Late last year, the federal government introduced a bill to prohibit foreign political donors. It would have strangled charity and NGO political activity with red tape. After a strong backlash, earlier this month the government introduced a revised bill, with a substantially reduced, although still significant, level of donor-checking bureaucracy. Labor is backing the bill.

While the government’s amendments reduce the burdens on NGOs, they are more draconian for foreign donors. In the bill’s original version, all donations below $250 were deemed allowable. In the current version, foreign donors are completely banned from donating for Commonwealth electoral expenditure. This includes donations to political parties and to NGOs when their political advocacy might influence voting in a federal election.

While NGOs won’t need any anti-foreigner measures on donations below $100, a foreign donor could, in theory, be fined up $42,000 for making such a donation. NGOs would not be legally obliged to warn small donors of these potential consequences.

NGOs will have responsibility for larger donors. Depending on their level of political activity, NGOs will need at least a tick-a-box non-foreigner assurance on donations up to $1,000 or $13,800. For all donations of $13,800 or more, donors will need to provide evidence that they are not foreign (eg a passport) or be checked (eg against the electoral roll). If these things don’t happen or the check fails, the donation must be returned or given to the Commonwealth. There are substantial penalties for NGOs breaching these rules, so at least those with professional staff are likely to comply.

Although the irony remains that it will be Australian citizens and organisations that incur most of the costs of the ban on foreign donations through additional compliance measures, the deeper political and philosophical issues are around the treatment of these deemed to be foreigners.

Australia’s large population of long-term temporary residents – primarily international students and various work visa holders – are foreigners under this bill, and will therefore have their political rights curtailed. 939,000 people in these categories were in Australia at the end of September.

At least for population and congestion policy, this year the political class does seem to have started to grasp the significance of a large long-term temporary resident population. But the foreign donations debate has proceeded as if they don’t exist – even the inclusion of New Zealanders with special category visas as non-foreign (nearly another 700,000 residents) was a late amendment.

Long-term temporary residents have a genuine need to engage with Australian politics.  The exploitation of foreign workers is a significant issue. International students have had many causes for complaint over the years, including crime, dodgy recruitment agents, dodgy education providers, and migration policy.

Temporary residents could still protest, comment in the media and directly pay lobbyists to advance their causes. But they will only be able to donate to NGOs working on these issues if the NGO sticks to policy, without any direct or implicit comment on political parties or candidates, or has fundraising arrangements that direct foreign donations to activities that are not covered the campaign finance regime. But sometimes NGOs should go beyond these tactics, and clearly point out that there are important differences between party policies.

In other contexts, the foreign donations bill recognises that if we allow, and often encourage, people from overseas to come to Australia we must also give them rights. Foreign companies, for example, can still donate if they are also registered in Australia. But this right it not extended to people who have met all the visa requirements to live in Australia for a prolonged period.

In my view, the whole attempt to ban foreign donations is a mistake. ‘Foreign’ influence is too weak a proxy for bad influence. In a country built on migration, free exchange of ideas, overseas investment and international trade it is hard to draw lines between the non-citizens whose activities we welcome and those we don’t. Donations are not worse forms of political activity than others; if anything they are better as NGOs are more likely to have some public interest filter than more direct forms of political action.

But at this point the political establishment has gone to too far on ‘foreign’ donors to completely retreat. In the short-term, the negative consequences of their mistake could be alleviated by removing long-term temporary visa holders from the definition of foreign donors.