Through the Wire

Australia: MP's Brothel Payments Threatens Gillard Govt

August 24, 2011
| Economics
| Asia and the Pacific
By James Grubel

CANBERRA, Aug 24 (Reuters) - A political scandal involving a government MP over payments to prostitutes, which threatens Australia's minority government, deepened on Wednesday when the lawmaker's former union asked police to investigate his union credit card bills.

The move by the Health Services Union (HSU) increases the likelihood that police will launch a criminal investigation into the credit card bills of the union's former boss Craig Thomson, now a government MP, including payments to a Sydney brothel.

Thomson has denied any wrongdoing. But if police decide he can be charged with a criminal offence of which he is then found guilty, he would be forced to leave parliament, sparking a by-election that could bring down Gillard's government which has a one-seat majority.

The union had previously not complained about Thomson's credit card bills, which meant police had limited scope to investigate the payments.

But on Wednesday, the union's new national secretary Kathy Jackson said the union had now referred Thomson's credit card use to police in the New South Wales state.

"The HSU first became aware of questionable financial transactions in May of 2008 as a result of an exit audit following Craig Thomson's departure as national secretary," Jackson told reporters in Sydney.

Gillard repeated her support for Thomson on Wednesday, but then shut down parliamentary question time 45 minutes early after a heated debate about the issue.

"I have made many statements about that in this house and I stand by every one of them," Gillard said when asked if she still had full confidence in Thomson as a Labor lawmaker.

Thomson on Tuesday stood aside from his role as the chairman of parliament's influential economics committee, ahead of a scheduled hearing with the governor of the Reserve Bank of Australia on Friday.

The scandal has dominated political debate and added to Gillard's woes as she struggles to overturn record low poll ratings, and to find parliamentary support for key reforms such as a carbon tax and a new mining tax over the coming months.

Gillard won national elections a year ago this week with a one-seat majority, thanks to the support of one Green and three independent lawmakers. Polls suggest she would be convincingly thrown from office if an election were held today.

The independents have maintained their support for Gillard's government despite the heated attacks on her and on Thomson, led by opposition leader Tony Abbott who has been demanding the government call an early election.

The next election is not due until the second half of 2013, but if Thomson were to be convicted of a crime before then, Labor would likely lose his seat in a by-election, which could force an early election.

Were the opposition to win a by-election in Thomson's seat, the government and opposition would control 75 seats each in the 150 seat parliament. But the government must provide parliament's speaker, who does not normally vote on bills.

That would in all probability leave neither side of the house able to control a majority, which could force the Governor-General to intervene and call an early election.

The allegations against Thomson stem from 2005, when he was national secretary of the Health Services Union, and revolve around a payment of A$2,475 ($2,595) to a Sydney brothel on his union credit card.

Abbott condemned the government's ongoing support for Thomson on Wednesday, saying the issue had distracted the government from working to protect jobs and manage the economy.

"As long as they are defending the indefensible and justifying the unjustifiable to protect their own position in government, they won't be protecting the interests of the Australian people," Abbott said.

($1 = 0.954 Australian Dollars) (Editing by Daniel Magnowski)

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