3 weeks ago
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February 3, 2026 — 6:53pm
Victoria’s political donation laws have been labelled an “abuse of incumbency” in the High Court of Australia during a legal challenge brought by two independent political candidates who argue the state’s current system unfairly favours the major parties.
Former Federal Court judge Ron Merkel, SC, appearing for independents Paul Hopper and Melissa Lowe, told the court on Tuesday the laws were deliberately constructed to assist established parties with decades-old financial war chests, while placing additional burdens on challengers.
The election-year test will be closely watched amid growing scrutiny of political funding laws nationally, as this masthead previously revealed former federal independent MPs Zoe Daniel and Rex Patrick have also launched a High Court challenge to recent federal campaign finance reforms.
The Victorian dispute stems from donation law changes introduced in 2018 which put a cap on donations from individuals and corporations but allowed long-establishing funding bodies – known as nominated entities – to continue transferring uncapped amounts to Labor, the Liberals and the National Party.
A 2020 cut-off prevented new parties and independent candidates from setting up similar structures, which Hopper and Lowe argue locked in a structural advantage to the major parties.
Victorian Solicitor-General Alistair Pound, SC, conceded on Tuesday that the law’s burden on campaigners would vary for different groups, but disagreed it entrenched an advantage for the major parties. He will continue with the state’s arguments when the court returns on Wednesday.
Pound said differing burdens did not necessarily “distort the free flow of political communication”, as Merkel had argued.
Pound said an expert review panel commissioned by the government to interrogate the laws – which recommended culling nominated entities because they significantly benefited parties established before the 2018 donation reform – could be considered by the court but should not be treated as binding.
Merkel told the court the donation caps entrenched inequality by ensuring major parties that had been accumulating wealth in their nominated entities could never be rivalled by new outfits, and described the scheme as an “abuse of incumbency”.
“The nominated entity exception … was solely enacted for the benefit of the three legacy parties,” he said.
Merkel pointed to Lowe’s campaign, which unsuccessfully challenged Liberal John Pesutto for the seat of Hawthorn in the 2022 election, and said the caps prevented Lowe from receiving between $50,000 to $200,000 in extra donations from the Climate 200 funding outfit – which could have more than doubled her campaign expenditure of $181,000.
In its submissions to the court, the state government argued that the cap on political donations levelled the playing field and prevented those with deep pockets from having undue influence on politics. But Merkel argued the system instead disincentivised independents by placing an extra burden on those who did not have access to major party war chests.
“We’re looking at millions of dollars flowing from these nominated entities,” Merkel said.
The state government has acknowledged the 2020 cut-off was discriminatory and moved to amend the system. But the plaintiffs, Lowe and Hopper, argue that the proposed amendments do not go far enough and say the nominated entity system should be abolished altogether.
“The case today is really about fairness,” Hopper, who now leads the West Party, said outside court on Tuesday.
“What we don’t need is a rigged set of donation laws and a system that is unfairly biased to the major parties.”
Lowe said she took the case to the High Court to “stand up for democracy”.
The Allan government is preparing to this week push through amendments to donation laws in parliament, which would allow newer parties and candidates the opportunity to set up funding bodies similar to those used by the established major parties.
But the government would also impose new restrictions on how those entities can operate, including limits on how much money can be transferred during an election period.
The government unsuccessfully sought to delay the High Court hearing while parliament considers the amendments, and conceded there was no certainty the amendments would pass.
Zoe Daniel, who is in Canberra for the Victorian challenge, said the major parties were using their power to implement “unfair” donation laws.
“At the end of the day the Australian people should see their will reflected in the people they vote for, and they choose to put in the parliament,” Daniel said outside the High Court.
In court documents filed late last year, Daniel and Rex Patrick argue sweeping changes to the Electoral Act tilt the playing field against independents and new political entrants, and might breach the Constitution’s implied freedom of political communication.
“Both of these cases are about fairness and about the Australian people,” Daniel said.
The Commonwealth intervened to assist the court on constitutional questions, reflecting potential implications of the case for election funding laws beyond
