The federal government has shielded former attorney-general Christian Porter from facing an inquiry over a blind trust setup to pay for his private legal bills.
Mr Porter's blind trust set up by anonymous supporters to pay for defamation proceedings against the ABC and one of its reporters has been criticised by Labor for lacking transparency and not putting on the public record who was funding the trust breached parliamentary rules on pecuniary interests.
The powerful privileges committee may instead be set to investigate broader issues of transparency of donations following a move by the government's Leader of the House Peter Dutton.
Speaker Tony Smith told Parliament on Wednesday he was satisfied a prima facie case had been made in the matter of Christian Porter's register of interests which paved the way for the committee to pursue the matter as contempt of Parliament.
However, the government narrowly won a subsequent vote to block the Porter matter being pursued, prompting Labor to cry that a potential matter of corruption had been swept from public view.
Labor's Tony Burke said in Parliament that preventing the committee to investigate was "the cover up to end all cover ups", and described the government's vote against the referral given precedence by the Speaker as unprecedented and a "disgraceful, shameful" moment for Australia.
"For 120 years this has been a key protection against corruption. Today the Morrison-Joyce government abandoned this principle," he said.
Mr Dutton told Parliament that while the issue was important, the government felt consideration should be given to broader issues raised by the case, such as expensive legal costs of defamation proceedings that members of Parliament were involved in.
"There are many members, as I look around, who don't have deep pockets to defend a defamation trial, in some cases costing over a million dollars. That's the reality," he told Parliament.
"I think it's a workplace entitlement issue."
He pointed to the existence of other cases of fundraising for legal matters including a GoFundMe fundraising campaign for Senator Sarah Hanson-Young's defamation proceedings against fellow senator David Leyonhjelm.
Donations and reimbursements to MPs from political parties was also a transparency concern, he said.
Referring the Porter case would be redundant if the committee was set to explore broader issues, Mr Dutton said.
Mr Porter's lawyers have been contacted for comment.
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