Key Takeaways
- The High Court of Australia ruled unanimously that Victoria’s campaign‑funding caps are unconstitutional because they impermissibly burden the implied freedom of political communication.
- The decision removes all donation caps, ends public funding for candidates, and eliminates the special “nominated entity” exemption that benefited the Liberal, Labor and National parties.
- Consequently, unlimited private donations—including from billionaires such as Gina Rinehart and groups like Climate 200—can now flow into the November 2026 Victorian state election.
- Independent and minor‑party candidates, who challenged the law, welcomed the ruling as a levelling of the playing field, while major‑party leaders warned of increased risk of corruption and undue influence.
- The Victorian government must now decide whether to rewrite campaign‑finance rules or allow unfettered private money to shape the upcoming election, with potential flow‑on effects for Western Australia, South Australia and federal legislation.
Background of the Victorian campaign finance laws
In 2018 Victoria introduced a suite of electoral reforms intended to curb corruption by shifting election financing from private donors to public funding. The legislation capped individual campaign donations at $4,970 and imposed tighter disclosure requirements. To secure parliamentary passage, lawmakers added a carve‑out allowing registered parties to channel money through “nominated entities”—special trusts or foundations that were exempt from the donation cap. Only the Liberal, Labor and National parties managed to register such entities, giving them a financial advantage unavailable to newer or independent groups.
The practical effect of the nominated‑entity exemption
Under the 2020‑2024 electoral cycle, the Liberal Party received roughly $7.07 million via the Cormack Foundation, while the ALP drew about $5.38 million from Labor Services & Holding. The exemption effectively created a two‑tier system: major parties could accept unlimited funds through their nominated entities, whereas independents and minor parties remained subject to the $4,970 cap. Critics labelled the arrangement an “abuse of incumbency” that entrenched the dominance of the two‑party duopoly.
Independent candidates launch a constitutional challenge
Paul Hopper (founder of the West Party) and Melissa Lowe (a teal candidate backed by Climate 200) filed a High Court challenge after the 2022 state election, arguing that the nominated‑entity carve‑out violated the Constitution’s implied freedom of political communication. Their solicitor, Kiera Peacock of Ripple Legal, contended that the exemption was not a neutral policy but a deliberate mechanism to favour incumbents. The plaintiffs had previously written to the Victorian government in 2024 requesting removal of the carve‑out, warning that litigation would be unnecessary if the government acted promptly.
The High Court’s unanimous ruling
All seven justices agreed that the nominated‑entity provision, because it was essential to the passage of the 2018 laws, rendered the entire donation‑cap scheme invalid. The Court held that the exemption “impermissibly burdens” the implied freedom of political communication, and that the legislation could not be salvaged by simply striking out the carve‑out; the laws were enacted as a package and thus fell together. The judgment therefore lifts all caps on campaign donations, abolishes public funding for candidates, and removes the nominated‑entity exception entirely.
Immediate reactions from political actors
The Victorian government expressed disappointment, describing the outcome as “a win for billionaires and a loss for transparency,” and said it is reviewing its options. Shadow Attorney‑General James Newbury warned that the state now effectively has “no donation system, no cap system and no limits on foreign donations,” threatening electoral integrity. Greens leader Ellen Sandell accused Labor of “botching” the donation laws in a desperate attempt to protect its political slush funds, predicting that multi‑million‑dollar contributions from big corporations, Gina Rinehart and Climate 200 could now sway the November election.
Responses from the plaintiffs and advocacy groups
Hopper and Lowe celebrated the decision as a restoration of a level playing field. Hopper stated that the High Court recognised that the major parties had been “rigging the system” to keep new parties and independents out. Lowe called the ruling a “great day for democracy” and said it exposed a “chink in the armour” of the major‑party duopoly, with broader implications for electoral fairness nationwide. The Centre for Public Integrity echoed this view, urging the Victorian government to replace the invalidated rules with a regime that applies equally to all candidates and warning that any government seeking to entrench advantage through funding laws is now on notice from the High Court.
Potential influence of wealthy donors and foreign interests
With the donation caps removed, entities such as Climate 200—backed by affluent climate‑activist donors—can now contribute unlimited sums to teal candidates like Melissa Lowe. Likewise, Gina Rinehart, Australia’s richest woman and a major donor to One Nation, faces fewer legal barriers to directing her wealth toward Victorian political campaigns. Although a spokesperson for Rinehart said she had yet to study the judgment, the ruling opens the door for significant foreign‑aligned or corporate spending, raising concerns about undue influence and the possible erosion of public trust in the electoral process.
Broader ramifications for Australian campaign‑finance regime
The Federal Government is watching the case closely, as former independent MPs Zoe Daniel and Rex Patrick have launched a similar challenge to national donation laws. A ruling that mirrors Victoria’s could affect the Commonwealth’s disclosure and cap framework. Additionally, Western Australia and South Australia, which have analogous nominated‑entity provisions, may feel pressure to revisit their own statutes to avoid constitutional vulnerability.
What the Victorian government might do next
Officials must decide whether to draft a new, constitutionally sound campaign‑finance system—perhaps one that caps donations uniformly for all parties, provides transparent public funding, or bans certain categories of donors—or to allow the current vacuum to persist, letting market forces dictate the flow of money into the November election. Whatever path is chosen, the decision will shape not only the immediate contest but also the long‑term health of Victoria’s democratic institutions.