Victoria's Premier Daniel Andrews says cabinet will immediately start work on overhauling the system that allowed two of his MPs to claim more than $140,000 to live by the sea instead of in their electorates.
Speaker Telmo Languiller and Deputy Speaker Don Nardella both sensationally resigned on Saturday after it was revealed they claimed a second residence allowance to live far away from the Melbourne CBD and their electorates.
Speaking in Abbotsford on Sunday, MrAndrews said he spoke to both MPs on Saturday and "they were left in no doubt about how disappointed I was and that I required them to do the right thing and resign from the positions they held".
"Is it any wonder there is a cynicism, that there is a scepticism, that there is a distrust of so many members of parliament when we see behaviour, appalling behaviour, just like this?" Mr Andrews said.
However, when asked if Mr Nardella should pay back the allowance, Mr Andrews said: "That is a fair question, the most important thing though I think is to let the audit committee deal with these matters."
Former Speaker Mr Languiller claimed more than $37,000 in second residence allowances while living in Queenscliff on the Bellarine Peninsula instead of in his western suburbs electorate of Tarneit for most of last year.
His deputy claimed at least $100,000 in allowances for living an hour from his Melton electorate in Ocean Grove, also on the Bellarine, since April 2014.
Only Mr Languiller has committed to repay the allowance.
Mr Andrews says cabinet will start work on reforming the rules on Monday.
"I think it is very clear to me, and I think it's clear to the vast, vast majority of decent Victorians, that second residence allowance is provided for those who represent a regional seat, and if you don't represent a regional seat, you will no longer be eligible to be able to claim that allowance," he said.
Special Minister of State Gavin Jennings has been directed to look at allowances more broadly to see if any other could be claimed in a similar fashion and how other jurisdictions monitor perk claims.
It is the third entitlements scandal to hit the Andrews Labor government.
The government is going to the High Court to stop an investigation into allegations MPs misused parliamentary allowances during the 2014 election campaign and last year Steve Herbert resigned as corrections minister after using his taxpayer-funded driver to chauffeur his two dogs.
"It has been Labor MPs that have been systematically rorting the system for years," Opposition leader Matthew Guy told reporters on Sunday.
"(Don Nardella) owes the Victorian taxpayer more than $100,000 in rorted money and Daniel Andrews must make him pay that back; if he doesn't, Daniel Andrews is then complicit in this rorting."
Replacements for Mr Languiller and Mr Nardella will be decided when caucus meets ahead of parliament resuming in March.
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