Will Peter Dutton Be Disqualified From The Parliament?

Probably not.

The contest for leadership of the Liberal Party, and therefore the Prime Ministership, has generated enormous interest in whether Peter Dutton is disqualified from being a member of Parliament by s. 44(v) of the Australian Constitution.

The question arises because Mr Dutton is a beneficiary of a discretionary trust that operates two childcare centres. The parents of children cared for in the centres receive subsidies under Acts of Parliament from the Federal Government for the cost of childcare. Before 2 July this year, some parents received the subsidies directly and, for others, the subsidies were paid directly to the childcare centres. Since 2 July, all subsidies are paid directly to the centres.

READ MORE: Hugh Riminton: Constitutional Cloud Emerges Over Peter Dutton's Business Interests

Why is this perceived to be a potential problem?

Section 44 of the Constitution is the section that has caused havoc because of its ban on dual citizenship for parliamentarians. But s. 44 also contains s. 44(v), which says that any person who “has any direct or indirect pecuniary [that means monetary] interest in any agreement with the Public Service of the Commonwealth” is disqualified from sitting as a member of parliament.

Come on and let me know, should I stay or should I go. Image: Getty.

The focus of the debate over Mr Dutton is not whether he has a direct or indirect pecuniary interest via being a beneficiary of the discretionary trust that operates the childcare centres (a discretionary trust is one where the trustee decides whether or not to pay a beneficiary like Mr Dutton any money from the trust).

In the case involving former senator Robert Day in 2017, four of the seven judges on the High Court held that Mr Day had an indirect monetary interest in the lease over his electoral office, despite his being a beneficiary of a discretionary trust that itself was the beneficiary of another discretionary trust that held the lease. No, the focus in Mr Dutton’s case is whether the childcare arrangements are an “agreement with the Public Service of the Commonwealth”.

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Mr Dutton has obtained an advice from Sydney silk Guy Reynolds SC, which in two pages says, without ifs or buts, that there is no agreement; the only rights, he says, are entitlements to subsidies under Commonwealth laws. (Mr Reynolds reportedly issued an update yesterday saying that the 2 July changes made no difference to his advice, but I have not been able to obtain it.)

READ MORE: Hugh Riminton: Peter Dutton's Legal Advice Is Out Of Date

The Labor Party has obtained a much longer joint advice from Sydney barristers Bret Walker SC and James Mack. In much less decisive language, they conclude that “it is clearly arguable that the arrangement” under which the subsidies are paid “is capable of being characterised as an agreement” under s. 44(v).

I’ll come back to their reasoning in a minute.

Who is right?

There are several reasons why it’s hard to say.

Poised to strike. Image: Getty.

First, the Constitution often does not mean what it says, and s. 44(v) is a good example. It says that any person who has a monetary interest in any agreement with the Public Service is disqualified from being a member of Parliament. Every time you buy stamps at a post office, you have a monetary interest in an agreement with the Public Service - but no-one is suggesting that buying stamps disqualifies you from sitting in Parliament. So how do you work out which agreements disqualify you and which don’t?

The second reason the question is a hard one is that there’s really only one High Court case on s. 44(v), the Day case that I mentioned before. And everyone involved in that case agreed that the lease involved definitely was an “agreement”, so the justices did not have to decide this issue.

Nonetheless, all seven justices made comments about what sorts of agreements were not agreements” under s. 44(v).  However, because they did not have to decide this issue, their comments are what lawyers call “dicta”, which means that, technically, they don’t form part of the reasons for the Court’s decision.

What that means in practice is that the justices who made the comments can more easily change their minds in later decisions, and justices appointed later who did not participate in the Day case won’t feel that they necessarily have to follow the comments made in it.

The third reason the question is a hard one is that the seven justices in Day wrote four separate judgments, each one approaching the question slightly differently. Chief Justice Kiefel and Justices Bell and Edelman wrote a joint judgment agreeing with the Attorney-General that the purpose of s. 44(v) was “to prevent ... a member of Parliament from taking advantage of his or her position in order to obtain a financial advantage and to prevent a conflict between that person’s duty as a member and his or her own interests”.  Because of that, they said that s. 44(v) did not apply “if the agreement in question is one ordinarily made between government and a citizen”.

Justice Keane gave an example of an agreement that obviously would be caught by s. 44(v) - “an agreement by an officer of the executive government to provide payments to a parliamentarian, in return for support in Parliament”.  By contrast, he said that “s. 44(v) is not concerned with the myriad of benefits generally provided by the Commonwealth to its citizens” and that it did not apply to a person who got a monetary benefit from the Commonwealth “which is available generally to the community”. 

Justice Gageler agreed, saying that “routine or patently benign agreements” with the Government were not caught by s. 44(v). Examples he gave included a bond issued by the Treasury and an agreement about the compensation payable when the Government compulsorily acquired a person’s land. Section 44(v) thus did not apply to an agreement entered into by the Commonwealth Government while carrying out “a law of general application enacted by the Parliament”. (The Walker/Mack advice in error says that Justice Gageler’s examples were caught by s. 44(v), which just goes to show how confusing the question is.)

Justices Nettle and Gordon focused on the effect of an agreement, rather than on what sort of agreement it was. They said that “agreement” cast a very wide net but that s. 44(v) applied only if a “person could conceivably be influenced by the potential conduct of the executive in performing or not performing the agreement or that person could conceivably prefer their private interests over their public duty”.

So where does that leave Mr Dutton?

In a pretty strong position.

Why?

There are several reasons.

Sorry but I think I'll be fine. Image: Getty.

First, it’s hard to see that there’s any “agreement” involved, even if that word is defined broadly.  What seems to be happening is that, by law, child care subsidies payable to parents (one of “the myriad of benefits generally provided by the Commonwealth to its citizens”) are being paid by the Government directly to the child care centres.  (The Walker/Mack advice points to the elaborate approvals process for childcare centre operators as being evidence of an “agreement”, but it is hard to understand why.)  Second, even if there is an “agreement” involved, the agreement seems to have been entered into by the Commonwealth Government while carrying out a law about childcare that applies generally throughout Australia. And third, it is hard to see the payment of the subsidies could conceivably influence Mr Dutton in his conduct as a minister or lead him to prefer his private interests to his public duty. (The Walker/Mack advice points, correctly, to the purpose of s. 44(v) being to prevent financial gain which may give rise to a conflict of interest, but does not explain how a conflict could arise in Mr Dutton’s case.)

Pointing against Mr Dutton are several factors.

First, the High Court has applied another part of s. 44 broadly - hence the dual-citizen havoc - and in the Day case, the Chief Justice and Justices Bell and Edelman said s. 44(v) should not be read narrowly because “it is protective of matters which are fundamental to the Constitution, namely representative and responsible government in a democracy”.  Second, because of the importance of s. 44(v), they said that “there can be no warrant for limiting its operation because of the consequences which might follow for a person who is disqualified”.  Third, the facts and the underlying laws in the case of Mr Dutton are complex, so reasonable people - and judges - may differ on whether s. 44(v) applies to him.

But it’s hard to see how the negatives outweigh the positives.  Overall, you’d have to say that Mr Dutton seems to be in the clear.

Robert Angyal is a Sydney barrister.  He does not represent or advise anyone involved in the Dutton controversy.