaps the non-politicised remnants of the Public Service could assist but I forgot science is no longer a Department and arts has been buried in Attorney-General’s. So this means Arts and Science are now buried and climate change is silenced.

    Australia and Australian sold resources are now producing well over one twenty-fifth of the world’s greenhouse gas emissions yet we have well under one two hundred and fiftieth of the world’s population.
    I wonder what will happen when the other 99.6% of the world population realise that Australia is one of the worst behaved countries in the world towards the common good of the atmosphere.
    The Coal(ign)ition has only had its Ministry in place for a day or so yet it seems to be setting its relations with the rest of the world on fire – at least the Abbott and Hunt could have blamed some independent advisors for our plight but CCA is gone PS is tamed and clearly only Abbott and Hunt are in charge.
    Dave

  5. Michel Rahme 6 years ago

    The Greens and conservation societies/foundations should also be seeking legal advice concerning what action may be taken against CEO Oliver Yates and CEFC board members if they fail to proceed and allocate the remaining $1.5 billion of the 2013/14 budget. Do the board members not have a legal obligation under s8, s9(1), s10, s 64(1), s65(a), s65(b), s67(1), of the CEFC Act to honour the intention of the legislation?

  6. David Hamilton 6 years ago

    Giles, congratulations on the readership numbers!

    As part of keeping up your excellent work, I hope you have the opportunity to ask Greg Hunt (a) will the Government ensure that the Climate Commission’s reports will continue to be available?, and (b) does the Government accept those reports?

    The second question is crucial, as the most recent reports of the Commission clearly address the difficult state of the global carbon budget and the need for urgent significant reductions in emissions. Of course, if you get a reply to the effect that the new Government does not support the reports, there are the obvious follow-up questions about which bits of which reports they do not support, and their evidence for their decisions that the reports are inaccurate.

    Indeed, we could all write to him asking him those questions.

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