The former independent MP Tony Windsor says any attempt to reform Australia’s political process must include the use of associated entities by major political parties.

Windor used an ABC interview to call for further reform of the democratic process, saying the Coalition and Labor used associated entities to hide the source of their political donations and the practice was eroding trust in the system.

“You’ve only got to look at recent events, you’ve only got to look at the way in which political donations are working now, how they can be hidden, how the lobbying process has in my view been corrupted over the years,” Windsor said on Monday.

“The use of what’s called associated entities to, in effect, ‘launder’ donations so that the general public, and the political process to a certain extent as well, doesn’t know where the money is coming from that donors give to political parties.



“Some wealthy person can go to a fundraiser for a particular party or a candidate, and there can be a chook raffle on, and some person can pay $50,000 in raffle tickets. Well the $50,000, the person who paid the $50,000, doesn’t show up in terms of a donation to a political party or a candidate. All it shows is there was a function held and the function raised $50,000 for a chook.

“There’s these sorts of things that lead to a distrust of the system.”

The political role of associated entities came under heavy scrutiny last year when focus turned on the Liberal party-owned software company, Parakeelia.

Last year it was revealed Liberal MPs and senators paid $2,550 from their taxpayer-funded office allowance to Liberal-owned Parakeelia Pty Ltd to provide software services.

Parakeelia remitted $1m back to the Liberal party over three years, including $500,000 in the one financial year, designated as “other receipts” in party accounts, making it the Liberal party’s second-largest source of income in 2014-15.

The revelations led Bill Shorten to demand answers from Malcolm Turnbull, claiming the set-up looked “like a Liberal party washing machine turning taxpayer dollars into Liberal party profits”.

But the treasurer, Scott Morrison, claimed Labor was engaged in a “desperate witch hunt” and the Coalition accused Labor of directly providing software services to its own MPs and senators as recently as 2014.

In September last year the auditor general, Grant Hehir, said after a limited review he found no evidence of contravention of electoral laws by Parakeelia.

On Monday Shorten agreed more needed to be done to improve people’s confidence in politics, including a serious discussion about whether Australia needed an independent commission against corruption.

“No discussion about electoral reform and rebuilding the confidence of Australians in the political process can take place without having an open and honest discussion about a federal Icac,” he said.

“Before the last election there was a Senate committee set up to examine the existing capacities of the anti-corruption regime in the Australian federal sphere of government.



“We need to get that Senate committee back going again. We need to demonstrate to Australians that we’re working for them, not just for ourselves.”

He said the political donations system also needed to be reformed.

“It is not right that we have a regime where, currently, anonymous donors can give $10,000 plus to political parties and we can’t find out their identity,” he said.

“It is not right that we still have foreign interests investing in Australian elections in the way they do. It is not right we don’t have real-time reporting.”

Windsor signed an open letter last week calling for an independent anti-corruption watchdog to investigate and expose corruption and serious misconduct at the federal level, including among federal parliamentarians.

Other signatories included former Western Australian premier Geoff Gallop, former New South Wales director of public prosecutions Nicholas Cowdery and former president of the Australian Senate Michael Beahan.