Published October 15, 2015. Sean Nicholls & Nicole Hasham

Greens MP Jamie Parker said the legislation had "positive elements" but donation caps needed to be further reduced, there needed to be continuous disclosure of donations and the overall expenditure on campaigns should be cut.

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Under the proposed laws, penalties for breaking election funding laws will be doubled from $22,000 and two years in jail to $44,000 and four years' jail.

The time frame within which prosecutions can be launched - the statute of limitations - will be extended from three years to 10 years.

Elsewhere, the caps on the size of donations that may be made to political parties and candidates will be wound back to 2011 levels. Current caps of $5700 to parties and $2400 to candidates and individuals will be reduced to $5000 and $2000.

The cap on the amount of money parties can spend on advertising will be reduced to what they were in 2011. This means spending will be capped at $9.3 million instead of $10.3 million.

In a move that will be read as targeting Labor-affiliated unions, spending by registered third party campaigners will be slashed to $250,000 each during an election period, down from current levels of more than $1 million each. Non-registered third party campaign spending is cut from $525,000 to $125,000.

A new model for taxpayer-funding of elections will be introduced, based on the number of votes a party receives at the election, up to the spending cap.

Parties will be eligible to receive up to $4 for each vote they receive for Legislative Assembly candidates and $3 per vote in the Legislative Council.

Independents in the Legislative Assembly will receive $4 per vote while for independents in the Legislative Council the figure will be $4.50.

There will also be new rules for disclosure of political donations before the 2015 state election.

Donations received between July 1 this year and February 1 next year will have to be disclosed within one week of the end of the period. The details will be made public in February, four weeks before the March 28 polling day.

The questions of making the new penalties retrospective sparked heated debate during a party room meeting on Tuesday.

Former premier Barry O'Farrell argued the new laws should be made retrospective to ensure they could apply to those accused of wrongdoing at ICAC.

Former attorney-general Greg Smith argued against the move, suggested it would set an unwelcome precedent.

The chair of a panel of experts examining election funding changes, Kerry Schott, has advised Mr Baird against retrospectivity.

But Opposition Leader John Robertson said the lack of retrospectivity offered those accused of funding breaches before the 2011 election a "get out of jail free card" and that Labor would seek to amend the bill.

Greens MP Jamie Parker said the legislation had "positive elements" but donation caps needed to be further reduced, there needed to be continuous disclosure of donations and the overall expenditure on campaigns should be cut.

Independent MP for Sydney Alex Greenwich said the bill "does not create a fairer system for NSW, it creates a better system for the Liberal National Party".

Unions NSW secretary Mark Lennon said the changes to third party expenditure laws were "a brazen attempt to silence the voice of working people".

But Mr Baird said the package of reforms "sends the strongest possible message to all current and prospective political candidates".

Main points

• Dodging donations laws punishable by up to 10 years in jail
• Time frame for prosecutions extended to 10 years
• Parties forced to make donations disclosures before 2015 election
• Union spending on campaigns slashed
• Donations caps reduced
• Taxpayer funding for parties based on votes received

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