Direct Democracy III: A people's veto?

So far the discussion of binding referenda has focused on positive referenda - the electorate directing government policy or passing legislation. But there's also another form of direct democracy that hasn't received much discussion: negative or abrogative referenda, in which the electorate challenges laws that have already been passed.

Obviously a system of binding referenda can be used for this purpose (repealing laws in the same way that Parliament does), but it can also be adopted as a standalone measure, a "people's veto" on government legislation.

How does it work in practice? From the Swiss experience it seems to promote wider consultation and compromise over legislation, granting greater power to opposition parties. Any party or group who feels that they are losing out can mount a challenge, and this acts as a powerful moderating influence.

The flip-side is that it also encourages legislative conservatism. Fear of a challenge makes governments unwilling to lead public opinion or introduce potentially unpopular measures. This may be a good thing, but at the same time I can't help but be concerned about the prospects of human rights legislation under such a system; if we'd had negative referenda, homosexual law reform would have been delayed by a decade or two, not necessarily because the public was opposed, but because politicians would have been unwilling to take the risk. There's also a danger that governments will seek to enact measures by administrative decisions (which is how much of Rogernomics was passed) rather than legislation, reducing the opportunity for public input. Obviously though I'd hope that that sort of behaviour was punished at the ballot box.

To a certain extent, the above effects depend on the threshhold required to force a poll. The Swiss make it very easy (100,000 signatures in a country of 7 million, or less than 5% of the electorate), and thus have frequent referenda. Our "traditional" figure of 10% would make challenges much rarer (but at the same time more likely to succeed), and probably give governments less reason to worry about them (which may be a Bad Thing). As before, it comes down to the same question: how much direct democracy do we really want?