Victorian Liberals face financial crisis ahead of state election – The Age

The Victorian Liberal Party faces a financial crisis ahead of next year's state election, with leaked documents revealing a string of budget blowouts, rising debtsand lost fundraising revenue from majordonors.

Figures seen by The Age confirm the party is struggling to balance its books, adding to tensions in the already bruising battle for state presidency between Liberal stalwarts Michael Kroger and Peter Reith.

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27-year-old Marcus Bastiaan and his outspoken partner Stephanie Ross have torn like a tornado through the Liberals' Victorian branch, aligning with figures such as Michael Kroger along the way.

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27-year-old Marcus Bastiaan and his outspoken partner Stephanie Ross have torn like a tornado through the Liberals' Victorian branch, aligning with figures such as Michael Kroger along the way.

Internal documents reveal the Victorian branch is expected to clock up about$1.73 million in losses by the end of this financial year, with an expected $1.52 million revenue hit from a major donor, the Cormack Foundation, and a further $233,000 in losses from an Enterprise Victoria fundraisernot being locked in as originally budgeted.

A deficit of $1.16 million was posted in the eight months to February 28, and the Liberals havealso taken on $1.72 million in debt to helpstay afloat with the possibility of more to come.

"We are borrowing to keep the lights on," said one furious Liberal source.

The figures are likely to raise questions about the party's financial management at a time when it should be building an election war chest for Opposition Leader Matthew Guy to fight the Andrews government.

In a sign of the underlying tensions,Mr Guy's parliamentary team have nowsetup their own fundraising account, separate from the administrative wingof the party, which contains almost $250,000 in donated funds to go towards their efforts at next year's poll.

Some insiders have blamed the party's financial woes onMr Kroger, who took on the presidency two years ago promising to shake-up the party's culture, decentralise power from head office to local branches, and significantly improvecampaigning and fundraising.

Since then, his critics argue, the result has been mixed: branches have been plagued by allegations of branch stacking centred on ally Marcus Bastiaan;the Liberals have flirted with the idea of a preference deal with One Nation; and the president has beenlocked in a dispute with the Cormack Foundation over internal governance issues, which has led to the withholding of funds.

State director Simon Frost insisted the party's financial status would not hinder the Liberals' election campaign against Daniel Andrews, saying: "The secretariat is closely monitoring our short-term financial situation. We have in place the systems and personnel to build a substantial war-chest to help make Matthew Guy the premier at the 2018 state election."

While MrKroger declined to comment, his supporters point to the role he played in uncovering the $1.5 million fraud by former Liberal state director Damien Mantach, and the positive federal election result the Liberals had in Victoria last year, where the Turnbull government snatched the seat of Chisholm from Labor.

Insiders say that the party might be able to break even if it can resolve the dispute with the Cormack Foundation andlock in another major fundraiser with the Prime Minister before the end of the financial year.

But the revelations of the Liberals' financial woes are set to intensify the battle for control of the Victorian branch, which will come to a head in April when Mr Kroger defends his presidency from a challenge by Mr Reith, a former industrial relations minister in the Howard government.

The contest has divided the party with federal ministers such as Josh Frydenberg, Michael Sukkar and Alan Tudge backing Mr Kroger to stay in the role, while others, such as Mr Guy, federal Liberals Scott Ryan and Kelly O'Dwyer, and most of the state parliamentary team, endorsing Mr Reith.

Declaring his support for Mr Reith earlier this month, Mr Guy said: "It's a 50-50 ball game in Victoria. We've got to be focused, ready and determined. We need to not, coming into an election, be focused on internal matters."

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Victorian Liberals face financial crisis ahead of state election - The Age