A bid to "take money out of politics" by the South Australian government with a ban on electoral donations could face legal challenges.
The Electoral (Accountability and Integrity) Amendment Bill 2024 would prohibit electoral donations and gifts to registered political parties, members of parliament and candidates.
Loans to registered political parties, MPs, groups, or candidates from anyone other than a financial institution would be prohibited.
Premier Peter Malinauskas conceded the reforms may face legal challenges.
"We know this is not easy," he said.
"But we are determined to deliver them, with this bill to be introduced in the parliament in the near future. We want money out of politics."
Kate Griffiths, from the Grattan Institute, welcomed the proposal but agreed the legislation may face legal challenges.
"I am a little bit concerned about how workable a full ban on all donations will be," she told the ABC.
"It's the sort of proposal that might face legal challenge - particularly in the High Court. And if it's not workable, what I really want to know is - what is their plan B?"
She said there could be concern from the High Court the law would stop people participating in the process of democracy.
"But that's often the reason against political donations - that it's not very democratic."
Under the reforms, newly registered political parties and unendorsed candidates would be entitled to donations of up to $2700 and a spending cap.
A person who circumvented the proposed laws could face a fine of up to $50,000 or up to 10 years in prison.
The bill proposes a restructure and mandatory application of the existing public funding model, including a reduction in the amount parties, MPs and candidates can spend.
It would increase public funding and use a system of partial advance payments, so funding entitlements are available to parties and candidates before an election campaign.
Australian Democracy Network campaigner Ray Yoshida cautiously welcomed the proposal and called for a parliamentary inquiry so the bill could be scrutinised.
He said it was unclear why the government was proposing additional public funding for parties, given it wanted to cap spending.
"It's likely this will strongly benefit the major parties above everyone else," he said.
"A major gap in the bill is how it doesn't propose any limits on spending by third parties."
Prime Minister Anthony Albanese noted Special Minister of State Don Farrell was undertaking an inquiry.
"We're looking at more transparency in political donations, that's something that Labor governments have always done," he said.
"And it's always been undermined by coalition governments who changed the level at which donations could be declared.
"We know that the extraordinary donations of people like Clive Palmer and others is something that is undermining of our democracy."
Clive Palmer's $117 million spend at the last election funded by donations from his company, Mineralogy, have been cited as an example of excessive influence.
Assistant Minister to the Prime Minister Patrick Gorman said the federal government wanted instant disclosure of donations of more than $1000.
