Vic watchdog, government head to court

Victoria's independent watchdog is closer to finding out if it has the power to investigate allegations Labor MPs rorted taxpayer-funded allowances at the last state election.

Lawyers for the state ombudsman's office, the government and the upper house are due to argue their cases before the Supreme Court in May, after the parties agreed to a hearing date.

The court was asked in February to rule on whether the ombudsman can investigate Labor's use of electoral staff to run its state election campaign.

This was prompted by an internal report which found Labor's use of electorate office funds to pay 26 staff for two days a week of campaigning at the 2014 state election would not "pass the pub test" among voters.

The upper house voted in November to ask Deborah Glass' office to investigate whether Labor had breached the rules.

Special Minister of State Gavin Jennings then wrote to Ms Glass to say her office didn't have the power to do so.

Ms Glass thought she did.

She asked the Supreme Court to clarify whether the investigation is within the ombudsman's jurisdiction to settle the "genuine controversy" about her powers of office.

The upper house has joined the ombudsman's case, and so has the government despite previously saying that Labor MPs had no intention of intervening.

Attorney-General Martin Pakula said it was an important test case about the relationship between the ombudsman and parliament, therefore the government wants to make sure the court hears all relevant parties.

Premier Daniel Andrews has repeatedly denied any election wrongdoing by Labor.