The state's upper house on Thursday restarted debate of the Sex Work Decriminalisation Act 2021, which will repeal offences and criminal penalties for consensual sex work.
Currently, sex work is only lawful if it abides by the conditions set out in the Sex Work Act 1994, which makes street-based sex work unlawful.
But the bill partially abolishes street-based sex work offences and associated public health offences, while facilitating regulation of the industry through existing agencies.
It also strengthens anti-discrimination protections for sex workers, making it unlawful to deny them accommodation.
New South Wales and the Northern Territory decriminalised sex work in 1995 and 2019 respectively, with Victoria drawing on the reforms and adding some of their own.
Reason Party leader Fiona Patten, a former sex worker who led a review into decriminalising the industry, said she and others had been fighting for reforms for 40 years.
"This bill is for everyone who has been working under these draconian laws that have not protected us," she said during the upper house debate.
"They haven't protected the people in the industry: the sex workers, the brothel owners, the managers, the receptionist."
Sex Work Law Reform Victoria spokesperson Matthew Roberts described Thursday's debate as "a momentous day for sex workers".
"The number one benefit for sex workers is we no longer will have to fear the police if something goes wrong at work," he told reporters.
However, advocates hope the bill is further strengthened to ensure all sex workers are protected under the laws.
"The bill does retain some criminalisation for street-based sex workers, which is really a missed opportunity for Victoria today, if the government doesn't go all the way and ensure all sex workers are included in this," Vixen Collective acting manager Dylan O'Hara said.
Animal Justice Party MP Andy Meddick will move several amendments, including one to cover street workers and another to expunge sex work convictions from the historical crimes register.
His amendments as well as others from the Justice Party and independent MP Catherine Cumming are not expected to pass, although the government has committed to destroy register records in line with existing legislation.
Opposition Leader Matthew Guy suggested that if the bill passes it will "open up every suburban street, every suburban house to be ... a brothel", but Mr Meddick dismissed that as "typical conservative rubbish".
Under the proposed laws, it would become an offence to carry out sex work in public areas such as schools, care services and places of worship between 6am and 7pm and on holidays.
However, Scarlet Alliance chief executive Jules Kim said the intent of decriminalisation was not to introduce specific laws for the industry.
"There are already these frameworks in place for other businesses, and it's about treating sex industry businesses as a business," she said.
Should the bill pass, as expected, the first reforms are scheduled to come into effect on May 10 and the rest on December 1 of 2023, including repealing the Sex Work Act in full.
A final vote is expected later on Thursday.
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