Hansard debates

Anthony CARBINES (Ivanhoe – Leader of the House, Minister for Police, Minister for Community Safety, Minister for Victims, Minister for Racing) (10:53): I move:

That this bill be now read a second time.

I ask that my second-reading speech be incorporated into Hansard.

Incorporated speech as follows:

The Victorian Government is deeply committed to protecting and strengthening Victoria’s democratic systems by ensuring that integrity, transparency, accountability, and fairness underpin our electoral processes and electoral system. This Bill achieves this very purpose by introducing a new legal framework for the regulation of political donations, State funding, and reporting, which is currently absent from the Electoral Act 2002 (the Act) following the High Court’s decision in Hopper v State of Victoria. On 15 April 2026 the High Court ruled that the old Part 12 of the Act, which contained the former legal framework for Victoria’s political finance and donations scheme, is wholly invalid.

Without this Bill, Victoria’s political finance environment remains entirely unregulated, leaving this State without laws to govern how political money is raised and disclosed. This regulatory vacuum jeopardises the core principles of our democracy by opening the door to hidden influences and leaving our system vulnerable to unchecked political spending. This fundamentally undermines public confidence in the fairness of this State’s electoral processes and outcomes. This Government is committed to restoring and safeguarding that confidence through this Bill. We cannot afford to let an unregulated environment persist as we approach the next election and to expose our democratic system to the risk of improper conduct.

To protect our institutions and the integrity of the electoral process, this Bill establishes clear, enforceable boundaries to support fair, transparent, and efficient elections, delivered in partnership with the Victorian Electoral Commission. The Bill achieves this by introducing:

• a rigorous political donations disclosure and reporting scheme;

• strict caps on political donations;

• a complete ban on foreign donations and clear limits on anonymous donations;

• transparent State funding provisions; and

• a robust compliance and enforcement framework with penalties for infringing the law.

These reforms will prevent improper influence in our political process. The reforms will ensure that Victorian election outcomes are determined by the voices of voters and not by the depth of certain pockets. Crucially, these measures will reduce any disparities arising between electoral participants due to unequal access to financial resources. And most importantly, political funding will become visible to the public to support broader confidence in the electoral system and to ensure our citizens can make informed decisions.

I will now turn to the details contained in the Bill.

Application of the regime

The regime introduced by the Bill will apply to any individual or entity that makes or receives political donations. This will include registered political parties, candidates, groups of candidates, elected members, associated entities, third party campaigners, and donors.

An associated entity will be defined as an entity that is associated with a political party by financial membership, registration, voting rights, control or purpose, with the purpose threshold being an entity which operates wholly or to a significant extent for the benefit of a political party. Unions, think-tanks and fundraising entities are examples of associated entities. As also outlined in the Explanatory Memorandum, entities that were nominated entities under old Part 12 will be regulated in the same manner as an associated entity for the purposes of the Bill, and will be subject to the same limitations and restrictions.

A third party campaigner will be defined as a person or entity who is not a candidate, elected member, group, political party or associated entity, but who receives political donations exceeding $7,500 or incurs more than $7,500 of political expenditure in a financial year. A third party campaigner could include a range of large or small activist or public interest groups, who are not aligned with a particular political party but engage in political campaigns.

A group will be defined as two or more candidates who are grouped on a ballot-paper, such as grouped Legislative Council candidates.

Activity regulated by the regime

Activities relating to political donations and political expenditure will be covered by the regime.

A political donation will include gifts of money, property, and services made without consideration or with inadequate consideration to a political party, candidate, group, elected member and in some cases, an associated entity or third party campaigner. A gift to an associated entity or third party campaigner will only be a political donation if it is for the purpose of incurring or reimbursing political expenditure. Political donations will also include the payment of an amount in respect of a guarantee and payment or contribution at a fundraising function. However, annual levies, subscription and affiliation fees will not be considered political donations, nor will gifts made in a private capacity for personal use or volunteer labour.

Political expenditure will be defined as any expenditure for the dominant purpose of directing how a person should vote at an election by promoting or opposing a candidate, political party or elected member. It does not include expenditure by an associated entity or third party campaigner disseminated outside the election campaigning period unless it refers to a candidate or political party or how a person should vote.

Advertising and raising awareness about issues, without promoting or opposing a candidate or political party, will not be considered political expenditure. The broadcasting, production or publication of an advertisement relating to an election will be defined as electoral expenditure under the Bill.

The provision of labour is only taken to be political expenditure if the dominant purpose of the labour is to create or communicate electoral matter. For example, if Charlotte is the chief executive officer of a not-for-profit organisation that encourages healthy eating and occasionally issues material to influence how electors vote, but Charlotte’s primary role is the delivery of healthy eating programs in schools and workplaces, as the dominant purpose of Charlotte’s employment is not to create or communicate electoral matters, her salary is not taken to be political expenditure.

Political expenditure has been defined in this way to ensure that all Victorians maintain their right to engage in public discussion on policy matters that are important to them, with an ability to advertise and raise awareness about an issue without it being considered political expenditure, so long as it does not promote or oppose a candidate or political party.

Caps and bans on political donations

To address concerns about foreign influences in elections and consistent with our system of representative and responsible government, the Bill will introduce a complete ban on foreign donations, regardless of the amount of the donation. It will be unlawful for a donor to make, or an entity to accept, a political donation unless the donor is an Australian resident or citizen, or has a relevant business number if the donor is not a person.

The Bill will also make it unlawful to accept anonymous political donations over $1,250 to improve transparency and operate as an anti-avoidance measure. This will preserve the integrity of the electoral process and prevent avoidance of disclosure and reporting requirements. This is consistent with reporting thresholds in other Australian jurisdictions.

Unregulated and excessive private funding poses risks of corruption and undue influence.

These types of unlawful donations, if accepted between 15 April and the day the Bill receives Royal Assent, will be required to be disclosed and forfeited to the State.

From 29 November 2026, the Bill will set a cap of $7,500, or a higher amount provided in the regulations, for each four-year election period on political donations made or received from the same source. The Bill will introduce a separate, interim cap of $5,030 for the period from 15 April 2026 until 28 November 2026, which is the date of the 2026 general election. Donations made above the interim general cap between 15 April and the day the Bill receives Royal Assent will be required to be returned.

Political donations caps allow individuals or entities to express their support without the risk of undue influence, supporting equal participation in the electoral process. Caps will apply to all electoral participants without discrimination, including nominated entities operating as associated entities under the new regime.

It will also be unlawful to make political donations to more than six third party campaigners for each election period, to prevent a proliferation of third party campaigners as a means to circumvent the cap.

New entrant general cap

The Bill introduces a double general cap for eligible electoral participants, called the new entrant general cap. This will be an interim amount of $10,060 from 15 April 2026 until 28 November 2026, and $15,000 from 29 November 2026 for each four-year election period on political donations. As with the general cap, amounts can be increased by regulations and are subject to indexation.

Eligible electoral participants will be those ineligible for State funding, including recontesting independent candidates who received less than 4% of first preference votes the previous election, first-time independent candidates and new registered political parties who have not been registered a whole calendar year.

Applicants seeking to be subject to the new entrant general cap must apply to the Victorian Electoral Commission (VEC), with the required information as set out in the Bill. Within 30 days of receiving an application the VEC must provide confirmation of eligibility or ineligibility. The VEC will be required to maintain a Register of New Entrants, published on its Internet site, which sets out those who have previously received or are eligible to receive political donations at or below the new entrant general cap.

The purpose of the new entrant general cap is to reduce barriers for those ineligible for a form of State funding, ensuring they have access to other means to fund their campaign without being constrained by the former general cap.

Small contributions

The Bill includes a small contributions exemption, which designed to be a practical way to ensure the donations scheme is not unduly onerous on those people that make minor contributions to entities covered by the regime. It will prevent a donor or recipients from inadvertently breaching the disclosure requirements or general cap, through making contributions of $100 or less, or a higher amount prescribed by the regulations, at events such as party meetings or events.

Disclosure of political donations

Victorians need to know who makes and receives political donations, in a timely manner, to monitor the potential risk that donors are influencing political decisions. The Bill includes a requirement for political donations and loans equal to or above $1,250 to be disclosed to the VEC by both the donor and recipient, with this amount indexed over time. Multiple donations from the same source or related companies will be treated as a single donation. Disclosure must occur in “real time”, with disclosure returns submitted to the VEC within 7 days of either making or receiving a political donation. The VEC will publish disclosure returns on its website within 14 days of receipt, supporting transparency in our political system.

Acknowledging the period of time since old Part 12 was invalidated in Hopper, the Bill will include disclosure and reporting obligations in relation to political donations made and received between 15 April 2026 and the day the Bill receives Royal Assent, with donations in some cases required to be returned.

In addition to real time reporting, annual returns must be provided to the VEC by political parties, associated entities and third party campaigners. The returns will include amounts received and paid, as well as the total debts incurred as at 30 June. The registered agents of candidates, groups and elected members must also provide an annual return to the VEC which sets out particulars of donations received above the $1,250 disclosure threshold.

The VEC will publish annual returns on its website within 6 months after the end of the relevant financial year.

Recipients of political donations will be required to keep a State campaign account to differentiate fundraising and expenses associated with an election, from other financial flows. Only funds in the state campaign account can be used to incur political expenditure. The State campaign account will be required to be denominated in Australian dollars, implementing recommendation 5.10 of the Electoral Review Expert Panel’s 2023 Report on Victoria’s laws on political finance and electronic assisted voting.

State funding

In recognition that political donation caps reduce how much money electoral participants can raise, the Bill will provide for state funding. State funding will be comprised of public funding, administrative expenditure funding and policy development funding.

• Public funding will reimburse eligible political parties and independent candidates for costs relating to running a state election. Registered political parties running a joint Legislative Council ticket will be able to jointly nominate how public funding associated with the ticket is apportioned between them, implementing recommendation 6.9 of the Electoral Review Expert Panel’s 2023 Report on Victoria’s laws on political finance and electronic assisted voting. To address circumstances where repayment of overpaid advance public funding may cause serious financial hardship, which may arise where a participant is no longer eligible or has not elected to receive payment in relation to the next general election, the VEC will have discretionary powers to seek repayment in instalments or waive repayments.

• Administrative expenditure funding will provide funding in recognition of the administrative burden on elected members, whether they are a member of a political party or an independent. This will help elected Members of Parliament meet the administrative costs of running their offices and complying with disclosure and reporting requirements. Administrative expenditure funding must not be used for electoral expenditure, or paid into the State campaign account and used for political expenditure. Amounts payable will be based on the number of elected members from a registered political party, or a fixed amount of $300,000 for each independent elected member.

• Policy development funding will reimburse eligible political parties for costs incurred in relation to policy development, up to a maximum of $31,050.

Compliance and enforcement

The Bill will prescribe civil penalties and offences for non-compliance under the Act and empower the VEC to regulate compliance with the regime.

The VEC will be able to appoint compliance officers, who will have powers to gather information to investigate possible contraventions of the Act.

Strong penalties will act as a significant deterrence and signal the importance of compliance with reporting obligations, with penalties of up to two years imprisonment or fines of up to 300 penalty units.

To further ensure compliance with the regime and ensure bad-faith actors do not go searching for loopholes, intention to circumvent a prohibition or requirement under the regime will be an offence with penalties of up to 10 years imprisonment or 1,200 penalty units for a natural person, and 6,000 penalty units for a body corporate.

The Bill imposes prospective criminal liability for certain offences relating to donations made and received between 15 April and the day the Bill receives Royal Assent.

Additionally, the Bill will require registered political parties to refund to their former nominated entities, before the 28 November 2026, being the date of the next general election, any funds received from their nominated entities between 1 July 2023 and 14 April 2026 that are in excess of the new general cap and remain in the RPP’s State campaign account on the day after the Bill receives the Royal Assent. The Bill will impose prospective criminal liability on those who fail to comply.

Independent Expert Panel Review

In addition to compliance and enforcement measures, the Bill requires an independent review to commence within 1 month following the 2026 November election to evaluate the operation and effectiveness of the new regime. The review will be conducted by an expert panel of three appointed members and will be completed within 12 months after the election. The appointment of an independent expert panel to undertake the review provides external oversight to ensure an objective assessment of the proposed reforms and that they are operating as intended.

The review will examine and make recommendations in relation to the operation of the regime, including:

• the effectiveness of the Act in addressing risks of undue influence arising from political donations;

• the effectiveness of the Act in promoting fairness in electoral competition;

• the operation and effectiveness of the political donation disclosure scheme, including timeliness, accessibility, and transparency;

• the impact of the Act on third-party campaigners, small community groups, and not-for-profit entities; and

• the overall administrative operation of the Act, including enforceability, compliance burden and the role of the VEC.

The report of the review will be laid before both Houses of Parliament within 10 sitting days after the review is completed.

Commencement

Following the decision in Hopper on 15 April 2026, when old Part 12 was declared invalid, there has been a period without a political donations and reporting framework. To rectify transparency concerns and ensure there is no gap where unlawful donations could unknowingly be made and received, the new political donations disclosure and reporting and state funding regime in Part 12 will commence retrospectively from 15 April 2026, the day of the Hopper judgement.

Public statements were released on 15 April and 17 April to put electoral participants on notice that obligations would apply retrospectively, to ensure continuous record keeping for disclosure and reporting purposes.

However, to ensure the Bill does not introduce retrospective criminal laws, certain offence provisions relating to making or accepting a political donation that is unlawful, entering into, or carrying out, a scheme with the intention of circumvention the proposed regime and failing to disclose and/or return certain nominated entity transfers, will be prospective offences and apply from Royal Assent.

Otherwise:

• Technical amendments to the Act will commence on 25 May 2026

• Remaining provisions, including consequential amendments to the Electoral Amendment Act 2026 and the Planning Amendment (Better Decisions Made Faster) Act 2026, will commence on the day after the day on which the Bill receives Royal Assent.

Transitional and savings provisions

Also as a consequence of Hopper, the Bill will introduce transitional and savings provisions to validate past actions taken under old Part 12, so that they deemed to have been taken under new Part 12, including:

• funds paid by the VEC, and the acquittal of funding used by funding recipients

• activities related to the status of calendar year and financial year annual return

• deeming registers, compliance officer appointments and procedures of the VEC

• state campaign account activities.

Transitional provisions also provide for the separate interim cap of $5,030 for the period between 15 April 2026 and the date of the 2026 general election and provide that certain political donations offences do commence until after Royal Assent.

The Bill will also include a provision authorising the Governor in Council to make regulations containing provisions of a transitional nature, including matters of an application or savings nature, arising as a result of the Bill.

Conclusion

The Bill will ensure there is transparency and accountability in the electoral process, with political donations disclosure and reporting and state funding regime that is founded firmly on integrity-based principles.

The Electoral Act is fundamental to the operation of democracy in Victoria. Noting its significance, there will be a post-election review of the regime.

I commend the Bill to the house.