Despite Abbott government instruction, the ‘green bank’ says it is legally obliged to continue operating until legislated not to

The Abbott government has instructed the Clean Energy Finance Corporation to prepare its accounts for the upcoming mid-year economic statement on the basis that it will stop making investments on 31 December and cease to exist on 30 June next year.

But the $10bn so-called “green bank” says it is legally obliged to continue operating as normal, and will do so, at the same time as it prepares its accounts in line with the treasury instruction.

The Palmer United party has hailed its success in “saving” the CEFC – and as long as the minor party refuses to support legislation abolishing the CEFC, the organisation will continue to exist.

But the government’s instruction indicates its policy intention is still to abolish the CEFC.

CEFC chief executive Oliver Yates said he would continue to operate “as usual” until parliament changed the law setting up his organisation, but he said the clear signals from the government that it still wanted to get rid of the CEFC made his job much harder.

“The fact that we have to prepare our accounts this way makes no difference to what we do. We will continue to carry out our statutory obligations,” he told Guardian Australia. “They don’t have the numbers in the Senate to abolish us, but they are sending signals to the market that our business is under threat, and that creates uncertainty and makes it harder for us to carry out our statutory obligations.”

The government has been trying to make good its promise to shut down the CEFC since the moment it was elected.

After last year’s election, when the Coalition government was still in caretaker mode, Abbott wrote to the CEFC – which in opposition the Coalition liked to call the “Bob Brown bank” – to advise it: “The Coalition does not support the CEFC nor its expenditure of $10bn of borrowed money on projects that the private sector deems too risky to invest in.”

And one of Joe Hockey’s first acts as treasurer was to write to the board of the CEFC instructing it to “suspend operations and cease making payments”. The CEFC obtained legal advice that to comply with this instruction without a change in the law would have been in breach of its statutory obligations.

The CEFC was set up by the former Labor government to make investments and provide commercial loans to clean energy projects, but the bank argues that its operations could also help the success of the new government’s Direct Action plan.

After the government secured PUP votes to pass Direct Action this week, it briefly appeared that the government may have given up on its intention to get rid of the CEFC.

“I’d just like to … congratulate the prime minister and the minister on their initiative. We’ve been able, as a party, to achieve the retention of the Climate Change Authority, the Clean Energy Corporation and Arena [Australian Renewable Energy Agency],” PUP leader Clive Palmer said when the Direct Action deal was announced.

But the letter from environment minister Greg Hunt to Palmer setting out the formal terms of their deal promises only that the government will not try to reintroduce its CEFC repeal bill during the final three sitting weeks of this year, when its parliamentary agenda is already crowded.

During the election campaign, the Coalition claimed it would save $545m over four years by abolishing the CEFC, but the corporation itself calculates the potential savings would be tiny because it is lending at commercial rates.

In the year to 30 June the CEFC issued more than $900m in loans – backed by the private sector at the rate of $2.20 for each CEFC dollar. The investments secured the annual abatement of at least 4.2m tonnes of carbon dioxide.

Yates said the fund generated a “reasonable return” for the taxpayer, raising funds at the government rate of about 3.5% and lending under commercial terms at about 7%.

In August, Tony Abbott advised the Tasmanian government to seek funding from the CEFC.

After a meeting with the state’s economic council and the premier, Will Hodgman, he was asked how Tasmania could access federal funds and replied: “If you take for instance the irrigation scheme that they’re very committed to, not only do you have the asset recycling fund, you’ve got the Clean Energy Finance Corporation, you’ve got various renewable energy funds that the commonwealth already has and these are all potentially available to help projects like this to go ahead.”