Allan to amend broken donation laws, double donor cap for new candidates

Political donations will be capped at $10,000 every state election cycle and doubled for new political aspirants under the Allan government’s new bill to fix Victoria’s electoral laws.

Cabinet will meet on Monday and vote on the changes, which come after months of negotiations.

The new law will replace an entire section of the state’s Electoral Act that was struck out by the High Court on April 15, when it found that donation exemptions created for nominated entities – special trusts worth millions of dollars that can provide unlimited support to the Labor, Liberal and National parties – unfairly restricted political communication and were illegal.

But in doing so, the court found the entire section of legislation that controlled state donations was also unlawful and struck out the laws, meaning there have been no caps, limits on foreign donations or disclosure requirements since.

The new legislation will restore donation laws, but remove any advantage provided by nominated entities by introducing a donation cap of $10,000 over four years, or the entire state electoral cycle. New candidates and parties will be allowed to receive double this limit.

The new legislation will not take full effect until after the November 2026 election. Instead, the laws will say donation caps of $4970 were legal before April 15, with another $5030 permitted until the November 28 election, equivalent to $10,000.

The three major parties will be required to pay back money received from nominated entities since July 2023 that is above these limits and be required to follow the same rules as all other donors.

On Sunday, The Age revealed the government had received legal advice that its new laws could unfairly advantage the major parties this electoral cycle, triggering the decision to legislate the return of funds from nominated entities this term.

Any donations made since April 15 will need to be disclosed, if required, and returned, if unlawful. Real-time disclosures will also be required for any donation above $1250, and all foreign donations will again be banned.

The change will affect independents running in the seats of Kew and Hawthorn, who have received $40,000 each from Climate 200 over this period.

Taxpayer-funded administrative payments not used for campaigning will 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.

Speaking on Sunday, Premier Jacinta Allan said transparency was a key feature of the bill that would be coming to parliament this