One of Labor's most respected figures, Senator John Faulkner, has argued against plans to change the laws for disclosing political donations.

The Government has decided it wants to lower the threshold for publicly declaring donations from $12,000 to $5,000, although initially it was pushing for the cut-off to be $1,000.

Senator Faulkner and former caucus chair Daryl Melham told their Labor colleagues in today's caucus meeting that the party should support the larger cut.

However, four cabinet ministers - Anthony Albanese, Mark Butler, Gary Gray and Mark Dreyfus - argued for the $5,000 threshold, saying it had secured enough votes to pass parliament because of a deal with the Coalition.

They told MPs the $1,000 plan would be unlikely to ever become law.

The legislation will require political donations of $5,000 or greater to be declared twice a year instead of the current annual declarations.

Any single donation of $100,000 or more must be reported to the electoral commission within 28 days.

Mr Dreyfus, the Special Minister of State, will introduce the bill to parliament tomorrow and rejects Senator Faulkner's views.

"He and I differ about the worth of this reform," he said.

"John would wish it to go a great deal further, he's made his views clear and I respect his views.

"But equally this is a very worthwhile reform to the disclosure regime."

Caucus overwhelmingly backed the plan although the vote was not unanimous.

Public funding boost to political parties draws ire

Another element of the legislation - to boost public funding to parties according to how many votes they get - has also attracted controversy.

Democratic Labor Party senator John Madigan has slammed the plan by the major political parties to take tens of millions of dollars from the federal budget to cover administrative costs as "un-bloody-believable".

Under the proposal, parties and independent MPs would be paid $1 for every vote they receive.

That would be on top of the current funding arrangements which give candidates who receive at least 4 per cent of the primary vote $2.47 per vote.

That amount is likely to increase at the end of June, when the rate is brought into line with the Consumer Price Index.

John Madigan says MPs are "going to have another dip in the trough at the public's expense". ( AAP: Alan Porritt )

Mr Dreyfus defended the changes.

"Public funding of political parties is a long-established part of Australian political machinery," he said.

"It's a recognition of the role that political parties play. It frees them to some extent from complete dependence on private sources of funding and that is a healthy thing."

The deal will cost taxpayers more than $50 million.

Senator Madigan says MPs are "going to have another dip in the trough at the public's expense".

"There's no money for dental care, there's no money for single mothers, we tell everybody else to pull their belts in and then we've got to have more money to so-called fund democracy," he said.

"We've got a bunch of people that are so disconnected from what the average person on the street's hopes [and] aspirations are, it's just un-bloody-believable.

"What message are we sending to people? The message isn't good.

"And we wonder why there's such a high informal vote.

"We wonder why people hate politicians' bloody guts - well it's on display here for the whole world to see."

Christine Milne wants corporate donations capped

Greens leader Christine Milne says her party will not support legislation funding the administration of political parties unless corporate donations are capped.

"The quality of our democracy, the quality of public policy, depends on people in parliaments making decisions on the merits of the case - not according to the corporate donations that have been made," she said.

Independent senator Nick Xenophon also wants tighter restrictions on private donations.

"If political parties get public funding, it should come with strict rules as to the level of private donations - whether it's corporate and union donations - as to what they can receive," he said.

"You can't have your snout in the public trough and then [be] getting huge donations from the corporate and union sector.

"I think that if you accept one, you can't accept the others to the extent that you have in the past, so I want to see details of that."

However, independent MP Bob Katter says his party is desperate for more money and he would welcome any move to boost public funding for election campaigns.

"We are constantly desperate for money and I think any smaller party that is anti-corporation - I suppose that would be a fair label to put on our party - you can imagine the problems you have in raising money if you're representing small business that haven't got two bob to rub together," he said.