The federal government's hopes of passing contested legislation in the Senate have been thrown into chaos following explosive revelations that its most compliant crossbench senator, Family First's Bob Day, may not have been legally elected.
Acting on legal advice, the government now believes it has been renting office space on behalf of the senator, whose company actually owned the premises.
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Bob Day bombshell
The Senator has resigned for the second time with questions surrounding his business affairs and whether he was validly elected. Courtesy ABC News.
That would be a breach of the constitution amounting to a "direct or indirect pecuniary interest" with the Commonwealth – which is specifically prohibited – and enough to make a person receiving such profit ineligible to stand as a member of the Australian Parliament.
The news is set to force a recount of all South Australian Senate votes from the July 2 election, and that in turn could result in the election of another crossbench senator or even one from the opposition – potentially changing the composition of an already hostile upper house.
The news was delivered on Tuesday afternoon, hours after the embattled Family First senator resigned from the Senate in the wake of the collapse of his housing construction company.
However, it is not clear if the government's action's hurried Mr Day's resignation on Tuesday, or if Mr Day's resignation forced the government to reveal that it was in possession of legal advice calling his original election into question. No casual vacancy would exist if Mr Day was not properly elected in the first place.
In a dramatic late-afternoon development, Attorney-General George Brandis released a statement advising that Special Minister of State Scott Ryan had written to Senate president Stephen Parry on Friday with "certain information concerning the position of Senator Bob Day".
Senator Brandis said the information related to a "potential indirect pecuniary interest" in a contract with the Commonwealth.
Normal practice would mean Family First selecting a replacement candidate, who would be ticked off by South Australia's Parliament before taking the seat in Canberra by the end of the year, or early next year.
However, in an email sent to senators on Tuesday afternoon, Senator Parry said he was "considering information which raises difficult constitutional questions relating to the composition of the Senate and I am seeking further advice before I put the matter before the Senate on Monday".
Senator Brandis said the government would refer the matter to the High Court, which would sit in its capacity as the Court of Disputed Returns.
Fairfax Media understands the question relating to Mr Day's eligibility derives from the Commonwealth's rental of Mr Day's South Australian electorate office.
According to property and company searches, the Fullarton Road electorate office was owned until September 2014 by B & B Day Pty Ltd, a company of which Senator Day had been a director. It was sold to Fullarton Investments for $2.1 million.
Company records show Fullarton Investments has one shareholder and director – Colin Steinert. Mr Steinert has previously been named as a project manager with Senator Day's building company, Homestead Homes.
In a statement, Family First said it had no prior knowledge of the conflict allegations. It also said Mr Day "denied any pecuniary interest exists or existed". The party is seeking legal advice.
Mr Day had scraped into office in the 12th and final spot at the July 2 poll.
It is likely a count-back will be ordered. However, the eventual winner of the coveted spot would be anyone's guess, determined according to complex preference flows between Family First, One Nation, the ALP or the Liberal Party.
The election of an additional Labor senator – most likely the former senator Anne McEwen – which is a genuine possibility, according to some close to the Senate race in South Australia, would be a minor disaster for the Turnbull government, which is already struggling to wrangle a majority for its legislation from a large crossbench.
Any argument over the 12th Senate seat from South Australia could take weeks to resolve, even before the Australian Electoral Commission pushes the button on its computer to work out who was legally elected.
Questions will now be asked about precisely when the government knew there was a problem with Mr Day's election. In a hostile Senate inquiry two weeks ago, the since-resigned solicitor-general, Justin Gleeson, revealed he had been asked by the Attorney-General to advise on "the composition of the Senate".
Mr Brandis later complained bitterly about that revelation, saying he would have applied to keep it secret on grounds of public interest immunity.
If it emerges that the government had been advised weeks ago about Mr Day's ineligibility to be elected, it will be certain to attract criticism, given the government had been defending against Labor claims that Mr Day's crucial vote for upcoming union busting bills would have been tainted by virtue of his likely bankruptcy.
However, the non-eligibility question leaves those concerns in the shade.
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