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Cormann admits he knew about Day in Feb

AAP logoAAP 7/11/2016 Belinda Merhab

Finance Minister Mathias Cormann has denied turning a blind eye to Bob Day's potential breach of the constitution despite admitting he knew about the issues for almost a year.

Senator Cormann admitted on Monday he first became aware of the former senator's questionable arrangement with the commonwealth in December 2015, when he was appointed acting special minister of state.

The then senator had written to him complaining of having to foot the bill for his Adelaide electorate office, asking the finance department to back pay rent from July 1, 2015.

Mr Day had been offered an established office after he was elected in 2013 but insisted on choosing his own, which was owned by his company until the finance department advised him that was inappropriate.

He was able to use the office on the condition he sell it and pay his own rent.

After asking for back pay, Senator Day revealed to the finance department that he was still financially connected to the property because he sold it to a friend under a vendor finance arrangement, meaning he loaned his friend money to buy the building and was liable for the mortgage.

Senator Cormann says the department advised him on February 18, 2016, that it was open to him to approve the payment of rent to Mr Day.

But when it was then revealed the bank account to receive rent was linked to Mr Day, a "conscious decision" was made that the commonwealth would not pay.

"I understood at the time that the non-payment of rent meant that any potential breach of section 44 of the constitution had been avoided," Senator Cormann told parliament.

"Indeed, at no point did I receive any advice from the department of finance that the lease signed on 1 December 2015 in itself and in the absence of rental payments could cause a potential breach of section 44."

After Senator Day was re-elected at the July 2 election, the government sought formal legal advice which said the lease was a constitutional breach.

Asked by Labor whether he deliberately ignored the matter because Senator Day almost always voted with the government, Senator Cormann said the answer was an "emphatic no".

"As special minister of state, I treated Senator Day in the precise same way as I would've dealt with any member and senator in this place," he told parliament.

Mr Day has rejected any wrongdoing, saying the finance department had merely told him it was "not a good look" for a senator to own his electorate office.

However, emails from 2014 show the department had strongly advised against Mr Day moving in to the office and recommended he take up an existing office.

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