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Monday, 7 November 2016
Page: 1912

Senator CORMANN (Western AustraliaMinister for Finance and Deputy Leader of the Government in the Senate) (12:38): I speak in support of the motion and, in so doing, seek to provide some further context. I was appointed Acting Special Minister of State on 29 December 2015. A few hours after that appointment, that same day, I received a letter from then senator Bob Day by email in relation to arrangements related to his Fullarton Road electorate office. I will table this letter and my reply at the conclusion of my remarks. This is, incidentally, the only correspondence between then Senator Day and me in relation to his electorate office at 77 Fullarton Road, Kent Town.

The 29 December 2015 approach by then Senator Day in relation to his electorate office was, I believe, the first time I became aware of the arrangements put in place in relation to then Senator Day's electorate office. I was told that: (1) then senator Bob Day had occupied the premises at 77 Fullarton Road, Kent Town, as his electorate office since April 2015 after relevant a heads of agreement had been executed in February 2015; and (2) a lease agreement with a commencement date of 1 July 2015 was later executed on 1 December 2015, although, consistent with relevant terms and conditions in the lease, no rental payments were made.

It is important to note here that at the time of executing either the heads of agreement in February 2015 or the lease on 1 December 2015 the Department of Finance was not concerned that then Senator Day still had any interest in the 77 Fullarton Road property. Specifically, former special minister of state Michael Ronaldson had agreed to enter into the heads of agreement and the lease on the express basis that he had satisfied himself that: (1) then Senator Day no longer had an interest in the 77 Fullarton Road property—this was expressly confirmed by then Senator Day and also confirmed by the department through relevant title searches at the time—and (2) there would be no net cost to the Commonwealth in entering into the heads of agreement and the lease compared to the scenario where then Senator Day had accepted the earlier request and preference by the Department of Finance to occupy the electorate office premises vacated on 30 June 2014 by then former senator Don Farrell.

As early as October 2014, former special minister of state Michael Ronaldson had already imposed a number of terms and conditions on then Senator Day for the establishment of his electorate office at 77 Fullarton Road; specifically: (1) to pay, himself, for any necessary upgrade to bring the Fullarton Road property to government standards; and (2) no rent would be paid by the Commonwealth for the electorate office at 77 Fullarton Road until either the Don Farrell office had been sublet or the lease on that office came to an end on 14 August 2016, whichever was sooner.

In his 29 December 2015 letter to me, then Senator Day complained that over a period of 18 months since he took office and had declined to occupy the Farrell office the department had not been successful in subletting that office and that as a result, in addition to having paid, himself, for the upgrade of his electorate office, he had also been forced to pay rent for it out of his salary since moving into the 77 Fullarton Road premises in April 2015. He requested that the department now pay rent for the electorate office from 1 July 2015, being one year after the beginning of his term as a senator for South Australia and the commencement date of the lease.

In terms of my approach from that time, given it is the department's responsibility to provide an elected member or senator with appropriate office accommodation, given that then Senator Day by then had occupied the 77 Fullarton Road property since April 2015, with a 1 July 2015 commencement date for the lease of that property, given all relevant property title searches and Senator Day's express advice to the department that he no longer had any interest in the 77 Fullarton Road property, and subject to satisfactory evidence of the rental payments made as claimed by then Senator Day being provided to the Department of Finance, I was prepared to agree to this request. However, despite subsequent repeated requests by the Department of Finance, then Senator Day did not provide any evidence of rental payments which he asserted in his letter to me he had made. Instead, information he subsequently provided to the department for the first time about vendor financing arrangements underpinning his sale of the 77 Fullarton Road property and related financial arrangements caused concern about whether then Senator Day in fact remained connected to the Fullarton Road property.

In dealing with then Senator Day's ongoing requests for rental payments to be made, the department asked him whether then Senator Day had any interest in the lease agreement between Fullerton Investments and the Commonwealth and whether this could contravene section 44 of the Constitution. Then Senator Day denied any interest in the lease agreement and any section 44 implications if the government were to pay rent to the landlord at the 77 Fullarton Road property.

Subsequent to that—and aware of all the information that had emerged by then—on 18 February 2016, the Department of Finance advised me that it would be open to me to approve the payment of rent for the Day electorate office going forward from 1 March 2016. However, when asking to put in place this payment, further information came to light—namely, that the bank account to receive the rental payments was an account linked to then Senator Day. Given this, a conscious decision was made that the Commonwealth would not pay rent to the owners of the 77 Fullarton Road property in the circumstances, neither by way of reimbursement for the period from 1 July 2015 nor prospectively from 1 March 2016. In fact, at no stage during then Senator Day's occupation of the 77 Fullarton Road property as his electorate office did the Commonwealth pay any rent for those electoral office premises. I understood at the time that the non-payment of rent meant that any potential breach of section 44 of the Constitution had been avoided. Indeed, at no point did I receive any advice from the Department of Finance that the lease signed on 1 December 2015 in itself and in the absence of rental payments could cause a potential breach of section 44 of the Constitution.

In the meantime, on 8 May the general election was announced for 2 July 2016, and the government subsequently assumed caretaker mode. On 2 August 2016, then Senator Day was declared re-elected. On 4 August, then Senator Day again approached the government to complain that the rent for his electoral office had not been being paid by the Department of Finance. Given the renewed request for rental payments and the fact that from 14 August 2016 rent was due to be paid by the Commonwealth under the terms of the lease, the government decided to seek formal legal advice. Senator Ryan has gone in some detail through the relevant time line and decision points since. When then Senator Day decided to pursue this issue again after his re-election on 2 August 2016, and given that the 14 August 2016 deadline under the lease was approaching, based on all the information the Department of Finance had accumulated by then, proper legal advice was able to be sought, with eminent independent legal expert David Jackson QC ultimately advising the government on 27 October 2016 that, in his opinion, the lease executed on 1 December 2015, in all the circumstances which had emerged since, in itself and even without rental payments being made was a breach of section 44 of the Constitution; specifically, in the context of all the new information the about the selling, financing and loan arrangements which had subsequently emerged. Ultimately, whether this is indeed the case is a question which has yet to be settled and can only be settled by the High Court, assuming the Senate refers this matter to the court for its consideration. That is why it is appropriate for the Senate today to refer this matter to the High Court to settle the constitutional position in relation to this issue.

In conclusion, and by way of a general point about how this matter was handled by the government and specifically by me, I would add this point: special ministers of state work in a non-partisan and confidential manner with members and senators from all sides of politics to facilitate their office and staff arrangements, among other things. Then Senator Day is not the only one who challenged an initial finance department proposal or preference about where their electorate office should be located. Special ministers of state generally and, as appropriate, work with parliamentary colleagues in a non-partisan fashion to try and find appropriate solutions within the rules to help ensure that all of us can do the job we were elected to do, to the best of our ability. My approach as special minister of state in dealing with colleagues was to always operate in good faith on the information provided to me by members and senators. In relation to then Senator Day, the information which has emerged since the lease for his electorate office was first executed should now be reviewed by the High Court. Only the High Court is in a position to settle the constitutional questions raised by the legal advice the government received about these matters on 27 October 2016 and which the government referred to the President of the Senate the next day. That is why I commend the motion to the Senate.

I table the two documents that I flagged earlier.