The plan will use $1bn of Clean Energy Finance Corporation funds for reef projects, diverting money allocated to fight climate change

The Coalition has announced a “rescue mission” for the Great Barrier Reef, but based on details released so far, it looks more like a rescue mission for the government’s credibility on reef policy.

On Monday Malcolm Turnbull and the environment minister, Greg Hunt, announced a plan they say will focus on protecting the reef from its two main threats: climate change and water quality.

The plan will divert money allocated for fighting climate change towards projects that are focused around the Great Barrier Reef .

Under the plan, $1bn of the $10bn overseen by the Clean Energy Finance Corporation (CEFC) will be directed towards clean energy projects near the Great Barrier Reef, including some that have the co-benefit of improving water quality..

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This is money that is lent – not spent – and which is required to turn a profit for the government. It is money that otherwise would have been lent to clean energy technology projects.

According to the CEFC Act, lending that money to water quality projects would be illegal. The CEFC can spend money only on “clean energy technologies”, which are defined in the act as energy-efficiency technologies, low-emission technologies or renewable energy technologies.

It’s not at all clear how some of the projects spruiked as part of the announcement could be spent in accordance with that law. At a media conference on Monday morning, Turnbull said CEFC money might be used to fund “installing and managing electric fencing which keeps stock away from the edge of the banks of rivers and creeks and water courses”.

Ariane Wilkinson, a lawyer at Environment Justice Australia says without further detail, it is hard to know what the government’s plans are. “But if they’ve stepped outside the constraints of the legislation, it wouldn’t be the first time,” she says.

In 2013 the Coalition told the CEFC to stop operating – the first step in its plan to shut the agency. But it turned out that order was unlawful, and the CEFC board continued to lend money.

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Turnbull’s electric fence example could have been a slip. And it appears the government intends to direct the CEFC to invest in projects that have a “dual benefit” – ones that fit within the “investment function” of the act, but which would also help reduce pollution on the reef. It could do this by the minister writing a new investment mandate for the board.

Left to its own devices, the CEFC would invest its money in what it saw as the most worthy projects. If they happened to also improve water quality on the Great Barrier Reef, it would lend to those projects.

But the best water quality projects are unlikely to be ones that also happen to be clean energy technologies. A recent report from the Great Barrier Reef water science taskforce listed 10 recommendations, none of which appear to involve clean energy technologies.

By insisting that it spend 10% of its funding on projects that have the co-benefit of improving reef water quality, the governent has ensured funding will not go to the best clean energy projects, thus weakening climate change policy.

The government also says it will direct some of the money to clean energy projects in the Great Barrier Reef catchment, which have no water quality co-benefits. It says that would help fight climate change.

But it does the precisely opposite. By limiting the options for that investment to projects within the catchment, it guarantees that the CEFC will fund worse projects – projects that might not have been funded if it weren’t for that imposed limitation. And of course climate change is a global problem – it doesn’t matter if the low emissions technology is in Queensland rather than the other side of the country.

Wilkinson says this could land the policy in legal trouble. She says the CEFC is bound by law to spend its money in the most efficient and effective way possible.

“The policy does not appear to be designed to achieve this,” she says.

“[Water quality and clean energy] are two different issues that should be addressed by different technologies. If that is in fact the policy, I’m unconvinced it is within the spirit of the purpose of the CEFC Act.”

Nor is the amount of money on offer substantial. It is less of an investment than the meagre $500m over five years offered by Labor. The amount announced by the Coalition is twice as much, but over twice the period.

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Moreover, Labor’s promise is for actual funding, not loans. And water quality projects funded by Labor’s money won’t be limited by needing to fit within an act designed for clean energy projects.

Imogen Zethovan, from the Australian Marine Conservation Society, says neither party is offering enough. “Scientists and economists have said we need billions – not millions,” she says.

Zethovan says regulation is also needed to ensure farmers complied with best practice and limited pollution runoff.

The Greens have gone further, and urged a legal cap on water pollution as well as a $2bn fund to be spent over five years.

Claire O’Rourke, from Solar Citizens, says the announcement is merely “shuffling deckchairs”.

Regardless of party political considerations, tying one bucket of money to both clean energy and water quality seems an illogical way to fund either of those two vital goals.

A spokesman for Hunt did not give more details about the fund, but insisted it was allowed under the act. “The Reef Fund went through a full cabinet process with full approval from the Clean Energy Finance Corporation,” he said.