As John Pesutto faces bankruptcy, the Victorian Liberals struggle to unite

So much of politics is the art of compromise.
It's an art form the Victorian Liberals seem unwilling, or unable, to practice as the party once again rips itself apart over the fate of former leader John Pesutto.
Unless Mr Pesutto can stump up $2.3 million in the coming weeks, he'll be bankrupted and expelled from state parliament, after he was successfully sued for defamation by his colleague Moira Deeming.
On Friday, Mr Pesutto was served an official bankruptcy notice, giving him a 21-day deadline to come up with the money.
The Hawthorn MP is desperately trying to raise the money and secure a loan.
A proposal for the party to provide that loan still hasn't been landed and is proving a new lightning rod for division and anger.
But Mr Pesutto's very public demise is about much more than his defamation defeat — it is about control of the heart of the party.
At its core, this contest is about the ideological direction of the Victorian Liberals and is the culmination of years of internal infighting.
It's about whether the Liberals are still a "broad church", a term so often used to describe the party.
The ABC has spoken to more than a dozen Liberal MPs past and present as well as party figures, who wished to speak anonymously to frankly discuss the state of the party.
None, from either side of a widening factional divide, say the opposition is presenting itself as a credible alternative government, despite myriad challenges facing Victorians.
The state party room is characterised by personal animus, a focus on petty internal disputes and a desperation to control the party.
"It's all about promoting self above the party and the values it can bring to the state or country."
After more than a decade in opposition, some Liberals believe MPs are gripped by "institutional opposition", where the only mission goal is internal control.
In a sign of just how widespread the rancour is, MPs loyal to both Mr Pesutto and Ms Deeming described the other as a "terrorist" intent on damaging the party just to get their way.
Those supporting Ms Deeming think Mr Pesutto should take his medicine and leave parliament if he cannot pay the money. While those behind Mr Pesutto, including former Premier Jeff Kennett, say the party must support a man who was acting in his capacity as leader.
"Can you imagine the Labor Party allowing one of their own to be bankrupted,'' Mr Kennett recently wrote to the party's powerful administrative committee, who may decide on a loan for Mr Pesutto.
"There are only two questions you need to answer. What is in the best interests of the party? What must we do to give ourselves any chance of winning the state election?"
The saga started in early 2023.
Ms Pesutto tried to expel Ms Deeming, an outspoken first-term MP, over her attendance at an anti-trans-rights rally.
The event, entitled Let Women Speak and categorised by supporters as a women's rights event, was gatecrashed by neo-Nazis.
But Mr Pesutto's expulsion attempts backfired, and a court ultimately found he had defamed Ms Deeming on multiple occasions by conveying that she associated with neo-Nazis.
In suing Mr Pesutto, Ms Deeming threw out the rule book and disrupted the status quo.
"They want someone like me to quit,'' Ms Deeming said in a recent online interview with Club Grubbery, a website started to "provide a voice for all those adversely impacted by the COVID madness".
Both Ms Deeming and Mr Pesutto declined to be interviewed for this story.
Even with the emphatic court win — $315,000 in damages and $2.3 million in legal costs — Ms Deeming wants total victory.
She recently said she had "no idea" why Mr Pesutto remained a Liberal party member.
It's a view shared by loud voices outside the state party room, as well as some within.
"He tried to silence a woman — don't we already have a problem with women voters?" another said.
Mr Pesutto won Hawthorn by 1,500 votes at the 2022 election, returning to parliament after losing his once safe seat to Labor in 2018.
The threat now comes from teal independents — Hawthorn sits within the federal seat of Kooyong and the area is one of the strongest for federal MP Monique Ryan.
"We can't have a by-election, if we do, we'll get smashed, then we lose all momentum for 2026,'' a senior, despairing, Liberal said.
At the heart of this problem is a culture where the Victorian Liberal Party, and many who represent it, are more concerned with internal victories than representing the people.
Ms Deeming doesn't like the current direction of the party. She says it has "crashed into the rocks".
She wants the party to be more conservative and supports recruiting people that share her views into the party to steer its direction.
"We need to take back ownership of the party of the centre right,'' Ms Deeming told Club Grubbery.
"We have to get really mercenary about [it], we have to get completely brutal."
It's this sort of rhetoric that angers, and frightens, other Liberals — especially from the moderate side who have been railing against a "lurch for the right" for more than a decade.
There have been well-publicised efforts and allegations of branch stacking, with operatives targeting Mormon groups and other conservative Christian groups for Liberal membership.
In recent times, members of micro-conservative parties who have run for parliament have tried to join the Victorian Liberal Party.
Political experts, strategists and indeed some within the Liberal Party know this sort of conservative politics does not wash well with Victorian voters.
It is part of the reason Mr Pesutto tried to remove Ms Deeming from the party room. He wanted to assure Victorians his party would not get caught up in culture wars.
In a recent interview with the ABC, Mr Pesutto didn't back down.
"I was determined, and I remain so now, that I want the Liberal Party to be, and to be seen to be, a party that is broad-based, mainstream, inclusive and can appeal to all Victorians — no matter who you are, whether you own a home or you rent, regardless of how you identify,'' he said.
Moira Deeming entered parliament after the 2022 state election following a controversial preselection.
Ironically, she won support of moderates in the party as part of a factional war with the other local candidate, one not based on any sort of ideology.
As a local councillor, Ms Deeming had pushed back against transgender people accessing women's toilets and playing women's sport, an issue she does not retreat from.
When Scott Morrison was prime minister, his office intervened in Victoria to ensure that Ms Deeming was not preselected for a federal seat in 2022 because her views were too distracting from the federal campaign.
"Women and girls are suffering in Victoria because this government cannot or will not define what a female is, and as a result every woman and every girl in Victoria has lost the right to enjoy female-only sports, female-only change rooms and countless other female-only activities,'' Ms Deeming said in her first speech to parliament, naming the issue as a priority.
It angered several MPs who wanted the opposition to focus on toppling the Labor government.
So when Ms Deeming helped organise the Let Women Speak rally on the steps of state parliament, Mr Pesutto pounced.
Mr Pesutto had miscalculated how many people within the party shared Ms Deeming's concerns about trans rights.
It has cost him dearly.
Ms Deeming has found support far and wide within Liberal circles, including from high profile figures such as Peta Credlin, the former chief of staff to Prime Minister Tony Abbott turned Sky News host.
Hilton Grugeon, a successful property developer from NSW, also came to her aid and bankrolled her legal case. It's the multi-million dollar loan from him that is causing so much pain for the Victorian Liberals.
The saga has taken an incredible personal toll on both MPs. Ms Deeming has often spoken about the trauma it has caused her and her family.
Her supporters reluctantly admit that Mr Pesutto and his backers have done well to paint Mr Pesutto as the victim in this sorry episode.
But they remain unwavering in the direction the party must take.
Since 1982, the Liberal Party has won just two out of 12 elections from opposition, and was returned only once in 1996 under Jeff Kennett.
Neither Mr Kennett, who won in 1992, nor Ted Baillieu, who won in 2010, were social conservatives.
"The federal election showed that, despite the Liberals enjoying the significant advantage of the unpopular Allan Labor government, Victorians are deeply sceptical of the party's brand in this state,'' Monash University politics professor Paul Strangio said.
"The current saga will only reinforce the public's misgivings about the Liberals being a viable alternative governing party.''
Professor Strangio has been watching Victorian politics for decades, and holds grave fears for the Liberal party and what its dysfunction means for the state.
Without robust competition for office, there is a risk of declining standards of government.
"Victoria was the bedrock of the post-war Menzies-inspired Liberal Party. He insisted that the party's creed ought not to be in any way reactionary. Today that tradition has been effectively bankrupted," he said.
"The party in Victoria has dying roots, is riven by philosophical and personality-based animosities, is short on talent and politically inept."
Professor Strangio said there was a serious test for current Opposition Leader Brad Battin in this conflict — the new leader has remained tight-lipped on picking a side, provoking anger that he is not doing more to resolve the issue.
"He looks like a bystander; he looks like he is washing his hands of a situation that effectively amounts to a proxy war over the direction of his party. It's not tenable for a leader to remain publicly mute in these circumstances,'' Professor Strangio said.
"It raises the issue of what kind of premier he would make. How much authority would he actually wield over his party? Who is really in control?"
Professor Strangio said the fascination with culture wars and the promotion of deeply socially conservative policies is a fundamental miscalculation by some Liberals.
It puts them out of alignment with the sensibility of the majority of Victorians. Equally misguided is the idea that these types of concerns and attitudes resonate with outer suburban voters.
"'These are demographically complex, socially and culturally-diverse communities. Aggressive conservatism doesn't speak to them, if anything, it alienates them," he said.
Professor Strangio said with its record of chronic underperformance, there was a serious case for some form of federal intervention in the Victorian Liberal Party.
But those in the party say an intervention is too difficult and that it would not solve the biggest issue — the personal hostility between state MPs.
Finding a compromise is proving difficult.
A GoFundMe for Mr Pesutto has raised $212,562 and has now been closed as he works to secure a loan to cover the costs. Other major donations are understood to have been committed privately.
A plan has been cooked up for the Liberal party or one of its fundraising arms to provide a loan to him to cover the costs.
At the time of writing, a proposal has not been put to the administrative committee who will decide.
Mr Battin is a member of the panel along with elected volunteers from the membership. He's now understood to be supportive of some rescue package. Anything to avoid a messy by-election that could present questions for his leadership.
There has been some reticence from the party to get involved. When Mr Pesutto first moved on Ms Deeming, the admin wing of the party was essentially told to butt out, as it was a matter for the party room.
It's why there's some reluctance, and in some members, complete resistance to helping out Mr Pesutto.
"He was pig-headed then, and now he wants our help,'' one senior figure said.
The personal animosity is party-wide, not just confined to the MPs.
Mr Battin did not create the mess but has to deal with it. It's distracting him from his work of trying to end 12 years in the political wilderness for the Victorian opposition.
He wants it resolved and is quietly trying to do so, although publicly he is staying tight-lipped.
Even if he can resolve this matter, the challenge remains to try and unify a fractured party room.
If Mr Pesutto is bailed out by the party, it will only incense Ms Deeming and her group. But if Mr Pesutto is bankrupted, the party will be just as angry.
And there is Ms Deeming's upper house preselection. Among the MPs and party figures canvassed for this story was a view that Ms Deeming would lose preselection for next year's election.
If that occurs, you can bet the party infighting will ramp up again.
And that will be even closer to polling day.

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