Posted December 17, 2014 20:18:56

New South Wales's corruption watchdog says the state has a "culture of non-compliance" with political donation laws, and the electoral commission should be given the power to deregister parties for extreme breaches.

The Independent Commission Against Corruption (ICAC) also wants senior party officials to face criminal sanctions if they breach internal governance rules.

Banned donations and dodgy dealings: use our interactive to explore the ICAC scandal that has rocked NSW politics.

ICAC made 22 recommendations in a report designed to "address deficiencies in how election funding is managed in the state".

Its release followed months of public hearings into allegations of MPs rorting electoral funding laws.

The report said NSW had some of the country's most restrictive election donation rules, but "restrictive rules do not make regulation effective"

It criticised existing laws for forcing the NSW Electoral Commission (NSWEC) "to undertake onerous administrative activities at the expense of close supervision of party compliance".

It also said senior party officials were not being held accountable for internal governance, and "there are few sanctions and penalties for failures of parties to exert effective internal control, further undermining party accountabilities".

The report's recommendations include:

• increased powers for the NSWEC to enable it to deregister a political party "for extreme cases of non-compliance" with donation and funding laws
• criminal and civil sanctions to failures of senior party office holders to meet their internal party governance responsibilities
• a mandatory electronic disclosure system to facilitate online, real-time reporting by political parties and candidates before elections

"There is no doubt that the internal party governance arrangements achieved by the current regulatory framework in NSW fall short of what is desirable in terms of holding parties and their senior officers accountable for non-compliance," the report said.

"There is neither a willingness nor a capability to comply; as such, a culture of non-compliance has developed."

ICAC said it released the report to contribute to a review of political funding laws.

In June, Premier Mike Baird commissioned an expert panel to examine the laws, which identified a "pressing need for cultural change in NSW politics" in an interim report released in October.

A spokesman for Mr Baird said he was still awaiting the final report.

"We will consider the ICAC's report recommendations at the same time we consider any recommendations from the expert panel, which are due at the end of December," he said.

Topics: corruption, political-parties, government-and-politics, sydney-2000, newcastle-2300, nsw