We don't need full public funding of elections to stop the kind of corruption alleged in ICAC, we need tougher penalties for those who flout the very clear donation laws, writes Anne Twomey.

Should we reward or punish criminals for breaking the law? That is essentially the question that is being debated in relation to the full public funding of elections in New South Wales.

The reporting of the many allegations being made in the ICAC has given the false impression that property developers, politicians and parties have simply managed to avoid the application of NSW election funding laws by behaving in particular ways.

It is then suggested that the law is full of loopholes and ineffective, so we should move to a system of full public funding for elections to avoid the problems of corruption and undue influence.

Both premises are false.

It is not a case of the law being evaded. The law is sufficiently comprehensive to prohibit the various evasive strategies being exposed at the ICAC. Secondly, it is not the case that full public funding of election campaigns will necessarily avoid the problem. It will most likely simply shift any influence peddling and corruption so that it is directed towards the personal benefit of Members of Parliament while simultaneously rewarding parties for unlawful behaviour at the expense of the taxpayer.

What is remarkable about the ICAC's hearings is that so many people seem to have thought that it was so easy to avoid the application of the NSW election funding laws. Perhaps they never read them. Perhaps they thought that those who wrote the laws were stupid. Perhaps they just didn't care.

So here is a primer for those who would like to avoid the attention of the ICAC.

Can a property developer avoid the law by having its employees donate on its behalf? No. It is unlawful for a prohibited donor, such as a property developer, to solicit another person to make a political donation. It is also unlawful for a person (including an employee) to make a donation on behalf of a prohibited donor and it is unlawful for the party or candidate to accept the donation.

Can a legal donor who has reached the limit of the donations he or she can make in a year instead get employees who are overseas backpackers to make the donations to a political party? No. First, it is still a political donation if person gives money to others with the intent that they then use it to make political donations. It would therefore be unlawful if the amount exceeded the first donor's cap. Secondly, the only individuals who can make political donations are those who are on an Australian electoral roll. Acceptance of donations from overseas backpackers is unlawful.

Can a person legally make a $10,000 donation to a candidate in a NSW election? No, as it breaches the cap on donations. It is both unlawful to accept such a donation and unlawful to make it if the donor has the "intention of causing the donation to be accepted in contravention" of the cap on donations.

Can a prohibited donor instead pay someone else to provide media services to a candidate or party? No. It is unlawful to make or accept indirect campaign contributions (other than volunteer labour) greater than $1000 in value.

Can political donations be used to provide a personal income to a candidate while he or she campaigns on a full-time basis? No. It is unlawful for political donations to be used otherwise than for the objects and activities of the party and in particular it is unlawful for them to be put to the use of an individual in a private capacity.

Can a candidate or Member of Parliament receive a donation and "wash" it through the account of another organisation? No. It is unlawful for a candidate or Member of Parliament to accept political donations, unless the donation is made to the official agent of the candidate or Member and deposited in the official campaign account if it is to be used for electoral expenditure.

Can a prohibited donor, such as a property developer, instead donate through an organisation connected with a political party and get it then to donate the sum to the party? No. It is unlawful for a body to make a political donation on behalf of a prohibited donor and it is unlawful for the party to accept a donation that was made by someone on behalf of the prohibited donor. It is also unlawful for a prohibited donor to make a "political donation", including a gift, to an entity that was used or intended to be used to enable that entity to make a donation to a party or candidate or to incur electoral expenditure. In other words, you can't launder donations through other bodies.

The problem is not that the Act is ineffective in prohibiting such behaviour. It clearly addresses and prohibits the many attempts that have allegedly been made to avoid its application.

The only problem is the absence of a sufficient deterrent to prevent people from breaching the law. This is because the penalties are pathetically weak (a fine of $11,000 for a person and $22,000 for a party). Given the serious effects of such crimes in undermining public confidence in the political system, a more fitting penalty is needed.

In comparison, in Canada, a person can be imprisoned for up to five years for circumventing the cap on donations. In addition those convicted of corrupt practices in Canada can be banned for seven years from running for Parliament or holding any government office.

In NSW, we are hard-pressed even to prosecute them. This is because there is a limitations clause that prevents any prosecutions for election funding offences taking place more than three years after the offence occurred, letting any offenders in relation to the 2011 NSW election off the hook. In Canada, offences can be prosecuted within 10 years of occurring.

If the problem is criminality, is the answer rewarding parties with even more public funding? Political parties are already reimbursed 75 per cent of their election expenses and receive generous public funding for their administrative costs of approximately $9 million over four years for a major party.

If the allegations made in the ICAC are true (and it should be remembered that no findings have yet been made), it is unlikely that any amount of public funding will stop those intent on behaving corruptly and breaching the law. We have seen enough indications to suggest that those who seek to influence Members of Parliament will simply do so by other means such as gifts, holidays, promises of future jobs or other advantages.

Public funding will not deter such deliberate and calculated behaviour. Prosecuting people and putting the guilty behind bars might have a more salutary effect.

Anne Twomey is a Professor of Constitutional Law at the University of Sydney. View her full profile here.