Turnbull's agenda on knife edge as second senator challenged

Australian Financial ReviewNov 2 2016 8:06 PM

Phillip Coorey, Laura Tingle

Support for a government crackdown on rogue union behaviour is line-ball, and the Senate vote may have to be recounted in two states, after the government said it would refer the election of a second senator to the High Court.

The day after the government announced the High Court would judge the validity of the election of former Family First Senator Bob Day, it said that the Senate on Monday would also be referring West Australian One Nation Senator Rod Culleton.

When elected on July 2, Senator Culleton had a conviction for the minor larceny offence of taking a tow truck key, but it was punishable by a sentence of imprisonment of one year or longer. Under section44(ii), this makes him ineligible for Parliament. The conviction was subsequently annulled.

Mr Day, who has resigned, has allegedly breached section 44(v) which prohibits a direct or indirect pecuniary interest in a contract with the Commonwealth.

The allegations concern Mr Day's electorate office, for which he was eligible to receive rent from the Commonwealth government but for which he was also liable for the mortgage repayments. No rent was actually paid.

Senator Culleton said he would fight the case but added he was unlikely to vote in the Senate until it was resolved.

"While I have a dark cloud over me I have to remain honourable not only to myself, but to the Senate and to Parliament," he said.

This potentially rules out him voting during the remaining three sitting weeks of the year, when the government was planning to push through the Senate its industrial relations bills which were used as triggers for the July 2, double dissolution election – a bill to re-establish the Australian Building and Construction Commission and a bill to establish a Registered Organisations Commission.

In the hope the High Court moves quickly, the government will devote next week to the bills on the same-sex marriage plebiscite and budget appropriation. Parliament does not sit the week after next but resumes for the final fortnight on November 21.

Self-imposed sin-bin

With Mr Day gone, Senator Culleton in the self-imposed sin-bin, and Labor and the Greens opposed to all measures, the government needs the support of eight of the remaining nine Senate crossbenchers.

Jacqui Lambie opposes all measures, meaning the government has no more leeway. It needs the support of the other three One Nation senators, the three members of the Nick Xenophon Team, Derry Hinch and David Leyonhjelm. All but One Nation are demanding amendments.

The High Court actions could also change the longer-term composition of the Senate.

If Senator Day's election is ruled invalid, the Senate vote in SA will be recounted and experts predict the Family First spot could go to either Labor or One Nation.

If Senator Culleton is disqualified, it is highly likely One Nation would replace him because the party ran a group ticket in that state.

If he survives the High Court action, Senator Culleton could still lose his spot on the grounds of bankruptcy as he is being pursued by creditors over debts totalling $6.1 million.

The government's political headache intensified on Wednesday when it emerged it had concerns about the arrangements regarding Mr Day's electorate office for more than two years.

Mr Day approached the government in 2014 about moving his electorate office to a building he owned at 77 Fullarton Rd, Kent Town, in SA.

He could only do so under three conditions; that he divested all interest in the building, paid for the refurbishment, and accept that no rent be paid by the government until another Senate office it owned was either sublet or the lease ran out in 2016.

Senator Day sold his building to an associate under an arrangement in which he remained liable for the mortgage. In February 2014, the Finance Department first expressed concern.

Raised suspicions

When Senator Mathias Cormann became special minister of state after the September 2015 leadership coup, Mr Day approached him wanting to be reimbursed for the rent he had been paying. But he raised suspicions by not producing evidence he had paid rent.

After the July 2 election, new minister Scott Ryan ordered an internal investigation which then prompted the government to request legal advice which concluded last week that although no rent had been paid, there was a prima facie breach of s44(v) because the lease had been executed in December 2015.

"This is a very dodgy government covering up its improper behaviour," said Labor leader Bill Shorten.

"This issue of whether or not Senator Day was eligible to be elected didn't just start at the end of last week. I think the government has to explain when did it think it was a problem with Senator Day's eligibility? How long have they been accepting a vote on legislation and turning a blind eye to all of the issues surrounding Senator Day and his conduct?"

Senator Cormann said the High Court, not the government, would determine the eligibility of individual senators.