The High Court has declared Victoria's electoral funding laws unconstitutional, throwing the state's political landscape into disarray. The unanimous decision effectively cuts off major parties from accessing unrestricted funds previously channelled through established "nominated entities."
Unrestricted Funds Drained
The ruling, handed down today, means the Labor Party, the Liberal Party, and the National Party can no longer draw unlimited money from entities created decades ago. These nominated bodies were instrumental in funding campaign activities.
The implications are particularly severe for the Victorian Liberal Party, which heavily depended on its nominated entity, the Cormack Foundation, for advertising and campaign expenses.
While the Labor Party also benefits from a nominated entity, it sustains itself through party membership and union affiliation fees, suggesting a potentially more stable, albeit different, financial footing.
The Challenge's Roots
The High Court's decision stems from a challenge brought by independent candidates and minor parties who argued that the existing laws were inherently biased. They contended that these regulations created an uneven playing field, favouring established parties with long-standing fundraising mechanisms over newer entrants.
Concerns were raised that while major parties could access donations and payments above spending caps via their nominated entities, newer parties and independents faced significant disadvantages.
This issue has been brewing since at least late 2025, when the Victorian government itself began moves to alter the laws, acknowledging their problematic nature.
Government's Shifting Stance
Facing legal pressure, the Victorian government had previously sought to amend the laws. In late 2025, it proposed changes aimed at allowing minor parties and independents to establish their own nominated entities, albeit under stricter caps.
The government’s initial approach in late 2025 appeared to be a concession that the laws were unconstitutional, but it argued for retaining exemptions for older parties' fundraising bodies.
The intention was to allow new parties to create fundraising arms, but with all incoming donations subjected to caps, while major parties could still access accumulated wealth from decades-old entities. This move was met with criticism, with some deeming it an unfair deal.
Constitutional Quandaries
The core of the legal argument revolved around the "nominated entity exception" and its compatibility with the implied freedom of political communication enshrined in the Australian Constitution. Critics argued that these entities, while allowing unrestricted fund transfers for campaign spending in some instances, complicated the donation process and undermined democratic principles.
The structure of these laws, particularly the discrepancy between capped donations and uncapped electoral expenditure, has been a point of contention.
The debate highlights a broader struggle for equitable campaign funding, with potential ripple effects for electoral laws across Australia.
