Section 44: Would a student loan from the Commonwealth prove grounds for disqualification?

Could the Commonwealth HELP loan scheme, that assists the vast majority of students to undertake tertiary or further education, give rise to yet another ground for disqualification under section 44 of the Constitution, which has seen 10 MPs and Senators depart the Parliament since the 2016 election, another candidate miss out on taking up a Senate seat, and a growing cloud over many more?

If it does, this might adversely affect the position of the newly elected Greens Senator for Western Australia, Jordon Steele-John, who, before taking up his seat this week, was undertaking a degree in politics by distance education at Macquarie University?

If this were found to be an issue, it would also affect the future nomination and election of students and recent graduates with student loans owing to the Commonwealth. While few students are in the box seat for winning an election, some run as minor party candidates, for the experience or to “fly” a party’s “banner” in seats where their prospects are slim.

While it seems far fetched, and reminiscent of the concerns at the time of the 1975 referral of James Webster to the Court of Disputed Returns that ordinary, routine transactions with the Commonwealth, like getting the telephone installed, might see Members of Parliament breach s.44(v), the so-called “brutal literalism” of the current Court, the decision in Re Day No. 2 earlier this year, and the particular nature of the Commonwealth HELP schemes, do give rise to contemporary questions.

And given the fact that most MPs and Senators are of an age or circumstances where they have either not been beneficiaries of the HELP scheme, or have likely discharged any liabilities through previous employment before contesting an election, the issue has not likely been at the forefront of attention for the Parliament before now.

While the prospects of disqualification arising from the HELP loan arrangements are far from certain, it does add more uncertainty to the questions hanging over the newly elected Senator Andrew Bartlett, who faces an office of profit question over his university employment, and the prospective replacement for Jacqui Lambie, Steve Martin, who faces a question over holding an elected office in local government.

It also arises alongside the private common informer action taking place in the High Court, where s.44(v) is being used to argue that Nationals MP, David Gillespie, has an indirect pecuniary interest because he has an interest in commercial premises being leased to someone with an Australia Post franchise.

The remoteness of the prospect of disqualification in each of these instances does not diminish or negate the uncertainty.

The uncertainty also advances the case for reform of section 44 so that it works effectively to offer safeguards as to the allegiances and interests of prospective and elected MPs, while affording clear guidance to those contemplating running for election.

Section 44(v) provides that:

Any person who: …

(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 twenty-five persons;

shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.

In Re Day No. 2, the majority of the High Court earlier this year ruled that Bob Day was disqualified as a Senator from the time when the Commonwealth directed payment for premises in which he had an interest, by way of a loan facility backed by a mortgage on the premises, for use as his electoral office.

It is arguable that an arrangement where an individual student, without the means to cover the full cost of their education themselves, enters into an agreement with the Commonwealth for a loan to go towards their mandated contribution to higher education, falls within the purview of s.44(v), however ostensibly absurd or unfair that outcome might seem.

By way of response, regard might be had to the joint judgment of Kiefel CJ, Bell J and Edelman J in Bob Day’s s.44(v) case where they held that:

There can be no relevant interest if the agreement in question is one ordinarily made between government and a citizen. Were this otherwise, every day-to-day dealing which a citizen has with government could result in the disqualification of a citizen who happens to be a parliamentarian.

However, here, it might be argued that while the HELP schemes are easily accessed by the majority of students who secure a place in higher education, the HELP scheme is still of such a limited purpose and nature as not to be “ordinarily” available to any citizen.

In separate judgments, Keane and Gageler sought to couch an exemption to the application of s.44(v) where an agreement was entered into “in the execution of a law of general application enacted by the Parliament”. This reading of the provision would certainly be a strong defence against an argument that a loan under the HELP scheme is grounds for disqualification.

While a form of student contribution towards the cost of higher education has been in place since the late 1980s, since the passage of the Higher Education Support Act in 2003, the scheme moved away from a deferred liability towards the form of a loan arrangement, where the Commonwealth lends students an amount to pay for the “student contribution” element of the cost of their studies. Repayment of the loan takes place through the taxation system when the student or graduate earns sufficient income.

The Court in Re Day held that the meaning of agreement in s.44(v) was broad, and was not confined to a legally enforceable undertaking. However, the loan scheme, and the administrative arrangement for payment and the eventual recovery of the liability through the taxation system, is underpinned by a statutory regime.

Without going into the intricacies of the legislation, the relevant section of the HELP legislation that establishes the status of the financial relationship between the student and the Commonwealth is

96‑1  Payments to higher education providers

If a student is entitled to an amount of *HECS‑HELP assistance for a unit of study with a higher education provider, the Commonwealth must:

(a)  as a benefit to the student, lend to the student the amount of HECS‑HELP assistance; and

(b)  pay to the provider the amount lent in discharge of the student’s liability to pay his or her *student contribution amount for the unit.

Loans and similar financial obligations are generally regarded as a pecuniary interest, and are declared as such in MPs and local government councillors’ declarations.

In looking at the purpose of s.44(v) in Re Day (No. 2), the High Court considered that there had to be a discretion in the management of the agreement that might conceivably give the Executive unwarranted influence over an MP. The Court was minded to emphasise that it was not the likelihood or risk of influence over someone having an agreement with the Commonwealth, but whether the influence was, in the words of Nettle and Gordon JJ, “conceivable”.

Such discretion might exist in the situation where a person is earning sufficient taxable income so as to be obliged to repay the loans made under the scheme, as would be the case with a student turned MP earning sufficient income immediately as to be liable for repayments. For example, Sections 154-45 and 154-50 of the Higher Education Support Act give the Taxation Commissioner a discretion, upon application by a loan recipient and against stated criteria, to defer making and to amend assessments for the repayment of the loan.

The uncertainty of this question, along with those that still might be put to the High Court, underlines the continuing confusion about s.44 and its application, and the need for reform.

A series of questions, regarding the nature of any HELP support and whether any advice on the matter had been obtained, were put to Senator Steele-John earlier today. As of first publication, no response has been received.

 

 

 

 

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