In a significant ruling with potential national repercussions, the High Court of Australia has declared parts of Victoria’s political donation and campaign funding laws unconstitutional. This landmark decision, detailed in a 71-page judgment, found Section 12 of the Electoral Act—which governs political donations and election expenditure—unacceptable as it “impermissibly burdens” the implied freedom of political communication enshrined in the Australian Constitution.
The laws in question, introduced by the Victorian Labor government in 2018, set caps on individual donations to candidates and parties, limiting them to below AUD 5,000 each term. However, major parties—Labor, Liberal, and National—were able to withdraw unlimited funds from their respective fundraising bodies, known as nominated entities. In contrast, smaller parties and independents were unable to establish their own nominated entities, leading to a challenge by West Party candidate Paul Hopper and former independent candidate Melissa Lowe, who argued that the existing regulations distorted the electoral playing field.
Hopper expressed that voters seek fairness, emphasising that the two dominant parties have exploited the system to inhibit the emergence of new parties and independent candidates. The High Court’s ruling has ordered the Victorian government to cover the legal costs for Hopper and Lowe.
In response to the ruling, Premier Jacinta Allan indicated that the Labor government would assess the High Court’s decision before making an official statement. Previously, Allan had moved to introduce a bill enabling smaller parties and independents to set up nominated entities with capped transfers, yet these proposed reforms were abandoned prior to legislative approval.
Other states, including South Australia, New South Wales, and Queensland, have also implemented donation caps similar to Victoria’s, although Australia currently lacks any federal caps on political donations or spending. Anticipated federal reforms, set to take effect in 2027, propose to limit individual donations to a party’s branch to AUD 50,000 per year and cap total election spending for political parties at AUD 90 million nationwide.
This ruling thus raises critical questions about political financing and the equitable representation of candidates across Australia, potentially instigating significant changes in the way political donations are regulated at both state and federal levels.