Victoria's Liberals saved John Pesutto from bankruptcy. But can they save themselves from all-out war?

The Guardian

20-06-2025

As his party room imploded last year, plagued by infighting and a looming defamation trial, John Pesutto placed a blank sheet of butcher's paper in front of his colleagues. In the dying days of his tenure as opposition leader, Pesutto asked MPs what should have been simple questions to answer: What are our values? What do we stand for?
His attempt to unify a deeply divided party failed spectacularly.
Almost a year later, there is no consensus answer to those questions. Factional grievances have intensified, with MPs now warning of 'all-out war' and outlining 'completely brutal' schemes to gain control of the party.
A bitter rift between Pesutto and fellow Liberal Moira Deeming, who successfully sued him for defamation after he falsely implied she sympathised with neo-Nazis, has left the party room, its organisational wing and dwindling membership divided.
Many senior Liberals are despondent. There have been, according to some, more than two years of 'shit fights', 'constant stupidity and self-harm' that have allowed 'an inept Labor government' to evade scrutiny, despite the best efforts of a few opposition MPs.
Some hope the party's decision to loan Pesutto $1.5m so he can pay Deeming's legal fees, avoiding bankruptcy, may lead to a truce. But others suggest animosity runs deep and the party will struggle to heal while both remain in the party room.
On Thursday night, members of the party's administrative committee handed over their phones to an official before voting in a secret ballot.
Pesutto, who had only a matter of days to raise $2.3m, outlined a last-minute loan deal using his superannuation as security, repayable with a commercial interest rate.
This was, for some on the committee, the first time they had been briefed on the proposal despite reading about it in the media for several weeks.
When Deeming's lawyers filed a bankruptcy notice against Pesutto, the Victorian Liberal party president, Philip Davis, began to canvass the views of his colleagues. Those strongly opposed were kept in the dark until the secret ballot.
'My position is well known,' said one admin member contacted by Davis. 'No, no, no, no, how many times can I say no.'
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Several members of the committee were furious at the prospect of party money being spent on an internal dispute, rather than on campaigning to beat Labor.
The proposal, first reported by Guardian Australia, was pushed by Pesutto's supporters as a way to avoid an expensive byelection in his seat of Hawthorn and to ensure, in their view, that moderate MPs were not pushed out of the party.
Even before the meeting was called, Pesutto's supporters put pressure on the party leader, Brad Battin, to endorse the loan and give it momentum.
'We're already in a shit fight, but if Brad doesn't support a loan, it will lead to all-out war,' threatened one Liberal MP who declined to be named so they could speak freely.
Another MP said Battin 'should not be the one to stand in the way of a deal that has support' from the party room and a majority of the committee.
This did not go down well with some on the committee.
'All this media stuff is emotional blackmail,' said one committee member who declined to be named given the tense nature of discussions.
When the deal was ultimately approved, Davis emailed party members to claim it would 'settle the matter once and for all' and allow the party to move on without further distraction.
Battin, who endorsed the motion, said it would 'avoid further financial and reputational damage' and also declared the matter resolved, with the party now 'united, disciplined and determined' to focus on the future.
Not everyone agrees.
Before the meeting, Deeming said she was dismayed a loan deal was even being considered. She said it ran 'against the grain of everything we believe as Liberals' and claimed it would be a 'direct rebuke' of the federal court judgment.
'I assume that they will continue with their quest to try to annihilate me,' Deeming said in reference to some of her party room colleagues.
Pesutto's supporters remain bitter the party only intervened at the final hour after relentless pressure to do, in their view, the right thing.
Others won't forget that Deeming's legal team threatened to chase money from Pesutto's supporters should he not be able to pay. Correspondence named former Liberal premiers Jeff Kennett, Denis Napthine and Ted Baillieu, and Victorian MPs David Southwick and Georgie Crozier as people who may be held liable.
'How can those two MPs sit in the party room with someone who was willing to do that and trust her?' said one Liberal source. 'They will always be looking over their shoulder.'
Deeming did not respond to that comment, but a source close to her denied any allegation that she was untrustworthy, dishonest or a bully.
Her financial backer, the New South Wales property developer Hilton Grugeon, who is owed $2.3m, said he was not bothered by the damage this would have unleashed on the party.
'I supported [the Liberals] when they were unsupportable,' Grugeon said. 'But I cannot care what happens to a party that wants to look the other way while their leader beats up on a woman who did nothing wrong.'
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Shortly before lodging defamation proceedings against Pesutto, Deeming outlined a vision of the Liberal party that is antithetical to some of her colleagues.
In late May, Deeming told the podcast Club Grubbery praised the rightwing South Australian senator Alex Antic's ability to control his state branch and said 'nobody can get rid of him'.
'We need to take back ownership of the party of the centre right,' Deeming said, before speaking to its rank-and-file. 'This is your party. You own it, it's yours. Do not cede this ground.'
'We've really got to get really mercenary about it,' said Deeming, who raised the prospect of working with Antic and Liberal senator Jacinta Nampijinpa Price to recruit more like-minded members. 'We've got to get completely brutal.'
But many moderates, including former federal vice-president Tom Harley, warn any push to become more conservative would make the party electorally irrelevant. Harley is scathing of the party's internal divisions, describing them as being in a state of 'constant stupidity and self-harm'.
'The Liberal party in Victoria is stuck talking to a small section of itself in the corner,' Harley said. 'We must focus on the issues that matter to people, not who goes to which lavatory.'
Others, including the federal Liberal MP Jason Wood, believe factionalism is tearing the state party apart, rather than being a disagreement about values.
'Hopefully all this sorts itself and everyone takes a chill pill but, sadly, people are putting their factions first,' Wood said.
Many Victorian Liberals deny they have factions equivalent to the rigid blocs that divide power in the Labor party. But they don't dispute that their party is bitterly divided.
On Friday morning, Pesutto said he was 'grateful and humbled' by the party's decision to save him from bankruptcy and his colleagues would 'focus all our energy on winning the next state election'.
But some didn't get the memo. Within hours of the deal being approved, one unnamed conservative MP told the Herald Sun that Battin's leadership was in question and 'the conservative block will want a 'please explain''.
One senior Liberal operative not authorised to speak publicly believes the party's leadership team allowed the saga to remain unresolved for too long. They argue the damage will now be difficult to contain, despite a resolution being reached.
'If there had been good leadership of the party, the John and Moira saga might have been dealt with very differently and much quicker,' the source said. 'But no one stood up. They all thought, 'oh this will be fine, it will be buried'. But it wasn't buried. And that's how we've got to this stage.'
On Thursday night, just hours after the loan was secured, some members of Deeming's branch urged each other to draw a line under the scandal and focus attention on Labor.
'Let's move on now,' said one member in a WhatsApp message leaked to Guardian Australia. 'We have got an election to win.'
One of Deeming's closest allies, her husband, Andrew, replied saying, 'sadly it's not that easy to just move on'.
'Personally, my kids have nightmares because of this. Moira still gets abusive messages because of this. Politically, the party just reinforced all its negative stereotypes that they are anti-woman, that they are an old boys club,' Andrew Deeming said.
'How can we convince the public that the Liberal party cares about them when the Liberal party has given effective support to an MP who defamed his own colleague?'
The text messages show Moira Deeming is bitterly disappointed by the organisational wing's conduct.
'They literally sent a bulk email to brag about earning interest off ruining my life and destroying my family,' she wrote. 'Disgusting.'
Deeming confirmed she sent the message and told Guardian Australia it explained her motivation for uploading an image on social media that said: 'They financially profited off her trauma. They told the world they did her a favour. This is what institutional abuse looks like.'
'Clearly, it is undeniable that there are deep wounds,' Deeming said. 'There have been wrongs done. The things I needed were full exoneration and my loan repaid. I now have those two things.'
Pesutto may have been saved from bankruptcy, but the Victorian Liberals' internal battles are far from over.