Australian government on the brink over sex and cash claims

Allegations about prostitutes and credit cards are swirling around Craig Thomson, a former trade union leader, and could bring down Australia's minority government.

Craig Thomson, the MP at the heart of the scandal that threatens to topple the Australian government, in Canberra last week.

SYDNEY // Ordinarily, a scandal involving an obscure Australian politician would not dominate the headlines day after day. But these are extraordinary times.
The allegations swirling around Craig Thomson, a former trade union leader, could bring down Julia Gillard's minority government.
Police are investigating claims that Mr Thomson, a Labor MP since 2007, misused his union credit card to pay for prostitutes, and to buy airline tickets, lavish dinners and gifts for himself and his former wife.
If found guilty, he faces a possible jail sentence and would have to resign his seat, prompting a by-election that Labor would almost certainly lose. And that would leave Ms Gillard, who has a parliamentary majority of one, unable to govern.
Mr Thomson has denied any wrongdoing, saying that someone else, as yet unnamed, took the card and forged his signature.
However, some analysts believe his position is untenable, and that he could quit any day, setting off a train of events that could see a new conservative government installed in Canberra before the end of the year.
"Everything hinges on Craig Thomson, and it doesn't look bright," said Norman Abjorensen, a political scientist at the Australian National University.
An inconclusive federal election a little more than a year ago, followed by weeks of negotiations, led to Ms Gillard taking office with the support of one Australian Greens party MP and three independents. But she has failed to halt the decline in Labor's popularity, which began under her predecessor, Kevin Rudd, and an opinion poll last week had the party languishing 14 points behind Tony Abbott's Coalition.
Now the Thomson affair threatens to dislodge it altogether. After the Coalition referred the allegations to the police, the Health Services Union - of which Mr Thomson was national secretary - followed suit last week. The union said it would provide its financial records to the investigation.
The claims date from before Mr Thomson entered parliament, and involve expenditure totalling more than 100,000 (Dh388,242) Australian dollars, according to court documents.
That includes an alleged payment of 2,475 dollars to a Sydney brothel in 2005, and a 1,300-dollar restaurant bill.
So far, Mr Thomson has had the public support of his colleagues, including Ms Gillard, who argue that he is entitled to the presumption of innocence.
However, other influential figures, such as Graham Richardson, a former Labor Party power broker, have been less generous. "This bloke is damaging the Labor brand every day he hangs around the parliament like a bad smell in a lift," Mr Richardson wrote in The Australian newspaper on Friday.
The party has already paid Mr Thomson's legal fees, reportedly amounting to 90,000 dollars, in relation to a defamation action he mounted against the Sydney Morning Herald.
He dropped the case just before it was due to come to court. Labor's opponents claim the gift was designed to save him from bankruptcy, which would have forced him to resign.
Mr Abjorensen questions why the MP was again endorsed as an election candidate last year, given that the fraud claims were first aired in 2009.
"Surely they should have set alarm bells ringing and red lights flashing," he said. "The Labor Party had ample opportunity to investigate and decide whether Craig Thomson was going to become a liability. Either the allegations were not investigated, or someone said there's nothing to them, or there was a cover-up."
Now the government could fall over a grubby little scandal, and Julia Gillard is going to pay the price for the party's foolishness and incompetence."
If Mr Thomson does resign, and the opposition wins the by-election in his marginal New South Wales seat, there could be another federal election. But Mr Abbott could conceivably become prime minister without Australians going back to the polls, which is what happened in 1941, the last time the country had a minority government.
David Burchell, a political expert at the University of Western Sydney, believes fresh elections could reduce Labor to a parliamentary "rump" and consign it to the wilderness for a decade or more. "So the stakes are extremely high," he said.
The irony is that, in contrast to Europe and the United States, the Australian economy is in excellent shape. Unemployment is low, the Australian dollar is reaching all-time highs as the country reaps the benefits of a mining boom.
However, Ms Gillard, who ousted Mr Rudd in a leadership coup last year, has failed to convince voters of the merits of her plans.
Mr Burchell believes the Thomson affair could be protracted, noting that if and when charges are laid, the opposition attacks will have to cease, along with the almost daily drip-feed of new allegations.
In the meantime, tensions are running high.
After the Health Services Union announced it would cooperate with police, its national secretary, Kathy Jackson, found a dirt-covered shovel on her doorstep - apparently implying she was digging her own grave.
 
[e-mail]