John Madigan and Nick Xenophon are backing a Senate inquiry into political donations. Photo: Alex Ellinghausen
The issue has been in the spotlight after Fairfax Media's revelations that Clubs NSW donated $20,000 to the fundraising body supporting federal Liberal MP Kevin Andrews. At the time he was responsible for writing the Coalition's policy on poker machine reform.
Victorian senator John Madigan said major donors always expected a return on their investment and the system left politicians exposed.
"There is potential here for corruption of the democratic process," he said.
"Recent media reports that Clubs NSW donated large sums to Kevin Andrews while he was in the process of formulating the Coalition's poker machines policy highlight flaws in the current system."
Senator Madigan said donations should be disclosed before elections and individual and total donations should be capped.
"Politicians should not be for sale, yet this is exactly what the current system encourages," he said.
He told Fairfax Media he would begin lobbying his crossbench colleagues for an inquiry before Parliament's resumption on August 10.
Fellow crossbench senator Nick Xenophon said he would support an inquiry and hoped it would dovetail a bill he plans to introduce aimed at increasing transparency.
"It's long overdue. There needs to be fundamental reform," said Senator Xenophon, speaking from Thailand.
Senator Xenophon said it was unacceptable that political donations didn't have to be declared for up to 20 months after they were made, which could be after an election had taken place.
"You can't stop people spending money for a candidate and a cause, but what we can do is have full and more timely disclosure of where the money's coming from," he said.
Lower house independent MP Andrew Wilkie lashed out at the major parties on the receiving end of the gambling industry's "grubby money" and said the system left Australia looking little better than corrupt developing nations.
Mr Wilkie said modest attempts to curb the use of poker machines were quickly reversed after the Coalition's election to power, with the support of Labor, which he attributed to the industry's donations to both sides.
"We in Australia rail at wads of cash in brown paper bags in other countries but our political donations system is little better," he told the ABC.
Senator Madigan would need a majority in the Senate to establish an inquiry into political donations.
The shadow special minister of state Gary Gray wants to lower the threshold for a political donation to be declared from $13,000 to $1000 and supports faster disclosure.
Treasurer Joe Hockey has warned that any reduction in private funding of election campaigning could result in the public paying for political parties' election campaigns.