Spending caps, real-time disclosure requirements, and a lower donation threshold are among recommended reforms to reduce the election influence of donors with deep pockets.
The reforms are part of a push to increase transparency in federal elections and level the playing field, so the biggest spenders do not have an unfair advantage.
Election spending reached a record $440 million in 2022 and the top five individual donors contributed 70 per cent of all donations, analysis by the Centre for Public Integrity found.
A joint parliamentary committee has been investigating potential reforms to funding, donations and transparency.
Its interim report has made 15 recommendations, centred around political donations and spending, trust in the electoral system and Indigenous people's participation in elections.
Committee chair Kate Thwaites said Australia's democracy and electoral system was only as robust as the institutions and frameworks that supported them.
"The evidence we have heard has allowed the committee to develop clear goals for reform, to increase transparency in election donations and curb the potentially corrupting influence of big money," the Labor MP told parliament on Monday.
Recommendations included lowering the donation disclosure threshold from $15,200 to $1000 and introducing real-time disclosure requirements.
Political parties are currently required to disclose donations annually.
The committee also recommended introducing donation and spending caps for federal elections.
"Many of these reforms are not untested ideas or approaches," Ms Thwaites said.
"States and territories around Australia have grappled with the same challenges that the federal system must now respond to and they have provided models from which the Commonwealth can learn and adopt."
But coalition committee members rejected the interim recommendations and claimed they favoured "one particular political hue".
"In particular, we are concerned that the government will be proposing reforms that benefit them in the union movement and their business model," Liberal backbencher James Stevens said.
The dissenting report recommended the donation threshold be lowered to $8000, but supported a change to require monthly disclosure requirements.
Coalition MPs did not support donation or spending caps.
"We could see changes to our electoral system that are not about improving our democracy, but are about gerrymandering a financial benefit to the union movement and one particular party in our system," Mr Stevens said.
Independent MP Kate Chaney, whose successful campaign was largely funded by Climate 200, urged the committee to go further.
She will push for additional reforms to ban political donations from government contractors, expand the lobbyist register, and measures to address party and incumbent advantage.
"There's a strong appetite for reform around our election process," she said.
"Australians want to see a level playing field, transparency and truth, not big money affecting the outcomes of elections and policies."
