Labor has introduced into Parliament a suite of measures to clean up the hazy world of political donations.

Key points: Bill Shorten says "too many Australians" feel as if political system is broken

Bill Shorten says "too many Australians" feel as if political system is broken Liberal Senator says proposal "is a stunt" and has technical issues

Liberal Senator says proposal "is a stunt" and has technical issues Labor criticised for not waiting for Joint Standing Committee report to be handed down

Opposition Leader Bill Shorten said his legislation, which includes banning foreign donations and reducing the disclosure limit to $1,000, will help fix the perception that politics is broken.

"Australians are telling us that our political system, the quality of our democracy, that all of us here, we need to lift our game," he said.

Speaking in the Parliament, Mr Shorten said political donations were shaking the public's faith in the political system.

"Too many Australians feel as if our system is broken and that what happens here is cut off from their lives," he said.

"As long as this perception holds, we will continue to see the rise of fringe movements, false prophets who convert their anti-Canberra, anti-politics message into seats in Parliament for them."

Labor has introduced a suite of measures into Parliament, including reducing the donation disclosure limit from the current level of $13,200 to $1,000, banning all foreign donations and anonymous donations above $50, and to bring in real-time disclosures to avoid situations where it can sometimes be more than a year before it is disclosed who made a donation.

"Disclosure should be in-built, automatic and instinctive, and it should be as close to real-time as possible," Mr Shorten said.

"This means as close to instantaneous as the technology and accounting allows. This has to be the next step."

Donation reform proposal 'a stunt', Scott Ryan says

Minister of State Scott Ryan, who is responsible for electoral reform, said the Opposition's proposal was a stunt, claiming Labor did not reform the system when it was in Government.

The legislation aims to: Reduce the donation disclosure limit from $13,200 to $1,000

Reduce the donation disclosure limit from $13,200 to $1,000 Ban foreign donations

Ban foreign donations Ban "donation splitting" where donations are spread between different branches of political parties and associated entities

Ban "donation splitting" where donations are spread between different branches of political parties and associated entities Ban anonymous donations above $50

Ban anonymous donations above $50 Link public funding to campaign expenditure

Link public funding to campaign expenditure Introduce new offences and increased penalties for breaking donation rules

"We need to deal with this seriously, as the Prime Minister has said, and we do that by dealing with it in a thoughtful and comprehensive fashion," he said.

"This [Labor's plan] is essentially the same bill as they introduced before and when they were in Government they didn't progress it into the Senate, they didn't bring it to a vote."

Senator Ryan argued there were technical issues with Labor's proposal.

"The issue of foreign donations is quite important, but it's important that we deal with it comprehensively," he said.

"We need to look at the issue of foreign donations to third parties, there's no point in having a restriction on foreign donations just to political parties so they can go to groups like GetUp.

"We also need to clarify what we mean by a foreign donation.

"Labor's bill would seemingly prevent an Australian citizen on the electoral roll who resided overseas making a donation from their account. I think there are constitutional risks with that."

Senator Ryan said he would be waiting for the report from the Joint Standing Committee on Electoral Matters to be handed down next month before he brings forward any proposals to donation reform.

"We've got the most comprehensive inquiry into electoral funding and donations going on at the moment" he said.

"In the first week of March it will issue a public report on the issue of foreign donations, and following that it will also issue a comprehensive report on funding and donations comprehensively."

Political donations expert questions Labor reforms

Adjunct Professor Colleen Lewis, an expert in political donations from the National Centre for Australian Studies at Monash University, was also critical of Labor not waiting for the Joint Standing Committee's report on electoral matters to be handed down before introducing legislation.

Loading

"I don't understand why the Labor Party would be actually saying 'Well, what the Committee is going to say is not worth hearing because we've already decided what should be done'," she said.

"I'm a bit concerned that that doesn't show respect to the Parliamentary Committee which has Labor Party members on it.

"So look, the only conclusion I can draw is that they see it as being to their political advantage to do so."

Dr Lewis, who is appearing this week before the Joint Standing Committee on electoral matters, said Labor's proposal has one big hole in it.

"I wonder why there is nothing there on a cap on donations from all sources?" she said.

"If you actually believe that democracy is about equality, and I'm sure the Labor Party does, then you would expect the cap to be put on donations that allowed the average person to be put in a position to also have a political voice by donating to whichever party they choose.

"From what I can see there is not that cap, and I think that is crucial if we're going to stop this arms race that is going on at campaigns."

Labor's bill will be debated at a later date.