The Victorian government has unveiled replacement legislation after the High Court in mid-April struck out an entire section of the Electoral Act when it ruled donation exemptions created for nominated entities were unconstitutional.
It has left the state without any caps, limits on foreign donations or disclosure requirements ahead of the November election.
Under the bill debated in the lower house on Wednesday, political donations would be capped at $7500 over four years - up from $5000 - and the limit would be double for new candidates and parties.
Premier Jacinta Allan said the "new entrant" provision addressed the High Court's ruling and would establish a "more level playing field".
New entrants would only cover those seeking election for the first time, she said.
There would no longer be a donations "loophole" for Labor, Liberal and National nominated entities, through which the major parties were able to pay out unlimited campaign funds.
Each will be required to return money transferred to their nominated entities between July 1, 2023 and April 14, 2026 above the general cap of $5030 that remained in their state campaign accounts on April 15, 2026.
Other changes include restoring a ban on foreign donations, outlawing anonymous donations above $1250 and mandating real-time disclosure of donations above $1250.
"These changes make sure that elections are determined by voters - not big money, not billionaires, voters," Ms Allan told reporters on Wednesday.
Money Labor receives from unions as associated entities would remain uncapped but cannot be used for political campaigning.
Registered parties would receive boosted taxpayer-funded administrative payments of $300,000 for their first elected MP, $100,000 for a second elected MP and $55,000 for every MP between three and 45.
Independents would also receive $300,000 if elected.
West Party candidate Paul Hopper, who mounted the original High Court challenge with former independent candidate Melissa Lowe, said the new donations laws were "still rigged".
"We have already engaged lawyers to fight these rigged laws in the High Court," he said.
Donations made after the High Court's decision would have to be disclosed and returned if outside the proposed cap.
Teal independent candidates for Kew and Hawthorn, Sophie Torney and Shima Ibuki, confirmed they would hand back respective $40,000 campaign donations and $140,000 in administrative support.
The payments were made by Climate 200, the fundraising outfit co-founded by Simon Holmes a Court.
"This leaves my campaign bankrupt, while the major parties are filling their election war chests with taxpayers' money," Ms Ibuki said.
With no expenditure cap, Transparency International Australia chief executive Clancy Moore said millions could still be splashed by major parties and campaign groups for the November election.
"There is still a risk of US style arms race," he said.
The state government and coalition were not able to reach an agreement on the legislation, with Labor to rely on the crossbench to pass it through the upper house.
Shadow attorney-general James Newbury accused the government of trying to "rig the system" and said the coalition was considering its legal position as it believed the reforms to be unconstitutional.
The coalition's constitutionality concerns rested on "low" donation caps combined with "massive" public funding increases and the "random" start date of back payments from nominated entities.
"We will not let these laws stand if we are elected," he said.
An earlier government proposal put the cap at $10,000 but was "refined" to $7500 after negotiations with the crossbench.
The legislation would be subject to an independent statutory review - a "red line" for the Greens - after the state election.
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