Former Victorian teal candidates threaten High Court challenge over donation laws

A group of former teal candidates is threatening to fight the Allan government in the High Court, claiming Victoria’s political donation laws are so skewed towards the big parties they violate an implied constitutional right to political communication.

A legal letter sent to Premier Jacinta Allan on behalf of former Victorian state candidates Sophie Torney, Melissa Lowe, Nomi Kaltmann and Kate Lardner suggests the state’s election campaign finance laws have been rigged to give the Labor, Liberal and National parties free rein to rake in unlimited campaign cash from wealthy legacy trust funds.

Sophie Torney was an independent candidate for the seat of Kew in the 2022 state election.Credit: Eddie Jim

The July 31 letter, seen by The Age, demands the government scrap the so-called “nominated entity exception” from the Electoral Act, claiming it has led to a campaign financing environment so biased against minor parties and independents that it breaches an implied constitutional right to freedom of political communication.

“Such a law is an impermissible burden on the implied freedom of political communication,” the letter states. “That is because the nominated entity exception completely fails to balance the rights of various political participants. To the contrary, it only serves the three major parties.”

Under the 2018 overhaul of Victoria’s political donation laws – touted by then-premier Daniel Andrews in late 2017 as the “strictest donation laws in the country” – political parties were allowed to nominate a single financial entity to be exempt from the state’s strict cap on political donations.

But in a significant catch, from 2018 onwards, nominated entities were only allowed to raise a maximum of $4320 over the four-year political cycle, making it virtually impossible for any entities set up after 2018 to raise enough cash to be viable.

State Labor’s nominated entity is the innocuously named Labor Services and Holdings. In 2022, the year of the state election, it handed over $3.1 million to finance Labor’s successful campaign.

The Liberal Party has the Cormack Foundation, which is now, according to ASX records, worth an extraordinary $118 million. In 2022, it donated $2.5 million to the Victorian division of the Liberal Party.

Sophie Torney, who ran as an independent candidate in 2022 for the state seat of Kew, suggested the 2018 overhaul was just a rort to protect the big parties as their support dwindled.

“We were restricted to funding our campaign from individual donations of $4320, while the major parties had tens of millions of dollars to play with,” she said. “The results tell the story: there were three independents in the lower house before the election, now there are none.”

Dr Kate Lardner ran as an independent candidate in Mornington in the 2022 state election.Credit: Eamon Gallagher

The legal threat follows a March 2024 report tabled in state parliament from an expert review panel, also recommending removing the ability of political parties to appoint nominated entities exempt from donations caps.

Centre for Public Integrity executive director Dr Catherine Williams agreed the nominated entity exception should be scrapped, warning it had created an inequitable situation by giving established political parties a significant advantage.

“It gives the legacy political parties a substantial and grossly unfair advantage over minor parties and independents,” Williams said. “We urge the government to adopt the recommendations of the expert panel to abolish the nominated entity exemption from the electoral act.”

A state government spokeswoman said: “We’re considering the report and will respond to it in due course.”

She did not respond to questions about the legal letter.

According to the Australian Human Rights Commission, the High Court has found that an implied right to political communication exists as an indispensable part of the system of government created by the Constitution.

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