A carve-out in Victoria’s proposed campaign finance laws could spare Labor and the Coalition from having to pay back donations from their investment vehicles if the money has already been spent.
However, it is unclear how the Allan government’s new laws will work, given the major political parties keep the money from investment vehicles in the same campaign accounts as political donations, which has muddied the task of determining whether funds have already been spent.
Labor on Tuesday introduced its legislation to restore Victoria’s donation laws, which were thrown out by the High Court on April 15 because of exemptions that allowed investment funds known as nominated entities to provide unlimited support to the Labor, Liberal and National parties.
The legislation will not be publicly available until its second reading in parliament on Wednesday.
A draft version circulated to MPs and seen by The Age states that any payments received by the Labor, Liberal and National parties since July 1, 2023 from their nominated entities exceeding the $10,000 donation cap must be repaid by November 28 this year – the date of the state election.
However, the proposed laws also stipulate that the funds are only repayable if they are “in an old state campaign account of the party on the day this section comes into operation”, which means the parties won’t have to repay any money already spent.
The carve-out raises serious logistical challenges for enforcement given funds from nominated entities are kept in the same pool of money as all other political donations and campaign funding.
There have been five byelections in Victoria since July 1, 2023 where campaign funding could have been spent.
Under the proposed new laws, nominated entities will have the same obligations to report gifts to the Victorian Electoral Commission as political parties.
The draft legislation also requires an expert review of the state’s donation laws after the election, a point that has been a demand from the Greens in negotiations over passing the legislation through the upper house.
The review will consider the appropriate level of donation caps, as well as alternative public political funding models such as “democracy vouchers” – a scheme used in some US municipal elections where registered voters can direct funding to candidates of their choice.
Donations will be capped at $10,000 per person or business every electoral cycle, which is double the previous limit. However, a special cap of $5030 would apply between April 15 and the November 28 election. The threshold for disclosure would remain at $1250.
Political parties and independent candidates running for parliament for the first time will be eligible to register as “new entrants” under the proposed laws, and their donation cap will be doubled to $20,000.
Shadow attorney-general James Newbury said the Coalition was considering its legal position on the proposed laws after receiving the draft late on Monday night.
“I don’t say that lightly. My personal view is these laws are worse in a constitutional sense than the laws that were in place that the High Court struck out,” he said.
Newbury said he believed there were serious concerns the laws unfairly protected incumbent MPs and parties when comparing increased public funding for administrative purposes against the donation caps.
Under the proposed laws, parties will receive $300,000 for their first elected MP, $100,000 for their second MP and $55,000 each for their third MP through to their 45th.
“When you read the High Court’s judgment, they spoke quite specifically, not only to nominated entities, but barriers to entry,” Newbury said.
“When you increase public funding strongly for incumbents, but keep caps on donations low, you are actually entrenching that advantage.”
Greens leader Ellen Sandell said the donation laws needed to be fixed quickly but warned that the government’s fix could not contain its own significant loopholes.
“We actually need to see a final proposal before we can determine whether it’s a piece of legislation that is good for democracy or not,” Sandell said.
Climate 200 co-convenor Simon Holmes à Court, who supported the successful High Court case lodged by former state independent candidates Paul Hopper and Melissa Lowe, warned the Greens and other crossbench MPs against supporting the legislation, and questioned why they would “choose to reward Labor with $3 million extra in taxpayers’ money which does nothing but diminish democracy in Victoria”.
Premier Jacinta Allan on Monday indicated the government would have more to say about the donation laws this week. However, she did not appear before the media and no events were scheduled on Tuesday for her to address the legislation.
Health Minister Harriet Shing said the government wanted to negotiate a bill that allowed Victorians to have transparency over the system, ensure integrity over donation laws and be retrospective following the High Court’s decision.
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Patrick Hatch is transport reporter at The Age and a former business reporter.Connect via X or email.