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Bob Day ‘sold’ office but benefit remained
The Australian 12:00am November 3, 2016
Sarah Martin
Bob Day told the government he had “disposed” of his financial interest in the building that would house his electorate office, despite him using the property to secure a mortgage.
Documents released under Freedom of Information legislation show that the Department of Finance advised then special minister of state Michael Ronaldson that he should deny Mr Day’s request to use his business premises as his electorate office after winning a Senate position in September 2013.
Mr Day had refused to move in to the existing office rented by the commonwealth and vacated by Labor senator Don Farrell, saying the near-new property in the Adelaide CBD 3km from his office was “quite inappropriate”, with traffic, parking and safety problems.
Mr Day’s ownership of the property was raised as an “issue” by the department, which also said it had concerns about his plan to sell it with a lease in place to the commonwealth and how that “might be perceived”.
“Senator-elect Day has indicated to Finance that he has a financial interest in the building of his current work premises and that if he was allowed to remain at 77 Fullarton Road, he would sell the building and make it a condition of the sale that the new owner lease his office to the commonwealth.”
Other issues, including “substantial and difficult” work needed to bring the building up to standard, were also raised. A ministerial briefing note in February 2014 said: “Finance does not recommend the establishment of a new office for Senator-elect Day.”
Documents show that, after intense lobbying from Mr Day, then senator Ronaldson agreed to the special request in late 2014 but with a range of conditions, including that the move be “cost neutral” for taxpayers.
Senator Farrell said the revelation showed the government had been aware of the “dodgy deal” for years and had blatantly flouted departmental advice.
As part of the negotiations, Mr Day reassured the government he would dispose of his financial interest in the building, but it is now believed that he would have indirectly benefited from the taxpayer-funded rent. Mr Day has a mortgage with the National Australia Bank that is secured by the property.
In a letter to Mr Day sent on March 20, 2014, Mr Ronaldson said: “I confirm your advice to me that you have disposed of your interest in the Kent Town property” and agrees to consider his request to transform his business office into an electorate office.
A letter from Mr Day to the department in May 2014 says the new owner of the building is Fullarton Investments.
However, land title records show the settlement for the $2.1 million property — which was sold to Debra Smith, the wife of Mr Day’s business partner John Smith — did not take place until September 2014.
A background note to the minister sent in May 2014 from the department confirms that Mr Day “has advised Finance that he has now disposed of his interest in the building and the new owner is Fullarton Investments”.
There is no mention of his financial benefit from the lease going ahead, nor is any concern raised about the potential for a breach of section 44 of the Constitution, which disqualifies someone with a direct or indirect pecuniary benefit from a government contract from entering parliament.
After several months of negotiations and a $5000 feasibility study to examine the move, Mr Ronaldson finally agreed to the arrangement in a letter dated October 9, 2014.
However, in a June 2014 letter, he wrote: “Other incoming senators in recent times have had no choice but to move into the office of a retiring senator. The office of soon-to-retire Senator Farrell is viewed by Finance as absolutely fit for purposes and there is no justification whatsoever for the office being closed.”
The lease provided $66,540 a year to Fullarton Investments until 2020. Rent was due to first be paid in August this year, but new Special Minister of State Scott Ryan terminated the contract on October 7, and had legal advice last week that the matter should be referred to the High Court. Mr Day has denied any wrongdoing.
DAY’S DOWNFALL
2013
June
Bob Day’s business Home Australia posts a loss but reports a dividend to Day and long-term business partner John Smith of $2.6m.
September
Day, standing as a Family First candidate, elected to the Senate, to take up his seat on Jul 1, 2014.
Day’s company, B & B Day Pty Ltd, owns 77 Fullarton Road, Kent Town, which is also the headquarters of the Family First federal secretariat.
December
A company called Fullarton Investments Pty Ltd is registered at the same address. It is owned and directed by Smith’s wife Debra.
2014
January
Day begins negotiations with the government over using his Fullarton Road office as his electoral office to access his office entitlement, rather than relocate to an existing office rented by the commonwealth that was used by Labor senator Don Farrell, who lost his seat at the 2013 election.
He advises the Finance Department that he believes the old Farrell office he is required to occupy is “quite inappropriate”, citing problems with traffic, parking and safety.
February
The department refuses Day’s request to remain in his business office instead of relocating to an existing commonwealth office.
Department entitlements officer advises Special Minister of State Michael Ronaldson that it does not recommend allowing Day to establish a new office.
March
Ronaldson meets with and then writes to Day, saying he is prepared to consider Day’s request with a range of conditions in place
May
Day advises the government that he has disposed the building with a settlement date of June 2014, however property records suggest transfer did not occur until September 2014.
September
77 Fullarton Road sold to Fullarton Investments Pty Ltd for $2.1m. Day provided loan to Fullarton Investments, but maintains mortgage with NAB that is secured by the property.
October
Ronaldson writes to Day agreeing to the request with a range of conditions including that the proposal is “cost neutral” to the government.
2015
September
Ownership of Fullarton Investments transferred to Colin Steinert, a friend and neighbour of Day.
Steinert is a property conveyancer but also has his services as owner of a “non-bank holding company”.
December 1
Lease signed between Fullarton Investments and the commonwealth and backdated to apply from July 1, 2015.
2016
July 2
Day re-elected as a Family First senator.
August 4
Day contacts Special Minister of State Scott Ryan asking for rental payments and expresses the view that there is no problem with the lease arrangements, in relation to section 44 of the Constitution.
Ryan requests more details and seeks external advice from David Jackson QC.
October 7
Ryan terminates the lease between the commonwealth and Fullarton Investments.
October 27
Attorney-General George Brandis and Ryan receive advice that there is a potential conflict under Section 44 of the Constitution.
October 28
Ryan writes to Senate president Stephen Parry informing him of the potential breach, and also contacts Day to advise him of the government’s action.
November 1
Day resigns.