A wealthy Liberal fund set up by Peter Costello under scrutiny

A secretive foundation set up by Peter Costello is being eyed by Liberal bean counters to help stave off a feared collapse in fundraising capacity after Higgins was abolished.

Peter Costello (L) Josh Frydenberg (R)

A secretive and wealthy political foundation originally set up by Peter Costello is being eyed by ­Liberal bean counters to help stave off a feared collapse in fundraising capacity for the party after the Higgins electorate was abolished in a draft redistribution.

The Higgins Foundation Ltd was set up in 2008 with about $1m, with the money kept separate from mainstream Liberal Party, coffers and has been used to help fund campaigning in the Victorian seat of Higgins ever since, with its original corpus protected.

But the decision to abolish Higgins – which will be challenged by the Liberal Party – has opened discussion on what will be done with the Liberal wealth left behind, which also includes a separate Higgins 200 Club.

Mr Costello, the former federal treasurer, left the foundation nearly a decade ago but was key to its formation.

The spat between the party hierarchy and its Higgins leadership over the foundation comes as Kooyong Liberals are being forced to plug a donations hole.

This is after former deputy leader Josh Frydenberg had raised, while an MP, up to $2m over a three-year federal election cycle, with some money forwarded to other MPs battling to hold their seats.

Mr Frydenberg, whose old seat of Kooyong has swallowed Higgins under the redistribution, will not contest the next election but as a sitting member was a crucial cog in fundraising for MPs across Australia, drawing from his business community contacts.

The most senior members of the Victorian Liberal Party do not know how much the Higgins Foundation is worth today and have tried to wrestle control of the money in the same fashion as it tried to gain greater access to the Cormack Foundation, which has helped fund the party for decades.

10/12/2018 Peter Costello arrives at an event in Toorak to mark 25 years of the Higgins 200 Liberal fundraising club in December 2018. Picture : David Geraghty / The Australian.

While the value of the Higgins Foundation is not published, it is believed directors have protected the capital but used profits to benefit the Liberal MP or candidate of the day.

Former Higgins Liberal Katie Allen is still campaigning in the seat but may be forced to have a tilt at nearby Chisholm, which already has a preselected candidate.

One senior Liberal said the way the foundation was set up, how it worked and what was in it was a mystery to the party hierarchy outside Higgins, which was held by Mr Costello and former federal minister Kelly O’Dwyer and is now held by Labor’s Michelle ­Ananda-Rajah.

“There is no direct connection to the party (hierarchy), it’s not really visible to us,’’ a senior figure said. “We don’t know much about it at all and that’s not how it should be.’’

Mr Costello, until he left parliament in 2009, was the Liberals’ biggest fundraiser in Victoria but for years has had less and less influence in the party as he has pursued a private sector career.

Another senior Liberal said the foundation was set up in part to ­ensure the Higgins fundraising money was not ultimately seized by a factional rival.

The Liberal candidate for Higgins, Katie Allen, give a presser at Murrumbeena reserve in Murrumbeena, Victoria. Picture: Tony Gough

Dr Allen was seen as the logical choice to contest Higgins at the election and may be able to shift to nearby Chisholm, where most of her old seat was moved under the proposed redistribution. But this would require another preselection, which was held before the redistribution was handed down.

“Katie is the best candidate. But if we can’t keep Higgins then she should get Chisholm,’’ a senior party source said.

The Higgins Foundation, which changed names in 2019 after being called the Higgins 200 Foundation Ltd, was set up under a constitution that backed secrecy.

Under the heading SECRECY, the constitution says the directors will determine whether and to what extent the accounting records and other documents would be open to members, other than directors.

Directors, office bearers and outsiders such as auditors also were bound to “observe secrecy”.

Senior Liberals said there was conflict with party headquarters over the Higgins money that had started out as personality clashes.

However, the view in Higgins had been that the party machine had not performed well enough to justify surrendering control of the money.

“The party needs to get its own house in order,” a member said.

“People are causing mischief.”

If Higgins is abolished, as is likely, the party expects the electorate’s Liberal wealth to be shared on a pro rata basis with neighbouring electorates, although Dr Allen would have the money she had raised personally.