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Can the Direct Action Plan be blocked in the Senate?


The leader of the Palmer United Party (PUP), Clive Palmer, has this week expressed an intention not to support the Abbott Government’s Direct Action Plan, the Coalition’s climate change policy, in light of reports that the Government was planning to tighten eligibility for the aged pension. Mr Palmer has suggested that his party would block the policy in the Senate when three PUP senators take their seats after the first of July. The Environment Minister, Greg Hunt, cast doubt on this by saying that the Direct Action Plan will be part of the federal Budget, which is traditionally passed by the Senate. Mr Palmer replied that PUP could ‘reconsider its stance’ on passing the repeals of the carbon pricing mechanism and the Minerals Resource Rent Tax, if this happened. So which parts of Direct Action will actually need to be passed by the Senate?

There are a number of elements to the Direct Action Plan, although the details of many parts of the policy are still under development by the Government. The best information on the policy comes from the Green Paper on the Emissions Reduction Fund, and a speech given by Minister Hunt in December 2013. These elements include:

The Emissions Reduction Fund (ERF): a competitive tender process through which the Government will purchase greenhouse gas emissions abatement from Australian entities at the lowest available price. This will be a grants program costing $1.55 billion over its first three years, which could be set up in a number of ways:

(a) It could be enabled through new legislation that appropriates funds for the program and sets out how it will operate at a basic level – examples of this include the Automotive Transformation Scheme and the Steel Transformation Plan;

(b) It could be appropriated through the Budget process, and set up by regulations that operate under existing legislation (an example is the Clean Technology Investment Program, which was appropriated for in the budget process, and administered by regulations made under the Industry and Research Development Act 1986;

(c) It could be appropriated through the Budget, and administered under ministerial direction, without any specific legislation – like the Ethanol Production Grant Scheme.

If the ERF is set up under option (a), legislation must be passed by the new Senate to set up the fund, requiring the support of PUP, the Australian Labor Party or the Australian Greens. If option (b) is used, the regulations used to set up the fund could be disallowed by either house. If option (c) is used, the only way for the Senate to block it is to refuse to pass the Government’s appropriation bills, otherwise known as ‘blocking supply’, which is a highly unusual event. Although option (c) may be the most expedient way to appropriate money, governments may use the other options to set up grant schemes to ensure good governance, or place legal requirements on scheme participants (like the Green Army scheme).

Emissions safeguard mechanism (baselines): Under the DAP, entities will be prevented from emitting large amounts of greenhouse gases once the carbon price is repealed by the setting of ‘emissions baselines’, which entities must not exceed. Although the collection of emissions data is already provided for under the National Greenhouse and Energy Reporting System, new legislation will be required to impose baselines on emitters and compliance measures  for exceeding them. The emissions safeguard mechanism are an essential part of the DAP; in the absence of financial constraints on emissions (a carbon price), these safeguards are necessary to ensure that any emissions reductions achieved through the ERF are not cancelled out by increased emissions from other emitters.

One million solar roofs: Part of the DAP is to provide $500 rebates to install an additional one million solar hot water heaters or photovoltaic systems over ten years, at a cost of $500 million. Like the ERF, this scheme could be set up by legislation or by administrative measures. Previous schemes to provide these rebates have generally been set up administratively, with funds appropriated through the Budget process, not requiring passage of separate legislation.

Solar schools and towns and twenty million trees: These elements of the DAP will provide for the installation of solar panels in schools and towns, and for the planting of twenty million new trees in green corridors and urban forests. Few details have been released about how these schemes will operate, but it is likely that they could be set up through the Budget.

So the only part of the DAP that will certainly require enabling legislation (beyond the appropriations bills) to be passed by the Senate is the provision of emissions safeguards. Whether the new Senate will oppose any or all of the measures is a story that is still unfolding.