Major parties face having to repay millions of dollars in donations

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