The Finance Minister has responded to the charity sector’s concerns about its inclusion in the new foreign donations ban.

The Election Funding and Disclosure Reform Bill aims to ban foreign donations and impose new registration and disclosure requirements for non-party political actors.

The bill was referred to the Joint Standing Committee on Electoral Matters on 6 December.

The charity sector says the proposed legislation will unfairly clamp down on their ability to advocate, and tie them down with unnecessary red-tape.

Opposition leader Bill Shorten asked why “the good work of Australian charities [was] being put at risk because of the prime minister’s inept handling of foreign donation laws” in Parliament this week.

“Labor has led the way on reforming political donations and removing foreign influence from the political process. We’ll keep working with the government to ban foreign donations, which is already Labor policy,” he had earlier told reporters.

“I believe we can clean up donations without silencing our charities and not for profits.

“Labor is not interested in laws which punish Australian charities and not for profits.”

Finance Minister Mathias Cormann says Labor’s own bill is even tougher on charities.

“Bill Shorten’s bill captures charities in the ban on foreign donations to fund political expenditure and does not provide an explicit exemption for charities as our bill does for their non-political activities,” Mr Cormann told Pro Bono news.

“Our bill explicitly allows charities to seek and receive foreign donations to fund their charitable and other non-political activities but applies the same prohibition on foreign donations in relation to political campaign expenditure to them which applies to all other political actors.

“Under our legislation charities can continue to engage in political advocacy as long as it is funded by permissible Australian domestic donations – but they cannot fund political expenditure under our bill or under Labor’s bill with foreign donations.”

Mr Cormann said not including charities in the bill would “create a massive loophole”.

“There was supposedly bipartisan support for the core proposition that foreign donations should not be allowed to fund political expenditure in Australia,” he said.

“To exclude charities from a ban on foreign donations to fund political expenditure would make such a ban entirely ineffective.

“It would create a massive loophole and is inconsistent with Labor’s own bill designed to ban foreign donations in relation to all political expenditure – including political expenditure by charities.”

He said the legislation does not prevent charities from advocating.

“It doesn’t curtail their ability to engage in political advocacy at all, it just cannot be funded by foreign interest,” Cormann said.

“This bill allows charities to continue to collect foreign donations to fund non-political activity, such as medical research, conservation or aid projects as well as raise political donations from Australians and Australian organisations to fund political expenditure in Australia.”