Victoria is attempting political donation reform again. How do the new laws stack up?

Since April 15, Victoria has been operating without meaningful political finance laws. As the days have passed, candidates have received unregulated political donations that would once have exceeded donation caps. Foreign and anonymous donations have been allowed. For the first time in years, Victorians have had no reliable way of knowing who is funding political campaigns. That vacuum is a serious threat to the integrity of Victoria’s democratic system. The unregulated and undisclosed flow of money into politics raises concerns about corruption, undue influence, and the creation of an unfair playing field between the political candidates who have access to wealth, and those who do not. So it’s a welcome development this week that the Allan government appears to have finally secured a pathway to restoring some key political finance safeguards. Just as importantly as the short-term fix, secured through the political negotiations with the cross-bench, the proposed legislation also includes a comprehensive independent post-election review of Victoria’s political finance framework. The wild west for political donations The current predicament began with the collapse of the previous laws, held in April to be unconstitutional by the High Court . The court found the laws fell foul of the Constitution’s implied freedom of political communication because of the preferential treatment of bodies known as “nominated entities”. Nominated entities were organisations associated with the major political parties that could receive unregulated donations separately from those parties. Following the High Court’s decision, the state government appeared to have been caught flat-footed. The weeks of urgent political negotiation that followed had, until now, failed to produce a replacement. Read more: High Court takes an axe to Victoria’s political donations laws - and it will make federal MPs nervous What’s in the new laws? The bill that has finally been introduced into parliament restores some essential guardrails. It reintroduces the previous 21-day disclosure obligations for donations over $1,250. There are again prohibitions on donations from foreign and anonymous donors. The bill reinstates donation caps, but at a higher level than the previous $4,970. It is effectively $10,000 for the upcoming 2026 election. After that, it will be set at $7,500. In an attempt to offset the advantage of incumbents, this is doubled for “new entrants”. The bill also restores public funding. Administrative funding has been increased, with parties receiving $300,000 for the first MP elected, $100,00 for the second MP, and $55,000 for the 3rd to 45th MP. Victoria appears to have learnt at least the immediate lesson, because the new bill removes the nominated entity arrangements that lay at the heart of the High Court’s decision. It also includes provisions requiring the major parties to pay back donations received from nominated entities. That key elements of the regulatory vacuum have been filled – and particularly the disclosure scheme – should be welcomed. But it’s not perfect However, the rushed and politically driven nature of the process that has led to this bill, which allocates significant new public funding to political parties and restricts political activity, makes the legislation more of an emergency repair job than a comprehensive redesign. Indeed, several weaknesses from the previous regime remain. Notably, the legislation still does not provide for expenditure caps, which are essential for a level playing field. It does not resolve longstanding ambiguity about the treatment of fundraising events. It continues to allow wealthy people to spend large amounts financing their own political participation. It doesn’t address the exceptions carved out for affiliation fees from associated entities, including organisations such as unions, think tanks and businesses. These are payments made by organisations to political parties to maintain formal relationships, such as participation and representation rights. And on policy development funding, the bill retains distinctions between political parties and independents that raise concerns about unfair treatment. It also introduces some new features that raise questions. There is a new provision allowing for wealthy individuals and entities to spend unrestricted amounts for the benefit of others. There are concerns the significant expanding of public funding for administrative expenses that benefit political parties creates a potentially unconstitutional preferential treatment. There is a newly introduced ability to set disclosure thresholds and donation caps into the future through regulation, and without full parliamentary review. The application of donation caps and bans to transactions that have already occurred raises concerns about fairness, legal certainty, and whether the rules can actually