Labor and the Coalition face having to pay back millions of dollars in donations they received from their legacy investment funds after the High Court ruled their use was in effect illegal.
The Age can reveal the state government has obtained legal advice which says money received by the major parties from their nominated entities cannot be used to campaign in this year’s state election.
With Victorians heading to the polls in less than six months, the latest twist in the donations saga after the High Court struck out the state’s campaign finance laws last month is set to wreak havoc for the major parties by punching a significant dent in their cash reserves.
Nominated entities are legacy investment funds which Labor, the Liberals and Nationals have relied on for decades to help finance their election campaigns.
The funds contain millions of dollars, with the Liberals’ Cormack Foundation valued at about $120 million built up from the proceeds of property sales and a Melbourne radio station.
When Victoria’s electoral funding laws were overhauled in 2018, a carve-out from strict donation caps was introduced which allowed the major parties to maintain unlimited access to these funds.
The special treatment of these entities was the basis for the High Court’s decision to strike out Victoria’s donation laws last month, after they were challenged by independent candidates Paul Hopper and Melissa Lowe who argued the rules inhibited political communication.
Since the laws were abolished on April 15, there has in effect been no limit on political donations or any disclosure requirements.
As the Allan government negotiates on legislation to fix this gap, three sources with knowledge of the discussions confirmed to The Age that the major parties faced having to pay back money received from their nominated entities during this term of parliament, as it could otherwise influence November’s election.
The sources, granted anonymity because they were not authorised to speak publicly, said the legal advice informing the legislation indicated this was necessary.
After the High Court’s bombshell judgment, the Victorian Electoral Commission took down data showing how much these nominated entities had paid out since 2022.
But Climate 200 co-convenor Simon Holmes a Court’s “Wall of Advantage” website – an online portal illustrating benefits not available to independent challengers – cites sizeable figures based on research conducted before the VEC removed the data from its website.
It said the Cormack Foundation disclosed donations of $8.1 million to the Victorian Liberal Party between the 2022 and 2025 financial years, however this also included funding for federal election campaigns which were not affected by the court’s decision.
In 2018, The Age revealed a deal with the Cormack Foundation would result in the Liberal Party receiving $2.5 million for the 2018 state election and $3 million for the 2022 poll. This does not mean similar amounts have yet been donated for this year’s campaign. One source estimated the amount to be paid back could be above $1 million.
In the 2024-25 financial year, Labor’s nominated entity, Labor Services and Holdings, disclosed $6.8 million in payments to the Victorian branch, according to the Australian Electoral Commission, however this could also include funds validly used federally.
A Victorian government spokeswoman did not respond to specific questions about the legal advice.
An opposition spokesman said: “We continue to engage in good faith with the government, but cannot comment on the specifics of a bill which we have not yet seen.”
As part of the overhaul, the government is seeking to increase the annual donation cap to at least $10,000 – double what it is now – as it negotiates with the Coalition and crossbench MPs.
It is open to a $25,000 cap if it can do a deal with the Coalition, with shadow attorney-general James Newbury saying his party wanted to work with Labor but needed to ensure the laws were not struck out again.
If the $10,000 annual cap is legislated, it will not take full effect until after the November election. Instead, parties will be able to receive donations up to $5000 for this financial year, and another $5000 from July 1.
Premier Jacinta Allan has also promised to make the legislation retrospective to the date of the High Court’s decision.
Despite this, Climate 200 has tipped $40,000 into the campaigns of independent candidates Sophie Torney, who is seeking to topple Opposition Leader Jess Wilson in Kew, and Shima Ibuki, who is running against former Liberal leader John Pesutto in Hawthorn.
On Thursday, the organisation also provided the independents with $140,000 in administrative funding, not used for campaigning, which is available for parties and independents if they are elected.
Under the government’s proposed legislation, taxpayer-funded administrative payments would be boosted for registered parties so that they receive $300,000 for their first elected MP, $100,000 for their second MP and $55,000 for every MP between three and 45.
“Whatever the Allan government decides, it will not effectively do anything significant to level the
playing field to give independents the same starting lines for their campaigns as the major
parties,” Torney said.
The government spokeswoman said public funding was “core to free and fair elections”.
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
