The Victorian Labor government is scrambling to fix its broken campaign finance laws. It’s proposing a plan that would double the cap on political donations and boost taxpayer-funded support for political parties. This rush to rewrite the rules follows a stinging rebuke from the High Court just last month, which declared key sections of the state’s Electoral Act unconstitutional. The government is now under pressure to get new legislation through parliament by next week to prevent a vacuum in political regulation.
At the heart of the government's proposal is a plan to cap individual political donations at $10,000 for every four-year term. This hike from the previous, much lower limit of $4,970 provides more funding capacity for major political campaigns. Under these changes, any donor giving more than $2,500 would have their name disclosed to the public. This move brings more light into the often-murky world of party funding. The government hopes this compromise will fly, but the opposition is already sharpening its knives.
Like the giant leech that they are, Labor is proposing new donation laws that massively increase the amount Labor pays itself with taxpayer money.
That was Shadow Attorney-General James Newbury, pulling no punches in his critique of the funding scheme. The proposed model suggests political parties could receive $300,000 for their first elected MP, $100,000 for the second, and $55,000 for every member after that. New, unrepresented candidates would also be entitled to a $10,000 starter grant if they don't qualify for other state subsidies. The Liberal Party, currently the opposition, is balking at these administrative funding increases. They argue these increases serve as a massive handout to the incumbent government, which currently holds the most seats.
The legal mess began when Paul Hopper and Melissa Lowe, who ran as independent candidates during the 2022 state election, took the government to the High Court. They argued that the existing donation rules were rigged to give major parties an unfair advantage. The court agreed, specifically calling out the use of "nominated entities." These were shadowy foundations used by major parties to park and spend cash without the same transparency requirements as their official campaign accounts. These entities allowed the Liberal, National, and Labor parties to tap into decades of "legacy cash." This gave them a financial war chest that independents simply couldn't match.
All three major parties are losing their unfettered access to these legacy funds. The government is trying to apply these new rules retrospectively. It’s hoping to plug the gaps during the period where the state was effectively left without functioning donation laws. This has triggered a flurry of behind-the-scenes legal maneuvering as parties scramble to make sure their new funding structures won't be struck down by the High Court a second time.
The Labor government is caught in a tight spot. It needs to win over either the opposition or the crossbenchers to pass its new bill through the upper house. Labor spokespeople insist they want to work with Opposition Leader Jess Wilson, yet they claim that James Newbury is refusing to come to the table. If they can’t reach an agreement with the Liberals, they may have to cut a deal with the crossbench. They fear that such a move could leave them vulnerable to further legal challenges.
The prospect of more court battles looms large, especially with high-profile donors and activists like Simon Holmes a Court and his Climate 200 group watching closely. Government insiders have privately admitted they expect another High Court challenge as soon as the ink is dry on the new legislation. They are operating under the assumption that someone will soon decide to test the new rules in court. The Liberals, meanwhile, have floated the idea of a much higher donation cap, up to $25,000, provided it also applies to their own nominated entity, the Cormack Foundation.
As the clock ticks toward next Tuesday when parliament resumes, the halls of power are filled with confusion. Some party officials are worried that if the new deal falls through, the old caps might default in ways no one anticipated. This would lead to even more legal headaches. For now, lawyers are busy reviewing every comma and clause to ensure that the next version of the Electoral Act doesn't result in another day of humiliation in the nation's highest court.