Victoria's Political Donation Laws Struck Down

The High Court of Australia has unanimously ruled that key parts of Victoria's electoral laws are constitutionally invalid, leaving the state without a regulatory framework for political finance just months before the November 2026 election.

The Ruling

On April 15, 2026, all seven High Court judges found that Part 12 of Victoria's Electoral Act "impermissibly burdens" the Constitution's implied freedom of political communication. The decision invalidated the state's entire system of political donation caps, disclosure requirements, public campaign funding, and restrictions on foreign donations.

The ruling leaves Victoria without a functioning political finance regulatory framework approximately seven months before the scheduled state election.

What Was Invalidated

The laws, introduced in 2018 and effective before the 2022 state election, established:

• Individual donation caps of approximately $4,970 per four-year electoral term
• Disclosure requirements for reporting donations and campaign expenditure
• A ban on foreign donations and anonymous contributions
• Three types of public funding for political parties: election campaigns, administration, and policy development

The "Nominated Entity" Loophole

The legislation allowed "nominated entities" — separate investment or fundraising bodies that could transfer unlimited funds to registered political parties' campaign accounts without being subject to the donation cap.

Only three political parties had nominated entities registered: the Liberal Party, the Labor Party, and the National Party.

Under this system:

• The Liberal Party received $7.07 million from the Cormack Foundation
• The Labor Party received $5.38 million from Labor Services & Holding

Entities established after July 1, 2020, were subject to the donation cap. This created a system where major parties benefited from large, uncapped transfers from pre-existing funds, while new political entities could not establish comparable arrangements.

The Legal Challenge

Independent candidates Paul Hopper and Melissa Lowe — who contested the 2022 state election and planned to stand again in November 2026 — brought the case. They were represented by former judge Ron Merkel, SC, and solicitor Kiera Peacock of Ripple Legal.

The plaintiffs argued the nominated entity provisions created an unfair advantage for established parties and placed an impermissible burden on the Constitution's implied freedom of political communication. They had written to the Victorian government in 2024 requesting removal of the nominated entity exception before filing the legal challenge.

The Victorian government argued the donation cap was justified to curb corruption and prevent undue influence. However, the state conceded that the July 1, 2020, cut-off date for nominated entity eligibility could not be justified and was invalid.

Court's Reasoning

The court identified three forms of differential treatment in the legislation:

1. Advantages provided to political parties that were not available to independent candidates
2. Different rules for nominated entities registered before versus after July 1, 2020
3. Favoring major parties by allowing bodies holding existing capital funds to become nominated entities while restricting new entities

The court determined that the invalid provision could not be separated from the interconnected web of other provisions in Part 12. Consequently, the entire section establishing donation caps, disclosure requirements, and public funding mechanisms was struck down. The Victorian government was ordered to pay costs to the plaintiffs.

Immediate Consequences for Victoria

The ruling has several immediate effects:

Failed Legislative Response

An independent review commissioned by the government had recommended abolishing the nominated entity carve-out in 2024. An attempt by the Victorian government to amend the laws late in 2025 failed to gain sufficient support in parliament.

In December 2025, Premier Jacinta Allan announced a bill to allow smaller parties and independents to set up nominated entities, with proposed caps on transfers: $500,000 for parties and $50,000 for independent candidates per election cycle. This legislation was not passed before parliament adjourned in March 2026.

New Legislation: May 2026

On May 17, 2026, Victoria's parliament passed new political donation laws with crossbench support. The legislation:

• Caps donations at $7,500 per donor over each four-year electoral cycle
• Requires disclosure of donations of $1,250 or more
• Restores rules after the High Court struck down the previous regime

The Coalition and independents have threatened a High Court challenge to the new laws.

Independent and Third-Party Activity

Following the High Court ruling, Climate 200 provided:

• $40,000 to independent candidate Sophie Torney in the seat of Kew
• A matching $40,000 to independent candidate Shima Ibuki in Hawthorn

Simon Holmes à Court, co-convenor of Climate 200, stated the funds were intended to help independent campaigns "get off the ground" ahead of the election.

Broader Implications

Federal and Interstate Impact

The ruling has potential implications for campaign finance laws in other Australian jurisdictions:

• Commonwealth legislation, scheduled to take effect July 1, 2026, contains similar nominated entity provisions and faces a separate legal challenge from former independent MPs Zoe Daniel and Rex Patrick
• Laws in South Australia and Western Australia, modeled on Victoria's system, may also face constitutional scrutiny

National Context

There are currently no caps on political donations or spending at the federal level in Australia. Under reforms passed in 2025, individual donations to a party branch will be capped at $50,000 per calendar year, and nationwide election spending for political parties will be limited to $90 million.

Reactions

Challengers

"All Australian voters want is 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."
— Paul Hopper, Independent Candidate

"It's a great day for democracy. It has implications for the fairness of electoral laws around the country."
— Melissa Lowe, Independent Candidate

Government

"This is a win for billionaires and a loss for transparency. We are considering our options."
— Victorian Government Spokesperson

Premier Jacinta Allan stated the government would review the decision and seek advice before responding.

Opposition

"This is a very big problem for the integrity of our electoral system. We now have effectively no donation system, no cap system and no limits on foreign donations."
— James Newbury, Shadow Attorney-General

Other Political Parties

"The election could be influenced by multi-million dollar donations from big corporations."
— Ellen Sandell, Greens Leader

Civil Society

"Today's judgment makes it clear: governments cannot rig electoral laws in favour of major parties and expect to get away with it."
— Catherine Williams, Executive Director, Centre for Public Integrity

"The decision gives Victoria a chance to go back to the drawing board and puts other governments on notice."
— Bill Browne, The Australia Institute

Solicitor for the Plaintiffs

"The decision went beyond what my clients had asked for and could have been avoided had the government agreed to make the laws fair two years ago."
— Kiera Peacock, Ripple Legal