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Thursday, 10 June 1999
Page: 6720

Mr BEAZLEY (3:11 PM) —I wish to move that so much of standing and sessional orders be suspended as would prevent the Leader of the Opposition from moving the following motion forthwith: that the following question be referred—

Mr McGauran —Mr Speaker—

Mrs Crosio —You don't know what it is yet.

Mr Howard —Yes, he does.

Mr SPEAKER —Members on both sides of the House seem to be forgetting my earlier comments.

Mr McGauran —Mr Speaker, we will take the motion.

Mr SPEAKER —The Acting Leader of the House has offered to take the motion. Is the Leader of the Opposition therefore happy to seek to—

Mr BEAZLEY —Absolutely.

Mr SPEAKER —One moment. Is the Leader of the Opposition therefore happy to seek leave to enable it to be moved without the requirement for the suspension to occur?

Mr BEAZLEY —I seek leave, yes.

Leave granted.

Mr BEAZLEY —I thank the House. I move:

That the following question be referred to the Court of Disputed Returns for determination, pursuant to section 376 of the Commonwealth Electoral Act 1918 :

Whether the place of the honourable Member for Leichhardt (Mr Entsch) has become vacant pursuant to the provisions of section 44(v) of the Constitution.

They are, of course, three matters in dispute in this entire sorry saga as far as the member for Leichhardt is concerned. All three matters are serious enough to merit the consideration of this parliament, and all three of them have to be dealt with at question time and at all the other opportunities that arise for us, either by motion or directly by question. Those three elements are distinct in their different characteristics, and all of them ought to raise alarm in the mind of an honourable member of the public looking at the requirement for his or her representatives to be accountable.

These are the three things before us. The first is whether or not the member for Leichhardt has breached the code of conduct. The mere fact that there is breach of the code of conduct, of course, does not necessarily go to his fitness for holding a seat in parliament. What we have seen as far as that breach of the code of conduct is concerned is the excoriation of the Prime Minister's expediency in his absolute refusal to give any cre dence, any credibility, to his code of conduct at all. We saw in question time today his slipsliding around every single point that was made to him. Every time he was asked a specific question he erected a straw man and then addressed the straw man—every single question he was asked. He evaded every single question yesterday. He has, fortunately for accountability in this place, set himself a number of traps—a number of contradictions—to which we will have opportunity to return at a later stage. That is one of the elements that this parliament has before it for consideration, and a sorry tale that element is indeed.

The second thing before us is the probity of the contract. We went to a consideration of that during question time today. What we discern from that is that the Minister for Defence does not know what he is talking about, and the propositions that he put before the parliament misled the parliament in a number of key areas as to whether or not the advice of relevant persons had been sought.

Indeed, we have a document that points out that the flight sergeant on whom he relies pointed out to his superiors that Boral had marched in to complain to him that they had not been properly consulted and not been given the same opportunity to tender for the work as that given to the particular company in question here—Cape York Concrete. To their mind, the opportunity presented to that company was not presented to a respectable operation like Boral. And, apparently, there is another aggrieved party, we discover from the documentation, identified as a suitable tenderer whose views were not sought, whose business opportunity was not sought, despite clear instructions in the guidance manual to delegates that anybody who has a capacity to put in a competitive bid ought to be given the opportunity to do so.

That, of course, leads us onto the circumstances of the third problem that we are considering here today, and that is whether or not the parliamentary secretary has a sufficient pecuniary interest in all of this to run foul of the legal requirements contained in section 44(v) of the Constitution. Those legal requirements state that:

Any person who—

. . . . . . . . .

(v) Has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth otherwise than as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons:

shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.

The effect of section 45(i) of the Constitution is that if a senator or member of the House of Representatives becomes subject to a disability referred to in section 44(v) his place shall thereupon become vacant.

The question arises as to whether a direct contract with the Commonwealth from a company that consists of two persons—well fewer than 25—a contract established directly with not an agency acting on behalf of the contract (in other words, in a subcontractual relationship) but a direct contractual relationship with a department puts one in a position of vulnerability. A commonsense interpretation of that particular clause would say precisely that.

These are the circumstances in which the member for Leichhardt finds himself. He has been trying—and the Prime Minister has been aiding and abetting—every twist to get himself off that particular hook in all the questions that have been answered, or attempted to be answered, by them in this place in the course of the last couple of days. We have heard from the Prime Minister that it was all right for him not to declare his relationship as the company secretary or his relationship as a director, that clearly he was just a sleeping person as far as those requirements were concerned, and merely establishing the relationship was sufficient. Then they go on to say that there was not a pecuniary interest because he did not receive a payment in relation to that.

I would have thought that commonsense—and the Prime Minister, strangely enough, despite having dismissed this as a possibility yesterday acknowledged it in answer to the honourable member for Dobell as a probability today—would show that there is another form by which one might gain from a contractual arrangement, and that is if that increased the capital value of a company and a capital gain was made: a commonsense interpretation by the Prime Minister today, dismissed by the Prime Minister yesterday as a matter that ought to concern us about these matters.

I have an apology to deliver in this place. I actually slandered poor old Henry yesterday. I said—by implication at least—that what poor old Henry Burmester had produced was a quick and dirty proposition and of course you would expect the Acting Solicitor-General just to dance out there for the characters who pay him, and I discovered I was wrong. He produced a quick response, but he did not produce a dirty one. As Laurie Oakes pointed out last night on Channel 9, anybody reading this particular document sees it replete with qualification. This is a Solicitor-General trying to twist out from under two sets of circumstances: (1) he is very unclear as to the actual pecuniary interest and vulnerability of the member as far as this is concerned and qualifies himself repeatedly with `the facts as stated to me' through this particular proposition; and (2) he qualifies himself to the nth degree as to whether or not Webster is truly relevant or whether or not in fact a reasonable person might arrive at a different interpretation than Barwick CJ.

Just in case we missed the point on that, he went into quite some detail in the course of his remarks as to the challenges that have been put down to that interpretation, the narrowness of that interpretation and the fact that other decisions, though not directly related to that clause, indicated that the High Court might well choose to take a different view if those matters were expressed to it. Indeed, he went on to note in section 10 on page 4 that the Webster judgment has been criticised for taking an unduly narrow view of the commercial relationship required. On page 5, section 11, he notes that Barwick has been criticised for taking a narrow view of the definition of pecuniary interest. On page 5, section 12, he qualifies clearance of Entsch's pecuniary interests with the words `if being a shareholder does not create an indirect interest in the agreement'. On page 6, section 13, he notes that the High Court in Sykes v. Cleary was not as willing to read section 44(v) as narrowly as did Barwick.

I have noted five separate occasions where the Burmester opinion makes mention of criticisms of Barwick's judgment—remarkable frequency in a document with only 10 paragraphs of consideration of the legal issues. In other words, he covers himself in every second paragraph of his opinion. I have heard of two-handed lawyers, but that is a very two-handed judgment as far as these particular matters are concerned.

That brings me to the reason we have some confidence in moving this particular proposition, and that is the legal opinion available to us. It is a legal opinion provided by a lawyer of considerable distinction—one of the up-and-coming members of the bar with a very good reputation on constitutional matters. The Prime Minister felt it was pretty easy to dismiss one or two others who have been seen as people with a very considerable capacity academically as far as constitutional law is concerned. None of them were the people advising us. One Stephen Gageler was the person providing that opinion, and he provides an opinion very carefully couched. I go first to the summary of his views:

I consider that:

. on the material with which I have been briefed it is unclear whether Mr Entsch would be found to have come under the disability referred to in section 44(v) of the Constitution if the approach in Barwick CJ in re Webster were adopted;

. there is a substantial prospect that the approach of Barwick CJ in re Webster would not be adopted if the matter were to come before the High Court; and

. on the better construction of section 44(v) Mr Entsch would be found to have come under the disability for which the section provides and his seat will have been vacated.

In the reasoning that he puts down for these particular propositions, there are one or two points that I want to go to. The first point is that Barwick arrived at a very narrow interpretation of this particular clause in relation to who held responsibility or who was likely to be placing pressure on a member of parliament. While it had some legal precedence, it was not in fact the way in which it was commonly regarded at the point of time the Constitution was formed. It went to the argument that the only question at issue was whether the executive could utilise, via a contractual arrangement, a capacity to pressure a member of parliament.

One can think of pecuniary interest in far broader terms than that and, indeed, as was pointed out in this opinion, that is precisely what occurred at the Constitutional Convention. A far broader look was taken at the issue of pecuniary interest. It was seen more in terms of local government situations—as a result of their direct experiences at the time—and of course, in those local government situations, their concern was people making contracts associated with their local authority or arriving at decisions associated with land zonings and the like which would place them in a conflict of interest. Indeed, at the Constitutional Convention that was the issue being looked at most intensely. That broader interpretation might well be the view that comes to be looked at in this particular instance.

But even so, there are other areas—apart from the breadth or otherwise of the interpretation of what pecuniary interests means—that this legal opinion goes to. That was whether the very narrow interpretation placed upon the particular commercial transactions associated with Webster would be the circumstances that would govern an interpretation of the affairs of the member for Leichhardt. In effect—to put it in layman's terms, which are the terms I must put it in—Chief Justice Barwick, sitting solely on this particular case, effectively placed Webster in the context of a hardware shop owner. Basically, all that was being transacted here was an application for a particular set of logs or pieces of wood—as you would go into a hardware store and say, `I want 10 of them,' and walk out. Therefore, the duration of the transaction did not involve an ongoing relationship, but was such that it could be described—as it was described at the time—as casual or transient.

But is this the case here, in the circumstances in which Mr Entsch's company finds itself? The answer is no. It is not simply a contract related to the bits and pieces that one might purchase to make up concrete. It is a transaction that took place, or required actions, over a period of at least a month—or at least that is what we have been able to get out of the defence department, so far. Those transactions involved a service as well as a product, namely the mixing of the concrete. This creates a very substantial difference in the position related to Mr Entsch and the position related to the circumstances in which Barwick chose to find Webster. Since then, there has been an absolute load of opinion on this—and it is bipartisan opinion, I should point out. For example, the Senate Select Committee on Constitutional and Legal Affairs in 1981, in its report entitled The constitutional qualifications of members of parliament, challenged that narrow interpretation that I referred to earlier. As the legal opinion says to us:

The thrust of that criticism was that the construction was contrary to the intention of the framers of the section as expressed in the Convention Debates and was contrary to the language of the section.

He goes on to find other interesting cases and points out, for example, in the case of Sykes v. Cleary:

. . . a majority of the High Court held that a person employed as a teacher in a State teaching service and who was at the relevant time on leave without pay was incapable of being elected to the House of Representatives because he held an `office of profit under the Crown' within the meaning of section 44(iii).

That is a much broader interpretation of that particular section, and if the High Court were to follow its reasoning in this particular instance it might well produce a very different decision about the circumstances of the member for Leichhardt. This individual was not receiving an immediate pecuniary interest, which was part of the fig leaf defence for the member for Leichhardt—a defence we do not accept, of course. As you will recollect, I referred to the possibility of a capital gain but, assuming that there was not the possibility of a capital gain and he was not receiving directors fees or any other form of remuneration from the company, we should recall the circumstances in which Mr Cleary found himself in this place. As many of us remember, the mere fact he stayed on the rolls as a teacher, though not practising and receiving no remuneration, was sufficient to see his situation discarded. Of course, we also have—and this legal opinion refers to this—a number of other cases which bear very directly on those conclusions.

Finally, I quote the opinion of the barrister who has advised us and that led to the conclusions that I indicated at the outset. He said:

In the result, there is in my opinion a substantial prospect that the High Court would, if it were called upon to consider the matter, depart from the construction of section 44(v) adopted by Barwick CJ in In Re Webster in favour of a construction which:

. treats the word "agreement" as encompassing any contract whether executory or executed within a short period of time and whether or not it is capable of leading to executive influence over a member of Parliament;

. treats a senator or member of Parliament as having a "direct or indirect pecuniary interest" in an agreement where the senator or member has a real (as distinct from remote) expectation of making some monetary gain or avoiding some monetary loss as a result of the performance or non-performance of the agreement; and

. includes within the expression "direct or indirect pecuniary interest" the interest of a shareholder as shareholder.

I think that, as you read through those opinions and you read through Henry Burmester's escape clauses, what you see would be a common judgment amongst the legal profession today—that is, the member for Leichhardt is in deep shtook. To put it in layman's terms, the member for Leichhardt finds himself in a set of circumstances which are severely problematic for him.

It is the duty of those on both sides of the House in this place when somebody finds themselves in that situation to find it and clarify it. Even as robust a character as Reg Withers could find it that way as far as Webster was concerned when it was last raised in this place with this level of seriousness. But, as standards have declined so much since then, so standards decline now and the government refuses consideration of this sensitive matter. (Time expired)

Mr McClelland —I second the motion and reserve my right to speak.