In a scathing report released last year,Ombudsman Deborah Glass found Labor broke parliamentary rules by using $388,000 of public funds to pay campaign staff working on the 2014 election campaign.

Labor has since repaid the money.

Ms Glass reported that Labor had created an"artifice"by paying casual electorate officers to work as part-time campaigners instead of carrying out electorate duties for MPs.

The"red shirts"affair involved a"60:40 split"in which some casual electorate officers were paid partly by the Labor Party for their field campaign work with the remainder of their pay coming from the taxpayer.

In total,23 current and former MPs signed off on the payments.

Police decided against laying charges against the MPs even though they refused to be interviewed.

The opposition had sought to inflict maximum political pain on Labor with the red shirts scandal but it had little effect at the ballot box,with the state government winning the 2018 campaign with a landslide victory.

On Tuesday Opposition Leader Michael O'Brien said Victorians would be"absolutely disgusted by this outcome". He said it was extraordinary there were no charges.

"It’s no wonder politicians are held in such low esteem when the Labor Party can rort taxpayers,refuse to co-operate with police and they walk away with smiles on their faces,"he said."This is a very sad day for democracy in Victoria,it’s a very sad day for the justice system in Victoria as well."