As the VEC explains on its website:
To be eligible for registration, a political party must have at least 500 members who are Victorian electors, are members in accordance with the rules of the party and are not members of another registered political party or of a party applying for registration.
According to one source, the cut off time for the audit is sometime in June, but the party is well short of the 500 required and so is unlikely to make the grade. Democrats internal structures are notorious for being highly bureaucratic and labour-intensive, with various committees and sub-committees used to govern the party. Inevitably, with a drop off in membership, these committees are struggling to function effectively.
Another source indicated that lapsed and resigned members are being approached to rejoin the party in time for the audit. With no physical office in the state to manage a last-gasp recruitment drive, it seems likely to be in vain.
The potential deregistration of the party comes at an awkward time, with a state election scheduled for November 25. Without registration, the party would be unable to run candidates under the party banner and would instead be forced to run them as independents. It's rather ironic that after years and years of pushing for proportional representation in the Victorian upper house, the party is deregistered just months before the first election conducted under PR.
Still, deregistered or not, the party's candidates are unlikely to be competitive in November. Five years ago, a quota of 16.6% would have seemed achievable in several regions in the state and intense preselection battles would be expected. Instead, it's a very different battle being fought.
This isn't the first time the party has faced deregistration: In January, the Tasmanian Electoral Commission deregistered the party, making it ineligable to run in the March 18 election. It looks like Tasmanians might finally be trend-setters.
Anyone who wants to stop the rot and is feeling particularly charitable can head here to sign up as a member. Whilst I applaud you, I won't be joining you.
UPDATE, 21/2 5:45pm: Another source has got in touch and said with confidence that the party will pass the 2006 VEC audit, as it did the 2005 audit. Perhaps so. Or perhaps not.