Ex-Catholic Schools NSW head Dallas McInerney denies funds sought from Angus Taylor were for factional group

The former head of Catholic Schools NSW (CSNSW) says he did seek financial support from federal Opposition Leader Angus Taylor, but denied it was for a right-wing Liberal factional group at the centre of a corruption probe.

It came as previous testimony from the NSW Independent Commission Against Corruption (ICAC) roiled state and federal Liberal leaders.

Dallas McInerney stood aside as head of CSNSW after the ICAC announced it was investigating whether the organisation made donations, arranged and approved by him, that were not declared, exceeded the legal limit, and were used for Liberal Party recruitment and/or membership renewal.

Mr Taylor is not accused of any wrongdoing and has repeatedly denied making a payment.

It is understood CSNSW, which has authority over close to 600 Catholic schools, wrote to Commonwealth authorities saying it was not aware of donations made by the organisation to any political parties.

The ICAC is investigating whether people linked to the conservative Christian NSW Reformers solicited money from prohibited donors and disguised political donations through companies and sham invoices to build their influence.

Counsel assisting will argue payments made by Mr McInerney, through CSNSW, were allegedly disguised as consulting retainers for work never carried out.

During Mr McInerney's first day of evidence, he said he "mostly" believed in the goal of the Reformers to push conservative values in the Liberal Party.

Counsel assisting Juliet Curtin suggested the Reformers members were fervent or passionate, but Mr McInerney disagreed with the descriptor.

"I actually don't think there was a passion there. I think it was a calling… a duty," Mr McInerney said.

The commission heard Mr McInerney was an active member of the NSW Liberal Party until June this year after having been a member since the late 80s or early 90s.

He was elected to the party's local government oversight committee in 2019 and 2021.

'I want to shake down Angus for 10k'

The commission was previously shown a screenshot from an exchange between Mr McInerney and Reformers co-founder Robert Assaf about the now-opposition leader Mr Taylor.

Mr McInerney said: "I have breakfast club with ministers this Thursday morning. Who can I get an update from? Re SCD (state council delegates) progress in last six to 12 months."

"I want to shake down Angus for 10k."

The inquiry was also shown another group chat message in which former Liberal staffer Dylan Whitelaw claimed Mr McInerney secured a $15,000 payment and ongoing monthly donations of $3,000 for the group's work from Mr Taylor.

When asked about the text exchange, Mr McInerney agreed he did seek financial support from Mr Taylor but denied it was to support the work of the Reformers.

Mr McInerney said the money would be to support the statewide effort for the upcoming internal elections in the NSW division and said that the reference to SCD's was a "party-wide, statewide measure" not a Reformers-specific measure.

Mr McInerney said the money was "entirely independent" from the Reformers work.

Ms Curtin asked Mr McInerney how the money sought from Mr Taylor was to be used.

"Two objectives there. One was to support upcoming internal elections for the New South Wales Division," Mr McInerney said.

"And secondly, the conservative candidates that we had either put into key seats or plan to put in key seats."

When asked about Mr Whitelaw's text suggesting a deal was secured with Mr Taylor, Mr McInerney said had instead acquired "in-principle support" from other Liberal Party figures for the conservative faction and its candidates.

When Ms Curtin said Mr Whitelaw's account was specific, Mr McInerney suggested one explanation could be that Mr Whitelaw had misinterpreted him.

When asked what other explanations there were, he replied: "He lied. He boasted."

At a press conference on Thursday, Mr Taylor said he had already answered questions on the matter and would not give a "running commentary".

"No payment was made, I was clear about that," Mr Taylor replied.

A staffer for Mr Taylor was later captured on camera criticising Network Ten political editor Ashleigh Raper's line of questioning.

"Are your ratings that bad?" the staffer asked, adding, "Seriously that's a fricking disgrace".

"What? Asking questions about an ICAC investigation?" the reporter replied.

"Yeah and he's answered them like 500 times. No wonder 10 [News]+ got cut," the staffer replied.

Shadow minister removed as spokesperson

NSW Opposition Leader Kellie Sloane replaced Shadow Planning Minister Chris Rath as her representative on the Liberal Party's state executive, after evidence given at the ICAC.

The commission heard on Wednesday that the senior frontbencher had allegedly helped fellow party members avoid giving evidence at a 2023 parliamentary inquiry, including lobbyist Jeremy Greenwood.

During Mr Greenwood's evidence, counsel assisting Peggy Dwyer SC suggested he went to "pretty elaborate lengths" to be briefed by Mr Rath about the inquiry.

"A member of parliament who was originally on the parliamentary committee about the efforts to serve a summons and you were having a laugh because parliament had your old address so they wouldn't be able to serve the summons," Dr Dwyer said.

Mr Greenwood then agreed with the proposition put to him.

Ms Sloane said she would not comment on the state executive, as it was an internal Liberal Party matter.

"I have as leader, the prerogative to appoint anyone to state executive at any different meeting," she said.

Ms Sloane said she had private conversations with Mr Rath.

"I have chosen not to have Chris Rath be my spokesperson at state executive. He agreed that was an appropriate decision particularly while ICAC was continuing, I'll say that much."

She said she did not think Mr Rath should stand aside from his shadow ministerial role, as frontbencher Damien Tudehope had, because he was not in her leadership team.

But she said she reserved the right to change her mind.

Mr Rath's office said he apologised to parliament last week and declined to comment on his removal from the party's state executive.