The Clean Energy Finance Corporation obliged to ignore unlawful direction of the Minister

Last week we saw the new Federal Government take action to abolish three of the bodies set up to help Australia deal with climate change.  These included the Climate Commission, the Climate Change Authority and the Clean Energy Finance Corporation (CEFC).  However, legal advice (opens PDF on external site) we obtained on behalf of the Australian Conservation Foundation showed that there are limits to the governments power to take this action.

The action taken to abolish the CEFC was a direction from the new Treasurer Joe Hockey to the CEFC to immediately stop operating.

The CEFC is set up and designed to  ‘facilitate increased flows of finance into the clean energy sector.’  It does this by using a $10 billion dollar green bank, operating commercially and making investments that catalyse and leverage funding for commercialisation and deployment of clean energy technologies necessary for Australia’s transition to a carbon constrained economy.  The CEFC aims to be economically self sufficient by 2016.

The legal advice we obtained for the Australian Conservation Foundation confirmed that the CEFC’s activities cannot be terminated by the direction of a Minister.

The advice, covered widely in media, stated that the Treasurer’s direction to the CEFC, given on Wednesday of last week, was unlawful and the Board of the CEFC was obliged to ignore it.

The Australian Financial Review reported on Saturday that Treasurer Joe Jockey has appeared to back down from his initial tough demand that the Clean Energy Finance Corporation make no further investments. On Friday, he said it was a matter for the board… to decide how it will act. The retreat followed legal advice from barrister Stephen Keim SC, which highlighted it could be unlawful for Mr Hockey to close the fund.

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