Former Liberal Party treasurer Michael Yabsley is calling for a "radical" overhaul of Australia's political donations and election funding regime, including a cap of $500 a person per election cycle to each level of government.
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Mr Yabsley – who established Prime Minister Malcolm Turnbull's former fundraising body the Wentworth Forum – also wants the abolition of public funding of political parties and a ban on companies, unions and associations making donations, restricting them to individuals on the electoral roll.
Breaches of the rules should be subject to penalties including jail terms, and the system would need to be adopted by all states and territories via the Council of Australian Governments, he argues.
"By doing something quite major and quite radical you can have a very, very profound effect on the way political parties operate," Mr Yabsley told Fairfax Media.
"It would force them to basically go back to what they were meant to be in the first place – that is, grass-roots organisations, mass-membership organisations."
The issue of political donations has again emerged due to the furore over Labor Senator Sam Dastyari's disclosure that a company with links to the Chinese government covered a $1670 travel debt.
Mr Yabsley said parties had become "weakened", as evidenced by a decline in membership and increasing factionalism. A root cause was the political fundraising system and taxpayer funding.
At present there are no caps on the size of donations, no expenditure limits, and only donations over $13,200 need to be publicly disclosed.
Parties and candidates earn taxpayer funding based on the number of votes they receive at an election.
According to the Australian Electoral Commission, parties and candidates were paid $62 million following the 2016 federal election.
Mr Yabsley argued that if 2 per cent – or 340,000 – of the 17 million eligible Australian voters donated an average of $200 each to parties and candidates, it would raise $68 million.
A $500 cap also "passes the smell test", he said. "I don't think anyone in their wildest dreams would assert that someone had been influenced by a $500 donation."
He "would be amazed if [Mr Turnbull] were not totally on board" with the proposals to cap donations and restrict them to individuals, subject to discussion about the size of the cap.
However, banning companies, unions and associations from donating is likely to fall foul of the High Court.
A similar ban in state-based laws introduced to NSW by former premier Barry O'Farrell was struck down by the High Court as an unacceptable restriction on political speech following a challenge by Unions NSW.
Mr Yabsley acknowledged this but said "if there's a will, there's a way".
"If across the political spectrum and around the Commonwealth there is a uniform message, that will help enormously in terms of finding the right legal approach," he said.
