Bill Browne
Director, Democracy & Accountability Program
The Victorian Government has conceded that part of the state’s political donation laws is unconstitutional, but is defending the bulk of the scheme – despite its unfair treatment of independents and minor parties.
Annika Smethurst at The Age has acquired the Government’s submission in a High Court case.
The case was brought by two state independent candidates at the state level (Paul Hopper and Melissa Lowe), who argue that Victoria’s donation cap laws give the major parties an unfair advantage. The major parties are allowed “nominated entities” that can make contributions of any size. Everyone else is limited to about $4,850 over an electoral cycle.
The Victorian Government’s admission that the state’s laws are unconstitutional is damning.
There has already been one state election under those laws, and the next is exactly one year and one day away.
South Australia and the federal parliament have also adopted donation restrictions with a nominated entity loophole – raising concerns that their schemes are unconstitutional too.
Neither the Albanese Government federally nor the Malinauskas Government in South Australia allowed a parliamentary inquiry before rushing donation restrictions through – despite 35,000 Australians saying any major change to election law should go to a parliamentary inquiry.
A parliamentary inquiry could have made these laws fairer, instead of leaving it to expensive litigation in the courts.
What is a nominated entity?
A nominated entity is an organisation with a special relationship with a political party, that is allowed to donate to that party beyond the donation cap that applies to everyone else.
Three jurisdictions brought in nominated entities at the same time they brought in donation caps: Victoria (where they began), South Australia and the Commonwealth. So far, only Victoria’s have been challenged in court.
Victorian nominated entities contribute millions of dollars to Labor, the Liberal and the Nationals, while Victorian voters are capped at $4,850 each.
Nominated entities are not the only problem with donation restrictions
Australia Institute research shows that nominated entities are only the tip of the iceberg when it comes to unfair donation restrictions – whether in Victoria, South Australia or federally.
Other examples include: the way federal parties with multiple branches can benefit from “donation splitting”, where each branch receives a donation just below the cap; the ability of Victorian parties to charge levies on staff and MPs beyond the cap; and the special admin funding in South Australia, some of which can be spent on electoral purposes.
The Victorian Government has only made a limited concession so far
Victoria’s nominated entity law allowed parties to keep benefiting from existing funds, but not establish any new ones. The effect is that only political parties that had special funds in 2020 (Labor, Liberals and Nationals) could set up a nominated entity.
The Victorian Government has so far only made a limited concession: it agrees that it is unconstitutional to stop parties from establishing new nominated entities.
Instead, it proposes:
- Keep the ban on independents setting up nominated entities
- Allow parties to set up new nominated entities, but keep contributions capped at $4,850.
This would be closer to how South Australia and the federal government have set up their nominated entity schemes.
As Annika Smethurst points out in her article:
“any new party would have to build a nominated entity from scratch using only donations subject to the $4850 cap. This means newer entrants start from nothing, while major parties would still have access to decades of accumulated wealth.”
Will the High Court be convinced that this is reasonable?
If not, the South Australian and Commonwealth parliaments may have to revisit their electoral laws too.