The governments attempt to restore the compulsory plebiscite bill has been blocked by the Senate, paving the way for a voluntary postal vote.
The plebiscite was to be held on November 25 with the government offering to remove the $15m of public funds for the yes and no cases.
On Wednesday morning the government attempted to restore the plebiscite bill to the Senate notice paper. Labor, the Greens and Nick Xenophon Team used their numbers in the Senate to block the attempt to revisit it, with Derryn Hinch voting to allow debate but committing to block the plebiscite.
With the compulsory plebiscite rejected again, the government will now attempt to fall back on its Plan B of a voluntary postal ballot to be conducted between 12 September and 15 November.
Earlier, Tony Abbott urged Australians to vote against marriage equality, arguing that a no vote would protect religious freedom and stop political correctness in its tracks.
The former prime minister hit the ground running in the campaign against same-sex marriage at a doorstop on Wednesday, in contrast to Malcolm Turnbull who said on Tuesday he would certainly support a yes vote but I have many other calls [on] my time.
Marriage equality advocates are still investigating a legal challenge, with several legal experts questioning the constitutionality of appropriating $122m to pay for a postal plebiscite and using the Australian Bureau of Statistics to run it.
Asked before the result if he was disappointed that a voluntary postal vote would be held instead, Abbott said no, saying it was important that we make the most of the opportunity we now have.
Obviously I will be voting no but in the end this is not about the politicians, this is about the people its about your view.
And I say to you if you dont like same-sex marriage, vote no. If youre worried about religious freedom and freedom of speech, vote no, and if you dont like political correctness, vote no because voting no will help to stop political correctness in its tracks.
The Australian Marriage Equality co-chair Alex Greenwich said Abbotts intervention was totally dishonest but nothing new because opponents have always tried to make this issue about something else.
They know the settled will of the Australian people is in favour of marriage equality and in support of all couples being treated equally under the law.
On Tuesday the government argued it was on strong legal ground with a voluntary postal vote, despite lacking parliamentary approval.
The acting special minister of state, Mathias Cormann, said the plebiscite would be conducted as a survey by the ABS, paid for by an appropriation made through a finance ministers advance to the agency.
The constitutional law expert George Williams told Guardian Australia the decision to have the ABS run a postal plebiscite remains vulnerable to legal attack.
It can be challenged on the ground that the expenditure of money on a postal vote lacks parliamentary approval, the dean of University of New South Wales law faculty said.
In addition, the use of the ABS will open up a new line of attack based upon arguments that the functions of the ABS do not permit it to conduct a poll of this kind.
Williams warned that running the poll so quickly would have the effect of disenfranchising large numbers of young people and that a postal vote would mean that the votes of many young people and people from overseas will not be counted.
The constitutional expert Anne Twomey told Guardian Australia the ABS had the power to collect statistics, or numerical data concerning facts describing it as most unusual for it to collect opinions rather than facts.
It is arguable that this goes outside its functions, although it could also be argued that it was collecting statistics about the number of people who hold particular opinions, she said.
On ABCs AM Twomey also questioned the method of appropriating funds, noting that a finance ministers advance has to be for some kind of emergency thats unforeseen [and] here we have an issue that has been foreseen and previously there had been allocations for it in the budget.
Greenwich said it was encouraging that constitutional experts were speaking out about the fact that parliament, not a plebiscite, needed to resolve marriage equality, adding that no minister should be able to spend $120m without parliamentary oversight.
Labors deputy leader, Tanya Plibersek, told ABC AM a plebiscite would put Australian families through the trauma of having their relationships discussed as inadequate, described as having something wrong with them.
Plibersek said Labor would remind people [the plebiscite] is a flawed process, but you can count on us to continue to make the case for marriage equality.
She labelled Turnbulls claim he was too busy to campaign as a weak cop-out. On Tuesday Greenwich described it as an an absolute disgrace that would reduce confidence in the postal plebiscite.
Plibersek said Abbotts comments were exactly the sort of thing Id expect Tony Abbott to say, responding that religious ministers would not be forced to solemnise same-sex marriage and it was not political correctness for gay couples to politely ask to have the same rights as others.
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