Former senator Bob Day has accused the finance department of failing to warn him that a lease arrangement for his electorate office may breach the constitution, and said officials were on notice he still had an interest in the building.
The explosive testimony is contained in a submission to a parliamentary committee which seeks to revisit the issue that saw the high court rule in April 2017 that Day was ineligible to be elected to the Senate.
Day suggests the department and the former special minister of state, Michael Ronaldson, were more concerned with whether the arrangement was a “good look” than its legality, until advice in 2016 caused the government to dramatically change course and warn him it breached the constitution.
The joint standing committee on electoral matters is considering the Senate’s decision to refer Day to the high court, and is now likely to call finance department officials to quiz them about whether they knew the lease could constitute a disqualification and whether they warned Day and Coalition government ministers.
When Day resigned from the Senate in November 2016, it was revealed the government believed his election may have been invalid because he had an indirect pecuniary interest in the lease of his electorate office.
Day’s family trust had sold the 77 Fullarton Road property that housed his electorate office on a vendor finance basis. The high court held the arrangement was a disqualification because rent from the commonwealth was to pay back the trust, although no rent was ever paid.
Day claimed that in September 2013 the finance department explicitly warned senator-elect David Leyonhjelm that leasing offices he owned would breach section 44 of the constitution, but told him only that it “would not be a good look”.
In February 2014 the finance department advised Ronaldson to reject Day’s attempt to set up his electorate office in the building because of “concerns about how such a transaction might be perceived”.
Day revealed that he met Ronaldson in March 2014, and the minister advised him that the commonwealth leasing the office from a sitting senator would “not pass the pub test”.
“Ronaldson told me that if I wanted to be located in that building, I needed to sell it. Which I did,” Day said in his submission.
During discussions with the department regarding the lease, officers conducted visits to the premises and “it was quite clear that whilst I had sold the property, I still retained a significant interest in the premises”.
That was clear “through the occupancy of my various other activities: my political party, Family First, the Bert Kelly Research Centre and the Samuel Griffith Society, and that I was the contact person for all discussions with respect to the building and lease. The department raised no concerns with me about this.”
He said that from September 2013 to December 2015 the department did not mention section 44 “at any stage”.
“Had the department told me, as they did senator Leyonhjelm, about section 44, I would not have proceeded with the leasing arrangement.”
Day quoted passages from Hansard in November 2016 when the finance minister, Mathias Cormann, told the Senate that even after the department knew of the vendor finance arrangement in February, its advice was that it was open to him to make rental payments from March.
“The issue, to be frank, was not a concern to the department at that point in time,” he said. “As I have said previously, it is not a matter for the government to make judgments on who is eligible and who is not eligible to sit in the Senate.”
Scott Ryan took over as special minister of state in July 2016, and reviewed the arrangements. After Ryan took over the portfolio, the finance department was given advice in October 2016 from both the solicitor general, Justin Gleeson, and David Jackson QC. Their advice concluded Day was in breach of the constitution.
Day said that the Senate president, Stephen Parry, then warned him he intended to tell the Senate about the government’s advice that he was ineligible.
“In light of this bombshell, I felt I had no choice but to immediately resign,” Day said.
“Notwithstanding the department’s actions over the previous three years, and the authority of three special ministers of state to proceed with the lease as arranged, the attorney general, [George Brandis,] instructed the solicitor general of the commonwealth to argue in the high court that I should be disqualified.”
