The federal government could be forced to continue to assess the impact of big coalmines and coal seam gas wells on water resources, rather than hand that power over to the states, in a setback to its promised “one-stop shop” to “cut red tape” for environmental assessments.

The government is seeking to dispel any sense of crisis over the Senate’s rejection of key budget measures, with the prime minister, Tony Abbott, telling MPs on Wednesday that while “the new Senate won’t be all plain sailing … we will carefully, courteously, patiently and methodically work with the Senate to get our legislation through”.



But the opposition senators appear largely unmoved by the government’s attempted persuasion and the negotiations appear to be making little headway, with several key pieces of legislation dropped from the Senate program this week and others apparently set for heavy amendment.



The Palmer United party decided on Tuesday it would seek to remove the so-called “water trigger” from the government’s “one-stop shop” amendments to the Environment Protection and Biodiversity Conservation Act.

“We will amend the bill so the water trigger stays in federal hands,” PUP’s Western Australian senator Dio Wang said.

“We agree with the government that for flora and fauna it makes sense not to duplicate state and federal processes. But water is a national issue. Projects can have cumulative impacts and to be prudent the federal government should continue to have an overview of those approval processes,” he said.

Greens senator Larissa Waters said PUP should join with Labor and the Greens to block the whole “one stop shop” plan.

“We have a chance to keep all our current environmental protections, but PUP appears set to help facilitate the government’s trashing of them,” she said.



“PUP should be keeping all the current laws, not just one portion.”

PUP also announced Wednesday it had made a final decision to oppose the proposed GP co-payment, which alongside the opposition from the Greens and Labor means that policy appears doomed.

The government is also facing substantial amendments to a bill seeking to save $1.4bn by denying access to research and development tax breaks to companies with taxable incomes of more than $20bn.

The bill is opposed by Labor (even though it made a similar proposal in government to fund a manufacturing package) and the Greens. Wang said he would try to amend it to ensure the removal of the tax break was no longer backdated until July 2013 because PUP did not support retrospective legislation, a move likely to make a substantial dent in the budgeted savings.

The “water trigger” was inserted into the legislation under the former Labor government at the insistence of the former independent MP Tony Windsor, to ensure big coal mines or numerous coal seam gas wells did not have long-term consequences for a water catchment or water table.

The former government also set up an independent expert scientific committee to assess the impact of big projects on water resources.

Wang said the government had agreed to delay consideration of the environmental laws to give PUP a chance to draft its amendments on the “water trigger”.

The government also appears unlikely to get its land transport infrastructure amendment bill through.

The bill includes continued funding for local government roads, and the government has accused opposition parties in the Senate of denying councils this money.

“Under Labor’s legislation, the Roads to Recovery program terminated on 30 June this year. The first payment of our $2.1bn to local councils is due next month. All the Senate needs to do is pass the legislation this week and the money will flow to councils in full and on time,” transport minister Warren Truss said.

“So far, threatened obstruction in the Senate has left local councils in limbo.”

But both Labor and the Palmer United party senator Jacqui Lambie intend to introduce private members’ bills to guarantee the money, without other measures included in the government’s legislation, indicating the government will have to back down if it wants the roads money to get through to the councils.

Windsor had warned that the government’s plan to hand the water assessments over to the states would exacerbate already high levels of distrust in rural communities at the way these projects were being assessed and approved.

“This distrust has been exacerbated by recent Icac findings in relation to both Labor and Liberal parties in NSW and detrimental water impacts in Queensland to the extent that there is now a real need for independent scrutiny at a federal level,” he wrote in a blogpost for the ABC.