Direct Action Bill Passes Senate With Amendments: Questions Remain

Thursday 6 November 2014 @ 1.23 p.m. | Legal Research

The Federal Government’s Carbon Farming Initiative Amendment Bill 2014 (Cth) passed the Senate last week, meaning the Government will be able to begin implementing its “Direct Action Plan” to combat climate change following the repeal of the carbon tax.  While Labor and the Greens strongly opposed the Bill, the Palmer United Party eventually agreed to support the legislation, albeit with changes.  The Government has had to abandon its plan to abolish the Climate Change Authority, and will support a review into emissions trading scheme.

While Labor and the Coalition are divided on the best way to reduce emissions, both Direct Action and the previous carbon tax/emissions trading scheme were designed to achieve the same goal – the reduction of greenhouse gas emissions to 5% below levels in the year 2000 by 2020.  Peter Hannam from the Sydney Morning Herald has calculated that:

“Australia will need to avoid emitting the equivalent of 431 million tonnes of carbon dioxide between 2012 and 2020 to meet that goal.”

What Is Direct Action?

The Bill will establish an “Emissions Reduction Fund” revolving around three key elements – crediting emissions reductions, purchasing emissions reductions and safeguarding emissions reductions.

According to the Explanatory Memorandum:

“This initiative will allow businesses, state and local governments, community organisations and individuals to undertake approved emissions reduction projects and to seek funding from the Government for those projects through a reverse auction or other purchasing process.”

Peter Hannam, writing in the Sydney Morning Herald says:

“The basic idea is that big emitters (or smaller ones who band together) can choose to develop their own plans to cut pollution and tender a bid for a "reverse auction".  The government will pick the cheapest abatement efforts, paying the winning bidders up to the point it has achieved its reduction goal or it has exhausted its funds.”

Federal Minister for the Environment Greg Hunt believes that Direct Action will achieve the 5% reduction target better and at less cost to consumers than the Labor Government’s plan.  However, critics have raised concerns about many aspects of the scheme, including whether the scheme can achieve value for money. 

Senator Xenophon also supported the Bill after amendments were made to introduce a “safeguard mechanism” to require the operators of facilities to keep net emissions within baseline levels, but the levels are yet to be determined and will not commence in any case until July 2016.

Questions of Constitutionality?

In an article on The Conversation, Gabrielle Appleby from the University of Adelaide raises some questions about whether the scheme is constitutionally valid.  She argues that it raises some of the same questions from Williams v Commonwealth of Australia [2014] HCA 23 and Williams v Commonwealth of Australia [2012] HCA 23 (the “school chaplains” cases) which found that “the Commonwealth requires a valid statutory authorisation to spend money in addition to that provided in normal appropriations/budgetary legislation.”   She argues that there is a possibility that the same argument could be used for this legislation, as there is no clear constitutional power to make laws for the environment.  The legislation appears to be relying on the “external affairs power” as the object of the bill refers specifically to the Kyoto Protocol and the United Nations Framework Convention on Climate Change, and thus may be able to be construed as implementing international obligations.  However, Appleby argues that these instruments may not contain specific enough obligations for this argument to be successful.  She also points to item 366 in Schedule 1 of the Bill, which would repeal and substitute a new section 303 into the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) entitled “Alternative constitutional basis”, which suggests that the Government is aware of the issue.  The section puts forward three alternative options:

“the Commonwealth’s implied constitutional power to make laws that it alone can make for the benefit of the nation; the power to make laws on “matters of international concern”; and the power to make laws on “matters external to Australia”.

However, in her view, the argument most likely to be successful would be to limit the operations of the act under the “corporations power”.  Appleby calls the attempt “a constitutional patchwork quilt”, but does say that “[s]imply because there are doubts about the constitutional validity of Direct Action does not mean that the House of Representatives should refuse to pass the amending legislation.”

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