During parliament yesterday,  Member for Stirling, Michael Keenan, asked Julia Gillard whether she had “made inquiries that satisfy herself that she had been provided with all of the information … in relation to the monetary amount of the gift that he [Craig Thomson] received from the New South Wales Labor Party”.  Despite Gillard’s continuing support for Thomson, these under-the-rug payments and personal loans from the NSW branch of the ALP could be an effort by Thomson to avoid being forced to resign from parliament for bankruptcy.

The NSW backbencher has admitted on parliamentary record that he received a “sum of money” from the party to settle his legal bills.  Original estimates from Labor insiders put the total sum at $90,000, “$40,000 to settle his legal bills and about $50,000 in the form of a personal loan.” However, according to The Australian today, the total sum could be upwards of $150,000.

Crikey endeavoured to find out why a member of federal parliament cannot be bankrupt, and what else they must and must not be.

What are the criteria one must meet before becoming a member of federal parliament?

According to the Australian Electoral Commission, a candidate for a federal election must be:

  • at least 18 years old;
  • an Australian citizen; and
  • an elector (or a person qualified to become an elector).

What are the criteria you’re NOT allowed to meet?

Under section 44 of the Australian constitution, a person is not allowed to apply to become, or continue as a member of federal parliament if the candidate:

(i.) Is under any acknowledgement of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or citizen of a foreign power: or

(ii.) Is attainted of treason, or has been convicted and is under sentence, or subject to be sentenced, for any offence punishable under the law of the Commonwealth or of a State by imprisonment for one year or longer: or

(iii.) Is an undischarged bankrupt or insolvent: or

(iv.) Holds any office of profit under the Crown, or any pension payable during the pleasure of the Crown out of any f the revenues of the Commonwealth: or

(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 25 persons

Why are members of parliament forced to resign if they become bankrupt?

Under the 1966 Bankruptcy Act,  “bankrupt” means a person:

(a)  against whose estate a sequestration order has been made; or

(b)    who has become a bankrupt by virtue of the presentation of a debtor‘s petition.

According to John Kalokerinos’ paper “Who May Sit? An Examination of the Parliamentary Disqualification Provisions of the Commonwealth Constitution” the constitutional provision against bankruptcy is to protect the state and address the concern about “the scope for financial persuasion to influence a bankrupt candidate or parliamentarian”. Kalokerinos suggests that because views towards “debt and bankruptcy, the growth in consumer credit, and the importance of elector choice” have changed enormously since 1901, s44(iii) is no longer justified.

It was suggested more than 100 years ago by former NSW Premier Joseph Carruthers that the provision could be used by creditors to disqualify candidates or members of parliament to whom they are opposed.  Moreover, Carruthers argued “the electors should have the right to choose to be represented by a person who is bankrupt.  Such a person is not necessarily unfit for Parliament, and if that person has acted improperly, the electorate will judge him or her appropriately”.

Dissecting the linguistics — what does “undischarged bankrupt or insolvent” mean?

In a 1987 case Nile versus Wood, the High Court of Australia declared Robert Wood’s election to be invalid because of alleged breaches of sections 44(ii.) and (iii.) of the Constitution.  During this case, the semiotics of s44(iii) were analysed:

“The adjective ‘undischarged’ … attaches  to ‘bankrupt’ and to ‘insolvent’. In other words, insolvent is not adjectival and merely describing a person who cannot pay his debts as they fall due. It is … part of a composite reference to the status of a person who has been declared bankrupt or insolvent and who has not been discharged from that condition.”

Peter Fray

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