Victorian election exposed after High Court strikes out campaign finance laws

Victoria’s 2026 state election has been left exposed to corruption and undue influence by deep-pocketed donors and foreign actors after the High Court blindsided the Allan government by striking out all controls on donations and financial reporting requirements.

The shock judgment, which went beyond what any party to the case asked for, has sent the government scrambling to safeguard the integrity of the November 28 poll, in which a cashed-up One Nation party backed by billionaire miner Gina Rinehart is expected to have a major impact.

Premier Jacinta Allan said late on Tuesday her government would “immediately move” to introduce legislation to protect the integrity of Victoria’s electoral system.

“The High Court’s decision to strike down Victoria’s long-standing electoral integrity laws leaves our state exposed to dark money in politics,” Allan said.

“Our legislation will make sure that every party and every candidate will be accountable for every dollar they receive from this day forward.”

The court decision is also reverberating in Canberra, where the Albanese government is facing a challenge to its proposed campaign funding laws on similar grounds, and in Western Australia and South Australia, which modelled their electoral laws in part on the Victorian changes.

Two independent candidates from the 2022 state election, Paul Hopper and Melissa Lowe, petitioned the High Court to declare invalid a particular exemption to campaign donation limits, which they argued unfairly advantaged major parties. The court agreed the exemption was unconstitutional and as a remedy, put a red line through nearly 80 pages of the state’s Electoral Act.

The unanimous decision by the court removes a cap on campaign contributions in place since 2018, ceases public campaign funding for candidates and levels the financial playing field between the major parties, independents and new parties.

It also makes it impossible for anyone to track the flow of campaign money and influence in state elections by scrapping real-time disclosure requirements on donations above $1240 and removing a requirement for campaign donors to be Australian citizens or residents.

The government expressed its disappointment at the High Court decision, describing it as a win for billionaires and a loss for transparency. “We are considering our options,” it said. A government source, who was not authorised to speak publicly, said a legislative response would be needed before the election.

Shadow attorney-general James Newbury said the opposition – which did not support the changes to the electoral law when they were introduced eight years ago – would work with the government to help fix its mess.

“This is probably the biggest threat to the integrity of our electoral system our state has ever seen in modern history,” Newbury said. “You could see a rush of money from both good and bad actors that we will never know about.”

Greens leader Ellen Sandell called for an immediate government response. “In Labor’s desperate attempt to cling on to their political slush funds, Labor have completely botched these donation laws,” she said.

The Victorian Electoral Commission said it was considering the impact of the High Court decision. A spokesman for federal Attorney-General Michelle Rowland said: “The government will consider the court’s reasons carefully.”

The decision is a boon for teal candidates who will be able to access greater funds from the Climate 200 group founded by Simon Holmes a Court and for One Nation, which is generously backed by Australia’s richest person, Gina Rinehart.

A spokesman for Rinehart declined to comment. Holmes a Court said it was too early to say what the decision would mean for Climate 200 donations to Victorian candidates. He said multiple people involved in independent campaigns, including some supported by Climate 200, had lobbied Premier Jacinta Allan two years ago to change the law.

“She blew them off,” Holmes a Court said. “Victorian Labor only have themselves to blame.”

The solicitor who took the case to the High Court, Ripple Legal principal Kiera Peacock, wrote to Allan three times in 2024 seeking relatively minor amendments to remove a donation cap exemption for nominated entities – legacy funds used by the major parties to help fund their campaigns.

The same recommendation was made by an independent review of the law commissioned by the government.

Allan wrote back to Peacock in October 2024 saying her government was “carefully considering the recommendations”. Peacock said government inaction culminated in Tuesday’s court decision.

“Had the government acted, the plaintiffs would not have had to file the case asking the court to declare the exception invalid,” she said. “Today the court has decided that it couldn’t just strike through the nominated exception. The way it passed through parliament meant it was a package deal.”

All seven judges of the court found that the special carve-out given to nominated entities “impermissibly burdens” the constitution’s implied freedom of political communication.

They ruled that because arrangements for nominated entities were crucial to the laws passing through parliament, the entire section of the Victorian Electoral Act that sets out the campaign donation regime and public funding for candidates was invalid.

The plaintiffs in the case, Hopper and Lowe, hailed the decision. They are both planning to stand as candidates in November.

Hopper, the founder of the West Party, which intends to field candidates in all electorates in Melbourne’s west, said all Australian voters wanted a level playing field. “The High Court has recognised that the two major parties have been rigging the system to stop new parties and independents,” he said.

Lowe, a teal candidate backed by the Climate 200 movement planning to run against former opposition leader John Pesutto in the seat of Hawthorn, said the decision exposed a “chink in the armour” of the major party duopoly. “It’s a great day for democracy,” she said. “It has implications for the fairness of electoral laws around the country.”

The Centre for Public Integrity welcomed the High Court decision, which it said confirmed long-standing concerns that Victoria’s electoral law unfairly advantaged the major parties. It urged the Victorian government to reintroduce a campaign funding regime that would apply equally to all candidates.

“Today’s judgment makes it clear: governments cannot rig electoral laws in favour of major parties and expect to get away with it,” the centre’s executive director Catherine Williams said. “This is not just a Victorian issue. Any government attempting to entrench political advantage through funding laws is now firmly on notice from the High Court.”

The case centred on an overhaul of Victoria’s electoral law in 2018, which, the court accepted, was designed to enhance the integrity of the electoral system and reduce the risk of “corruption or undue influence” by single donors. A shift away from private donors and towards publicly funded elections was intended to reduce the amount of money spent on election campaigns.

The reforms, by privileging the financial affairs of the established parties, also contained a critical flaw.

While the law caps campaign donations at $4970, it provides an exemption for funds transferred to registered political parties through their nominated entities.

The only parties with nominated entities registered with the Victorian Electoral Commission are the Liberals, Labor and the National Party. In the first three years of the current electoral cycle, the Liberal Party received a total of $7.07 million from the Cormack Foundation and the ALP $5.38 million from its nominated entity, Labor Services & Holding.

Although it is theoretically possible for any registered political party to establish a nominated entity, the laws make it practically impossible for any new party to do so. After July 1, 2020, any seed money donated to nominated entities is also subject to the campaign-donation cap.

Counsel for the independent candidates Ron Merkel, SC, told the court at a February hearing that the preferential arrangements were an “abuse of incumbency” and that the nominated entity exemption was “solely enacted for the benefit of the three legacy parties”.

The Victorian government, represented by Solicitor-General Alistair Pound, agreed that the July 1, 2020, deadline for creating nominated entities was discriminatory but that, once removed, the law should be allowed to stand.

The law was passed with support of the Greens and crossbench MPs. The Greens have since opposed the exemption for nominated entities. An attempt by the Victorian government late last year to amend the law and avoid a High Court challenge failed to gain sufficient support in parliament.

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