The Victorian government's bid to stop an investigation into alleged misuse of Labor MPs' taxpayer-funded allowances during the 2014 election campaign has been tossed out by the Court of Appeal.
Ombudsman Deborah Glass asked the Supreme Court to clarify whether her office had the power to investigate alleged rorts following an Legislative Council request in November last year.
The referral was prompted by a parliamentary services report which found the ALP's use of electorate office funds to pay 26 staff for two days a week of campaigning in 2014 "would not pass the pub test" among voters.
The Supreme Court ruled the ombudsman could investigate but the government launched an appeal to "protect the architecture of Victoria's integrity regime".
The government argued the probe would impact Ms Glass' resources to examine other matters.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
"If the decision stands unchallenged there would appear to be no impediment to one house of parliament referring members of the other house to the ombudsman with regard to any matter whatsoever," Acting Attorney-General Steve Herbert said in September.
But the Court of Appeal on Friday dismissed the government challenge.
It ruled the Supreme Court judge hadn't erred in his analysis and the matter fell within the ombudsman's jurisdiction.
A government spokesman said the judgement would be considered before any comment was made.
However, senior minister Lisa Neville on Friday maintained Labor had not broken any rules.
"All along the way we've made it very clear that this has complied with the rules in terms of the electoral office issue," she told reporters after the judgement.
"If there is an investigation through the ombudsman I'm sure those issues will be addressed through that process."
Opposition legal affairs spokesman John Pesutto condemned the government for trying to obstruct an independent investigation.
"You have very serious allegations of potentially criminal wrongdoing and the government has been throwing everything at the ombudsman to try and stop her," he told reporters on Friday.
"You have to ask why would you do that? If you had something to hide you would do that."
The opposition estimates the court action cost taxpayers $1.5 million.
Greens leader Greg Barber on Friday called on the government to "get out of the road and let the ombudsman do her work".
