Australian police said today they were investigating whether a government MP committed a crime by allegedly using a union credit card to pay for prostitutes - an accusation which, if proven, could bring down the minority government.
Australian prime minister Julia Gillard clings to power with one seat, thanks to the support of one Green and three independent MPs, but her Labor government would be swept from office if elections were held today, according to opinion polls.
Labor backbench MP Craig Thomson, a former health union boss who heads an economics committee in the parliament, has strongly denied using a union credit card to pay for brothel services before he was elected to parliament. Mr Thomson says his signature was forged by a still-unnamed acquaintance.
Local media, led by the Sydney Morning Herald, have reported in detail the use of the credit card for escort services but have not directly linked Mr Thomson to the payments.
Mr Thomson said he would stand down from his role as the head of the House Economics Committee, which was on Friday to question the Reserve Bank governor, as pressure on him mounted over the accusations.
Mr Thomson said in a statement he was standing down to avoid disrupting the work of the committee.
"I continue to reject claims of wrongdoing. I will continue to serve as a member of the committee as it undertakes its important work," he said.
Ms Gillard has staunchly defended Mr Thomson, who if convicted of a crime and sentenced to a minimum of one year's jail would become ineligible to sit in parliament.
That would force a by-election which Labor, whose centrepiece policies of carbon and mining taxes are deeply unpopular, would likely struggle to win.
Police today said they were launching an inquiry into the claims after an opposition politician supplied them with information on Mr Thomson.
"Shadow Attorney-General George Brandis has provided information to police in relation to a number of matters concerning a federal Labor MP," New South Wales state police said in a statement.
"This correspondence has now been referred for internal assessment to determine whether a criminal offence has occurred," the statement said.
Ms Gillard said it would be unfair to comment on new allegations against Mr Thomson while the country's employment watchdog conducted a separate investigation into the Health Services Union he used to head.
"Let's remember here in this very parliament we've had members of parliament...investigated by the Australian Federal Police and ultimately the police found they had no case to answer," Ms Gillard told Australian radio.
Still, the police inquiry will add to Ms Gillard's woes as she struggles badly in opinion polls. Fresh elections are not due until 2013.
A Newspoll survey in the Australian newspaper today showed Labor's popularity has fallen back to record lows, down two points to 27 per cent, while Ms Gillard's own popularity was down four percent to a catastrophic 29 per cent.
Reuters