As parliament began its first 2017 sittings on Tuesday, and South Australian senator Cory Bernardi prepared to rise and confirm he had quit the Liberal Party, Senate President Stephen Parry made his own statement to the chamber.

He was reporting on the implications of the High Court judgement handed down during the recess, that former One Nation senator turned independent Rod Culleton had been unlawfully elected and was therefore disqualified from further service.

Parry confirmed that according to the rulebook, Odgers’ Australian Senate Practice, the disqualification would not affect the result of any votes in which Culleton had participated.

But among details still to be resolved, he said, was whether Culleton owed the government any money.

Parry explained that previously, as in the 1988 case that disqualified British-born Nuclear Disarmament Party senator Robert Wood for failing to properly take out Australian citizenship, attorneys-general had determined that salaries received by senators found to be ineligible had become a debt to the Commonwealth.

“In earlier cases, such debts have, in effect, been waived,” Parry told the senate. “However, I am advised that the decision whether to waive such debts is a decision for the government, not the senate. I have written to the finance minister seeking further advice on that matter.”

In a week in which Newspoll informed the government that its primary vote had dropped 4 points to 35 per cent over the summer holidays, and One Nation was up to 8 per cent, the decision on Culleton’s salary snags Prime Minister Malcolm Turnbull and his colleagues on the sharp horns of a dilemma.

Some Australians are likely to deem it completely appropriate to pursue repayment from a man who the law has found was not legitimately elected, even if it was due to a conviction that was quickly quashed. 

Given that Culleton is now facing bankruptcy proceedings, others might view any attempt to recover his salary and expenses as petty and futile, especially when previously others’ debts have been waived.

But in the current political context, waiving Culleton’s debt may send a certain constituency, vocal and already angry, completely berserk.

A single-line paraphrasing Parry’s statement posted on social media on Tuesday drew a barrage of outraged responses.

How could the government think of waiving the debt, people wrote, when it was refusing to do the same for those who had received computer-generated bills from Centrelink over the summer? Especially considering many of the bills were wrongly sent?

1. Bernardi strikes forth

The issue can be added to the list of those the government is now addressing in the shadow of a clear and present political danger: the threat from the right.

Cory Bernardi’s departure from the government benches – but not from the senate – to set up his new Australian Conservatives party, has highlighted that threat this week.

Thus far, none of his colleagues have followed. Instead, they responded with varying degrees of condemnation, from Attorney-General George Brandis’s barely restrained “disappointed” to education minister and fellow South Australian Simon Birmingham’s description of Bernardi’s defection as
“a dog act”.

“Cory Bernardi should resign from the senate,” Turnbull declared, accusing him of betraying the South Australians who six months ago had given him another six years there, as a Liberal.

Critics inside and outside his party noted that as the second candidate on the Liberal Party’s South Australian senate ticket last year, Bernardi had received only 2043 first-preference votes – hardly indicative of a strong personal following.

Bernardi insisted his support from disillusioned conservatives – and his decision to quit the Liberals – had emerged since the election and he now wanted to “put principle back into politics”.

He told the senate: “The journey ahead will not be for the faint of heart. But worthwhile ventures rarely are.”

Victorian Liberal Party President Michael Kroger predicted the new party’s only remote chance of success was in South Australia.

“But it’ll have short-term damage to the government and the [Liberal] Party,” Kroger conceded on Sky News.

“He’s just adding to the outsider effect, as I call it, in world politics today.”

That “outsider effect” represents the government’s real dilemma: how to re-engage with, or at least not further alienate, disaffected voters who are deserting the major parties in droves.

Maverick Queensland Liberal National Party MP George Christensen, who aligns himself with the Nationals in Canberra, voiced the concern permeating the government benches, front and back.

“We’ve got to reconnect,” he told reporters on Monday. “That’s absolutely clear. The message from the rank and file and the base has been one that’s disgruntled to say the least. We need to reconnect with our core constituency and with the people at large, and I think that there’s moves afoot to do that. So I really do hope that we succeed in doing that, because if we drift away any further it’s going to become untenable.”

He said Bernardi’s breakaway sent a signal to the leadership. “We cannot abandon conservative causes, conservative principles and conservative policies. We’ve got to re-embrace them, reconnect with that part of our core constituency and do the job that we were elected to do. And I think if we did that, there wouldn’t be breakaways.”

2. Policy shifts reflect One Nation's threat

Within the Liberal and National parties – and the Labor Party, too – there is a firm view that Bernardi’s new party is unlikely to pose a significant threat.

But Pauline Hanson’s One Nation is a different story.

“We are on the same lines with a lot of the policies and issues,” Hanson said of Bernardi’s decision. “It will split the conservative vote but I’ll put my policies there and hopefully [people will support them]. I’ve got no problem with working with Cory.”

The danger One Nation poses to the Coalition is evident in a series of government policy reversals in its first parliamentary week of the year.

On Monday, the prime minister won support from the Coalition party room to axe the politicians’ lifetime gold travel pass immediately for all but former prime ministers, rather than to phase it out.

On Tuesday, Deputy Prime Minister Barnaby Joyce announced that graziers in central Queensland would no longer be forced to sell their land so the defence department could train Australian and Singaporean military personnel.

On Wednesday, Turnbull and his ministers unveiled a further “omnibus” compromise on the welfare crackdown it first announced in the 2014 budget and failed to get through the senate, trimming the cuts and combining them with sweeteners in the form of childcare concessions and extra paid parental leave.

On Thursday, The Australian Financial Review reported the government had decided to defer another unpopular measure, also from the 2014 budget, to make Australians work until the age of 70 before accessing the pension, putting the transition plan on hold.

“We’ve shown in the last week how we listen to the issues that are out there in the public,” Joyce told ABC Radio. “We’re not arrogant.”

Joyce said it was his meeting with central Queensland graziers “the other day” that prompted the reversal on compulsory land acquisition.

“That’s the sign of a government that’s listening,” he said. “That’s the sign of a government that’s reacting.”

Its critics, including within its own ranks, say the reaction is coming far later than it should have.

Anger at the compulsory land acquisition proposal has been simmering in central Queensland for months. The Saturday Paper reported in early December that the issue had led to some LNP members quitting the party, prompting others to plead with their federal government to do something about it urgently.

Cairns-based LNP MP Warren Entsch was among them, saying at the time that One Nation was way ahead of his own party in reflecting the graziers’ concerns and describing Pauline Hanson’s party as being “all over it like a fat kid on a cupcake”.

This week Hanson issued a jubilant video statement claiming credit, along with the farmers, for the change.

“Yesterday I made my point quite clear to the prime minister why it can’t go ahead in full,” Hanson told viewers in a video message on her Facebook page. “…I am so thrilled with this and I’ve got to say, it’s been a lot of work.”

3. Minor parties seeking credit

But other minor parties and independents in parliament are trying to stop One Nation grabbing the kudos for raising or resolving issues on which they have already been campaigning.

On Wednesday, Tasmanian former Palmer United Party turned independent senator Jacqui Lambie introduced a private senator’s bill seeking to ban the burqa in Australia.

Queensland independent Bob Katter, who has long campaigned for a royal commission into the banks, produced legislation seeking to establish one. George Christensen says he is willing to cross the floor and support it even though his government does not. Only a government can establish a royal commission and Labor has vowed it will if it wins the next election. But Katter wants to remind people he was advocating it before any of them.

Both are issues One Nation has sought to adopt as its own. Thus far, its approach is gaining traction, as the Newspoll result showed.

Hanson said she was “thrilled” but not surprised. She said people had stopped her in the street in Sydney over the weekend.

“I think I’m talking about the issues that are really relevant to Aussies out there,” she told reporters.

“The number of migrants that are pulling me up and saying: ‘This country’s not the country that we came to. We love Australia but it’s changed so much.’ ”

4. One Nation prefence dealing in WA

One Nation’s growing electoral influence is being most immediately felt in Western Australia, where voters go to the polls in a state election on March 11.

On Wednesday night, Opposition Leader Bill Shorten restated Labor’s long-held position in relation to preference deals with One Nation, based on its immigration policies.

 “The Liberals are now looking at preferencing One Nation ahead of a mainstream party like Labor,” Shorten told the ABC’s 7.30.

“… We can work with One Nation professionally but we’re not going to horsetrade our values in the parliament or at the ballot box.”

He said refusing to swap preferences with One Nation had “been our policy and remains our policy – full stop”.

“The good thing about Labor is we’re united, and the Labor Party, I’m sure, will back the position which I’ve enunciated.”

On Tuesday, Labor Party state secretary Patrick Gorman had also declared Labor would not be striking any preference deals with One Nation.

But One Nation WA party leader Colin Tincknell, who is a candidate for the WA Legislative Council, has told The Saturday Paper that before Gorman’s declaration, dozens of Labor candidates had approached One Nation, inquiring about swapping preferences.

“I’ve had somewhere in the region of 20 to 30 lower house candidates wanting to do preference deals,” he said.

“The public would be very confused and the Labor voter would be very confused about what’s going on.”

He said he’d had one meeting with Gorman in which preferences were briefly mentioned. No agreement was reached and no further meeting had been scheduled.

Tincknell said One Nation would consider preference recommendations on a seat-by-seat basis and decisions needed to be made by midday Monday.

A spokesman for WA Labor told The Saturday Paper it “will not strike a deal on preferences with One Nation”.

“No deal, no arrangements,” he said. “WA Labor believes supporters of all parties should make up their own mind.”

One Nation is confident of its chances of securing seats in the WA parliament.

“I would say a really good chance is probably five [seats] and a good chance is 10,” Tincknell said, confirming that among the top prospects were the Nationals-held seats of Kalgoorlie and Pilbara – the latter held by Nationals state leader Brendon Grylls – and the Labor-held seat of Collie.

A Labor source confirmed the ALP believed Collie and Pilbara could both fall to One Nation, which its polling showed was registering 17 per cent statewide.

A Liberal source said private Liberal Party polling was also showing “a very strong One Nation vote in certain seats”.

Tincknell told The Saturday Paper that One Nation was paying for its own polling, which he said showed his party’s support well into double figures.

“In pockets, we’re going through the roof,” Tincknell said. “In pockets, we’re getting over 30 per cent.”

He declined to produce any evidence to substantiate his assertion but said the party was also doing “unofficial individual polls” in shopping centres, which were confirming strong support.

A statewide Newspoll published last week had the party on 13 per cent.

Tincknell said he was due to again meet the Liberals’ WA state director, Andrew Cox, before Monday to discuss whether deals could be struck in any seats on preference recommendations to voters.

When One Nation first emerged as a political force 20 years ago, the Liberal and National parties put it last on how-to-vote cards federally.

But this week, the Victorian Liberal Party has also flagged the possibility of preference deals at the state level with One Nation candidates.

One Nation’s support remains strongest in Hanson’s home state of Queensland, which will go to a state election within the next year.

Both Labor and the LNP view One Nation as a threat there.

Colin Tincknell said he wished WA’s election was a year later.

“I think we could be actually threatening for government in 12 months time,” he said.

“Now that Pauline is running all over Australia, we have a plan over the next two or three elections in each state and two or three elections nationally, to be [in] government … We are going to be absolutely a force to be reckoned with.”

Hanson has also declared it her party’s ambition to take government federally, laying out a national manifesto in an interview in News Corp tabloids.

“People see me as I could be their sister, their mother, their neighbour next door,” Hanson said. “They don’t see me as a career politician – they don’t see me as one of them.”

She is reaping the rewards of voters’ disillusionment with the major parties and their leaders, as expressed most recently in Newspoll’s figure for “other” candidates: 29 per cent.

5. Shorten riles Turnbull

Labor’s primary vote is also languishing, now just 36 per cent.

Also mindful of public concern and populist sentiment, it has established a federal Labor caucus crime and justice taskforce to examine the incidence of gang-related violence and use of the drug ice – despite policing being a state issue.

Bill Shorten is seeking to add to the pressure on Turnbull, talking up suggestions of leadership murmurs, despite no evidence of anything more than the usual internal Coalition frustration.

“The drums are beating,” Shorten said on Thursday. “There is leadership instability in the Liberal Party.”

Shorten suggested that was why Turnbull had unleashed a brutal character assessment of him in parliament the day before, when Shorten taunted him as “Mr Harbourside Mansion”.

In turn, Turnbull had lambasted Shorten as a “hypocrite” and a “parasite”.

“There was never a union leader in Melbourne that tucked his knees under more billionaires’ tables than the leader of the opposition,” Turnbull told the house of representatives. “He lapped it up. Oh yes, he lapped it up. He was such a sycophant, a social-climbing sycophant if ever there was one.”

The next day, he did not resile from his attack. “The people who know him best are his own colleagues,” Turnbull said of Shorten. “They know he is a fake. He has no integrity. No consistency. He doesn’t have a fair dinkum bone in him.”

Turnbull said politics was about both policies and character and that Shorten had “sold out” union members.

“I back myself,” Turnbull declared. “I am my own man. I can’t be bought by anyone. I don’t suck up to billionaires. I look them in the eye and, when I need to, I take them on.”

Shorten responded that he felt “a bit sorry” for Malcolm Turnbull.

“I’m relaxed in my own skin,” Shorten said. “I’m consistent. I think the problem is that we’ve got a prime minister who is being forced more and more to the right in his own party. The more he yells at me, the more I wonder if he’s judging himself … When you turn down the noise of parliament, the people in Australia just say, ‘What are you doing for us?’ ”

6. Hanson leads backlash against AustPost CEO salary

Both leaders had accurately anticipated the people’s feedback when news broke midweek that the chief executive of the government-owned Australia Post, Ahmed Fahour, had received an annual salary last year of $5.6 million, 10 times the size of the prime minister’s parliamentary pay packet.

They were quick to express dismay. Turnbull called the figure “too high” and out of touch with Australians’ expectations.

Pauline Hanson went further, declaring herself enraged by a salary she thought should be no more than $250,000. She warned that unless the government pressed Australia Post’s board to do something about it, she would not guarantee her party’s support in the senate for its much-needed family welfare and childcare package.

“Here I am, having to pass in the omnibus to pull back on monies to ordinary Australians who are struggling,” she said in a video message to supporters. “I cannot justify doing that to see the CEO get this sort of money.”

Australia Post’s chairman is being called before a senate estimates committee to explain.

Then there’s that other unresolved salary question – the one relating to disqualified former senator Rod Culleton. 

A provision in the Remuneration Tribunal Act says an amount paid without authority automatically becomes a debt to the Commonwealth.

The finance minister’s office directed The Saturday Paper to the office of the special minister of state, Senator Scott Ryan.

Ryan said the government was awaiting legal advice from the Australian government solicitor on how the court’s decision affects Culleton’s eligibility to “access salary and work expenses during his time in the senate”.

“This will also determine the issue of whether any debts become payable,” he said. “Should a debt become payable, it is up to that individual to determine whether they wish to apply for a waiver of debt. I will not pre-empt this process.”

Should Culleton apply, as might be expected, cabinet ministers will be weighing the government’s political interests against its financial ones in choosing whether to waive or not.

In an atmosphere of hair-trigger sensitivity to voter sentiment, they may be damned if they do and damned if they don’t. And they’ll have to work out which is worse.