The Baird government's changes to electoral funding laws will block candidates from taking out bank loans to fund election campaigns, unhappy backbenchers claim.
After the 2011 election, the Election Funding Authority reimbursed $4.9 million in public funds to candidates, compared to $15 million reimbursed to political parties head offices.
The reimbursement to candidates covered campaign spending up to a cap of $30,000.
Candidates unable to reach the fund-raising targets set by political parties would commonly take out a bank loan to bridge the gap if they were not independently wealthy.
The new law prohibits the direct reimbursement of public funds to candidates accounts.
"It has robbed candidates of $30,000 and puts more pressure on candidates to raise money," said a NSW Labor insider, who claimed it worsened the problems exposed at the Independent Commission Against Corruption.
One backbencher said: "The money will go back to head office. Because the money doesn't go to the campaign account, we can't get a loan."
The ICAC revealed Liberal candidates were set fund-raising targets of up to $140,000 for a minister in a blue ribbon seat, while candidates in marginal seats had to purchase $35,000 campaign packages. It is alleged some candidates accepted illegal property developer donations at the 2011 election to meet the targets.
The Labor Party does not set fund-raising targets, but candidates are expected to have $50,000 in their account for campaigning.
Labor upper house MP Steve Whan told Parliament he wanted election spending caps wound back further, because of the pressure on candidates to raise funds.
"I see it coming to the point where people who do not have independent financial means and do not have the ability to partake in large fund-raising efforts will not run for Parliament," he said.
Meanwhile, Labor was expected to win by-elections, which were forced by the resignations of Liberal MPs Tim Owen and Andrew Cornwell, in Newcastle and Charlestown on Saturday. Mr Owen and Mr Cornwell faced allegations at ICAC that they accepted illegal $10,000 cash donations from a property developer. The Baird government did not contest the seats.
