Watch: Teal MP, Labor minister in furious standoff over donation law to reduce campaign spending

A heated confrontation in the corridors of Parliament House has ramped up the dispute between the Albanese government and independents over donation reform.

Teal MP Zali Steggall accused Special Minister of State Don Farrell of shutting crossbenchers out of talks on Australia’s elections, their angry exchange – all finger-pointing, interruptions and dismissals – watched by a throng of journalists.

The pair ran into each other in the parliamentary press gallery on Thursday morning after Farrell had been interviewed on Radio National.

This masthead revealed on Wednesday that the government had struck a deal with the Coalition to overhaul Australia’s election laws and cap donations, infuriating independents who argue it gives the major parties access to both a per-seat and national campaigning budget they do not receive.

The laws, which were rapidly shepherded through parliament on Wednesday night, require donations of more than $5000 to be publicly disclosed and let donors contribute up to $50,000 to a candidate after Labor conceded to Coalition demands to more than double both caps.

Farrell was speaking to reporters in the corridors of parliament after he had finished an interview before Steggall strode over and started peppering the minister with questions.

“Why won’t you send the bill to [an] inquiry to be assessed [so] that it is actually democratic?” Steggall asked.

Farrell responded: “We’ve been engaged in this process for three years from the day that I took office … [so that] ordinary Australians can participate in the process, and then you don’t have to be an acolyte of a millionaire or a billionaire to win seats in the Australian parliament”.

In response, Steggall said Farrell needed to make the Australian people aware of public money being spent too, as she claimed “the public is paying for the money that you want to still spend during elections”.

The bill increases the amount of public funding per vote that candidates receive after an election, which benefits incumbents, to make up for the caps on donations.

“The only people that will be able to participate in elections will be union members,” Steggall claimed as she pointed at a camera.

Farrell scoffed that Steggall’s claim was “completely untrue”. Unions were subject to the same rules as other donors, he said.

“Well, members of the Labor Party,” Steggall interrupted, referring to Labor Party rules that permit party members and affiliated unions to vote on the party’s candidates and policy positions.

“Stop changing your story,” Farrell responded.

Steggall continued interrupting, arguing there were “secret loopholes” in the legislation, which Farrell denied with a pointed finger for emphasis.

“This is the most transparent electoral reform that has ever occurred in this country, and the whole process pushes downward pressure on the cost of elections, so ordinary Australians have a chance to be elected,” Farrell said while Steggall shook her head.

After someone in the audience attempted to return to the media asking questions at what was ostensibly a press conference, Steggall snapped back: “We found out the details of this deal through the press, so I think it’s appropriate we do it here in front of the press.”

As Farrell began to take media questions, Steggall remained present, staring at him the whole time.

Independent senator Jacqui Lambie told Sky News later on Thursday that Labor’s decision to push through electoral reform laws against the crossbench’s wishes could rebound on the government.

“If we [independents] come back with that balance of power, oh sure, I imagine it’s going to be a fight from hell but right now what’s more important is the cost of living out there,” she said.

On Wednesday, this masthead reported that furious teals threatened to use the balance of power to reverse the laws if the next election results in a hung parliament, where a major party would require their support to form government.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.