The Current State of Victorian Political Donations
Secret funding is set to play a significant role in Victorian politics for the next few weeks as the government faces challenges in creating a constitutionally sound donations regime. With the state election approaching in six months, the situation has become increasingly complex. In April, the High Court ruled that Victoria’s donations framework was unconstitutional, effectively invalidating a key section of the Electoral Act. This decision has left a regulatory vacuum, with no laws in place to govern donations.
In the absence of any legal framework, political parties are scrambling to manage donations while awaiting new regulations. Integrity experts have raised concerns about the potential for unchecked influence in the electoral system. Currently, there are no restrictions on foreign donations, no limits on the amount of money that can be given, and no requirement for disclosure. This lack of oversight has created a “crisis situation,” according to Catherine Williams from the Centre for Public Integrity, who emphasized the need for an emergency response.
The Government’s Response
The Allan government is working to find a solution to the current situation, but there are differing opinions among political parties. While the Labor Party is confident that its proposed donation laws will be constitutional, the Liberal Party remains hesitant. Despite these differences, there is a general consensus that donations received during this period will eventually need to be disclosed. However, questions remain about whether a donation cap will apply retrospectively.
Premier Jacinta Allan has declared her commitment to acting urgently, but recent meetings with the crossbench have not yielded significant progress. Sources indicate that a bill will be introduced to parliament next month, with time running out before the mid-June winter break. The challenge now is to ensure that the new laws withstand legal scrutiny and avoid being challenged in the High Court before the election.
Legal Challenges and Previous Reforms
Paul Hopper and Melissa Lowe, who ran as independents in the 2022 election, challenged the state’s donation rules in the High Court. They argued that the existing laws unfairly benefited major parties by allowing them access to legacy cash through nominated entities, while capping donations for smaller parties and independents. The court found that these laws violated the implied right to freedom of political communication and struck out parts of the Electoral Act that went beyond the donations cap and nominated entity system.
This decision has left the Victorian Electoral Commission (VEC) without a framework to distribute public funding to political parties. Some Labor sources have expressed frustration with the government’s handling of the issue, particularly the decision to abandon plans to restrict access to nominated entities earlier this year. An independent review in 2023 had recommended abolishing these entities, but the government did not act on this advice.
Ongoing Debates and Future Implications
Despite the challenges, some believe the government is working in good faith to address the complex constitutional issues. There is speculation that, in the future, the amount of campaign funding major parties can draw from their nominated entities may be subject to the donation cap. The Liberal Party has argued that donation caps would need to increase significantly, a claim dismissed by Labor.
Simon Holmes à Court confirmed that his Climate 200 organisation made a $40,000 donation to independent candidate Sophie Torney, well above the previous cap of $4,970 over a four-year term. This highlights the current lack of regulation and the potential for large sums of money to influence elections without transparency.
Managing the Law Vacuum
Political parties are navigating the law vacuum on the fly, with some candidates expressing frustration over the lack of clear guidelines. The Labor Party has instructed its candidates and MPs to maintain strict records and avoid accepting donations from non-citizens or permanent residents. The Liberal Party has also banned foreign donations and committed to transparency.
Ellen Sandell, leader of the Victorian Greens, has stated that the donation cap should remain unchanged but is open to negotiation. She emphasized the importance of making the law retrospective to prevent parties from benefiting from illegal fundraising. Micro parties in parliament have pledged to work with the government to limit the state’s exposure to improper influence.
Opportunities for Reform
Catherine Williams from the Centre for Public Integrity sees the current crisis as an opportunity to build a more robust donations regime from the ground up. Meanwhile, Paul Hopper has indicated he may return to the High Court if new laws continue to favor major parties. As the government works to finalize new legislation, the focus remains on ensuring transparency, fairness, and compliance with constitutional principles.
