Property developers are using workarounds to bypass state laws that ban them from making political donations, the chief of the NSW corruption watchdog has warned.
Independent Commission Against Corruption head John Hatzistergos on Friday told a parliamentary inquiry gaps between state and federal election funding regimes enabled developers to channel banned funds to political parties.
NSW has one of the strongest political donations regimes in Australia, including a blanket ban on developer donations, but there are long-held concerns it can be evaded via legal loopholes.
"The differences in election funding laws in NSW and the Commonwealth mean donations prohibited in this state can be made lawfully into a federal election account," Mr Hatzistergos told the inquiry, which is looking into 2023 state election administration.
Asked what tools officials needed to get on top of the issue, Mr Hatzistergos said a "very basic thing" would be not to accept a donation from a prohibited developer "rather than tell him you can put it into the federal fund".
"The second thing you can do is that if the person comes forward and wants to donate more than what the cap allows in the state, you don't say you can donate the balance into the federal fund."
He said ICAC's 2016 investigation into some NSW Liberal Party candidates and its 2022 probe into state Labor officials showed developers were trying to evade the NSW regime.
"That's what we're seeing time and time again, workarounds," he said.
Mr Hatzistergos said a possible way forward would be for state and commonwealth governments to look into harmonising rules.
It was unclear if extending political donation bans to professions involved in property, like real estate agents, solicitors and architects, would help, he added.
"What we're asking is to be careful about extending that prohibition to other areas," he said, pointing to failed attempts to ban unions from making political donations.
"The lengthening of the list of proposed exclusions moves away from the fundamental reason why developers were excluded as political donors to basically a group of people who you don't like," Mr Hatzistergos added.
In addition to developers, tobacco industry players, liquor and gambling businesses and their close associates are all banned political donors in NSW.
