Almost everyone in mainstream politics says they oppose xenophobia, but foreigners have few friends among advocates of campaign finance reform.

In introducing Labor’s third attempt to ban foreign-sourced donations, Special Minister of State Gary Gray said late last year that prohibiting foreign donations would help “remove a perception that foreign donors could exert influence over the Australian political process”.

Queensland already restricts foreign-sourced donations. And NSW goes much further, banning all non-citizens from donating to political parties or third parties for state election campaign purposes.

But these distinctions between “foreigners” and Australians are too blurred and too dubious to support these laws.

Under actual Queensland and proposed federal laws, foreigners can still donate so long as they use an Australian bank account. But these laws will prevent donations from expatriate Australians without an Australian bank account or credit card.

My examination of Australian Electoral Commission overseas donor returns found that more than half came from individuals with publicly reported Australian citizenship or companies they control. These people have a legitimate link to Australia that no law should diminish.

That leaves a smaller group of non-Australian overseas donors as possibly dangerous foreign influences. The most frequently cited example is British Conservative businessman Lord Michael Ashcroft, who gave $1 million to the Liberal Party during the Howard years. Ashcroft’s gift appears motivated by ideology and personal connections; he has few financial interests in Australia.

Any influence was only via more campaign advertising for the Liberals. This gives Ashcroft less direct influence on Australian politics than the foreign ideas and views imported every day via television, radio, the internet, newspapers, magazines and books. Prohibiting just one form of foreign influence seems arbitrary.

NSW law that started on January 1 also prevents expatriate Australians from donating, if their electoral enrolment has lapsed. But perhaps more concerning is that because only citizens can enrol to vote, permanent and temporary residents in NSW lose their right to donate. NSW gains about 60,000 new permanent residents a year, out of an Australian total of about 200,000. And about another 1 million people live in Australia on a temporary but long-term basis.

There is no obvious rationale for restricting the political rights of non-citizens in this way. They live here, study here, pay taxes here. Sometimes they seek political remedies for their problems, such as international students who have been mistreated.

They should have the right to do so. Yet in some circumstances, non-citizens could break campaign finance law if they give money to their own representative organisations.

When many overseas-born people live in Australia, and many Australian-born people live overseas, and many issues cross national boundaries, a ban on “foreign” donations does not reflect contemporary realities. The problems these bans will cause are far more obvious than the problems they will solve.

*Andrew Norton is a Research Fellow at the Centre for Independent Studies. His report Democracy and Money: The Dangers of Campaign Finance Reform was released by the Centre for Independent Studies on  June 2.