Victorian politics still exposed to ‘dark money’ and foreign donations as MPs struggle to agree on urgent reforms

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Exclusive: state is now without caps on political donations or disclosure requirements, months out from November election

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“Unlimited dark money” will keep flooding into Victorian politics after Labor failed to reach agreement with the Liberals or the Greens about donation reforms the Allan government vowed to fast-track through parliament.

Victoria is now without caps on political donations or disclosure requirements, months out from the November election after the high court struck down the state’s donation laws last month.

Under the previous laws, individuals and organisations could donate a maximum of $4,970 to a candidate, though there was an exemption for money transferred to registered political parties via their “nominated entities”.

While the high court challenge centred on that exemption, it ultimately found the entire section of the electoral act governing political donations was unconstitutional.

The ruling has left the Victorian Electoral Commission unable to distribute the latest round of public funding and opened the door to large donations, including from foreign sources.

The day of the ruling, the premier, Jacinta Allan, said the government would “immediately move to restore Victoria’s electoral integrity regime”, warning the state had been left “exposed to dark money in politics.”

She said the reforms would also be fast-tracked through parliament and backdated to the date of the decision.

Since then, Labor, the Liberals and the Greens have been in negotiations and broadly agree on the need to reintroduce a cap on donations, disclosure requirements and public funding arrangements.

But they remain divided on key details, including where the donation cap should be set, how to treat the nominated entities and whether the laws should be retrospective. It means the bill won’t be introduced to parliament before June.

The Greens leader, Ellen Sandell, said the party wanted to “reinstate strict caps or bans on political donations, and close any loopholes that allow Labor and the Liberals to rig the rules for themselves”.

“Right now, because of Labor’s stuff-up, we have a situation where unlimited dark money from overseas, billionaires and corporations can flow to political parties to influence our state election,” Sandell said. “We need to get big money out of politics and level the playing field.”

The Liberal sources said they would reject retrospective laws and wanted to see the donation capped increased. The opposition leader, Jess Wilson, on Saturday said “good faith” discussions continued with the government and it was on Labor to “bring forward” legislation.

But in a sign the government was becoming less confident of securing the Liberal’s support, the premier’s office had also begun consulting crossbench MPs last week.

This included Libertarian MP David Limbrick, who said he was “disappointed” in the delay, warning Victoria was “in danger” without safeguards against foreign donations.

“There are currently no state laws prohibiting foreign donations, which leaves our state vulnerable to foreign interference. This is a national security risk and the government must act urgently to fix it,” Limbrick said.

“I am disappointed that there hasn’t already been a bill presented to at least close this loophole and clarify administrative funding and donation disclosure arrangements, which are also in limbo.”

Animal Justice party MP Georgie Purcell backed reform but argued the previous cap was “very limiting for minor parties” and “gave an upper hand to major parties with historically wealthy entities and corporate donors”.

“We don’t want to open the floodgates, but most minor parties would like to see a modest increase that would allow us to properly fund and fight elections,” Purcell said.

The Australia Institute published an open letter in the Age on Monday arguing the new laws must be retrospective and fair. The letter, backed by civil society organisations, also calls for an independent review and broader public consultation, warning the reforms should not be “exclusively designed by those with a vested interest in the outcome”.

The Centre for Public Integrity, meanwhile, has called urgent restoration of disclosure and public funding rules before a broader overhaul of the laws after the election.

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