Peter Dutton

As the Coalition struggles to piece itself together after last month’s self-immolation, it’s easy to forget that a serious cloud still hangs over Home Affairs Minister Peter Dutton’s eligibility to sit in parliament. Just hours after the first of Dutton’s two unsuccessful attempts to seize the prime ministership, it was revealed that the minister’s eligibility was potentially compromised on the basis that government subsidies to childcare centres owned by his wife could place him in breach of section 44(v) of the constitution.

What is the case against Dutton?

The contours of s.44(v) are fuzzy, especially compared with the relatively straightforward citizenship provision in section 44(i), which claimed a number of scalps over the past year. Under the subsection, a person who has “a direct or indirect pecuniary interest with the public service in any agreement with the Public Service of the Commonwealth” is ineligible to sit in parliament.

The case against Dutton is equally fuzzy. Dutton is listed in the parliamentary register of interests as being a beneficiary of a discretionary family trust. The trustee of that trust is RHT Investments, a company owned by Dutton’s wife, which operates two childcare centres in Queensland. These centres are eligible for childcare subsidy payments from the Commonwealth. The subsidies used to be paid directly to parents, but after legislative changes that came into force in July of this year, payments are now made directly to the childcare centres. Dutton’s eligibility to sit in parliament therefore hinges on whether, by benefiting under a trust, the minister is in an agreement that will trigger disqualification under s.44(v).

Why is it so complicated?

The meaning of a pecuniary interest is obscured further by the total paucity of judicial authority on the matter. The High Court, which deals with constitutional questions, has heard just two cases concerning eligibility under s.44(v). In 1975, Country Party senator James Webster, who ran a company that supplied timber to various government departments, was found to still be eligible. The High Court overruled that decision when it last year found Family First Senator Bob Day under section 44(v). In the Re Day case, Day was found to have an indirect pecuniary interest based on a series of complex financial transactions between his family trust and an investment company, which leased office space to a government department. The offices were previously owned by the Day trust, and were transferred to the investment company on a vendor finance agreement, meaning that the rent paid by the Commonwealth was then paid to Day.

Will Dutton be found ineligible?

In light of statements made by judges in the Day decision, Dutton’s eligibility appears to hinge on whether or not the trustee (in this case, his wife’s company) has an “agreement” with the public service. Whether or not there is an agreement depends on how the High Court chooses to construe the childcare subsidy scheme. So far, constitutional law experts are divided. Two reports commissioned by Dutton found that the childcare funding scheme did not amount to an “agreement” with the public service.

In a more comprehensive advice released, rather dramatically, just hours before the critical Liberal party room meeting, Solicitor-General Stephen Donaghue QC concluded, with some reservation, that the “better view” was that there was no agreement between Dutton and the public service. Conversely, in an opinion provided to Labor, Brett Walker SC and James Mack and argued that the mutual and voluntary nature of the subsidy arrangement between childcare centres and the Commonwealth may be evidence of an “agreement”.

There was also divergence between the judges in Re Day on whether or not ordinary agreements between the government and citizens or laws of general application fall within the scope of section 44(v). Even if a conclusion here was reached, this would still trigger the question of whether the childcare subsidies constituted an ordinary agreement.

The upshot is that Dutton’s eligibility is still very much a live issue. According to University of Sydney constitutional law professor Ann Twomey, Dutton’s eligibility is a question “about which reasonable minds may differ”, which cannot be resolved with certainty without a trip to the High Court.

Where do we go from here?

For the eligibility question to be resolved by the High Court, Dutton would have to be referred. Labor has continued to call for Dutton’s referral, although this would require them to secure a majority vote in the House of Representatives.

If Dutton is ultimately found ineligible by the court, he will have to face a byelection. Given he holds his suburban Brisbane seat of Dickson by a knife edge, the future remains uncertain for the could’ve-been prime minister.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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