The bill was defeated by two votes after Labor, the Greens and the Legalise Cannabis Party all opposed the change.
The move devastated the family and friends of Denyer’s victims.
In 1993, Denyer, now 51, was sentenced to three life sentences after pleading guilty to the murders of Russell, Elizabeth Stevens, 18, and 22-year-old mother Deborah Fream.
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“Being in the session just looking down and seeing the people who are voting no. It’s pretty upsetting,” Karen, Russell’s friend, said.
The changes would be specifically targeted to those found guilty of murder or multiple murders, along with other serious offending.
There has been no timeline put forward for when the changes could come into effect.