Explainer: What are the alternatives to the NT's current system of political donations?

A Northern Territory Government investigation will examine the laws governing political donations and table possible reforms next year.

Meanwhile, Country Liberals Party (CLP) backbencher David Tollner has called for the NT's "dodgy system" of political donations to be scrapped and replaced with a publicly funded one.

The Labor Opposition and the NT's lone Independent MLA Gerry Wood has claimed the CLP has been covering up corrupt and illegal donations practices, while the CLP has hit back with accusations Labor has a long history of improper union influence.

So what are the alternatives to the current system?

1. Election campaigns could be publicly funded

In a speech to NT Parliament, Mr Tollner proposed making major political donations for election campaigns illegal.

"Donations that exceed $1,000 should be illegal, and all donations under $1,000 to a political party have to be declared by those who made those donations," he said.

"The public should fund election campaigns based on the number of votes a candidate received.

"In the NT that might be as much as $10 a vote.

"If someone was going to sweep the entire pool and get themselves the whole vote in electorate, they may well get $50,000.

"This is the only fair way, the only transparent way of doing this."

He said the calls for a wide-ranging inquiry into 20 years of political donations would only "muddy" the reputation of NT politics.

"Putting more inquiries out there is fuelling speculation," Mr Tollner said.

He said the existing system, which has no cap but requires parties to declare large donations, had become "all too grey and too blurry".

"It is my view, and the view I've passed on to the Chief Minister, is to get rid of this inquiry. Clean the whole system up once and for all and let's go to a publicly funded election campaign for everyone," he said.

In Australia, federal political parties receive campaign election funding.

A candidate who obtains at least 4 per cent of the first preference vote in their seat is eligible, with the amount paid calculated by multiplying the number of votes by the current election funding rate.

The current rate is about $2.50 per vote.

2. Campaign donations could be capped

Common arguments for private funding are that it reduces the amount of tax payer money spent on campaigns, it keeps the parties engaged with members and organisations and it prevents a deluge of substandard candidates.

University of New South Wales constitutional law expert Professor George Williams agreed that private funding was needed, but said imposing a cap on donations would liberate parties from undue outside influence.

"People give money to politicians usually in large amounts for a clear reason, and that is they want to influence the decisions that politicians reach," Professor Williams said.

"Governments themselves often don't like being dependent on private donors, they don't like the time involved in raising the money."

New South Wales has been plagued by allegations of political corruption on both sides of politics.

But rather than simply banning private donations, it has struck a balance by increasing public funding while also capping donations to $2,000 to an individual and $5,000 to a political party within six months of an election being held.

Professor Anne Twomey from the University of Sydney said this approach was a good one.

"It may well be more appropriate in the Northern Territory to cap those amounts at a lower amount," Professor Twomey said.

"You'd want to look at the sorts of donations the Territory had received in the past."

Professor Twomey said capping total expenditure would also drive down the need for political parties to get into bed with private donors.

"It's not just a matter of capping donations; what you really, really need to do is cap expenditure," she said.

"You need to take down the cost of campaigns and you need to prevent there being constant warfare in terms of each side having to raise more and more money and afflicting the poor populous with advertisements non-stop."

3. Donations could be immediately publicly declared

But former federal independent MP Rob Oakeshott, who is currently petitioning for a royal commission into federal funding, said capping donations only resolves part of the problem.

The former member for Lyne said all political donations in any jurisdiction should be publicly disclosed as soon as a party received them.

"If someone gives money to someone else, who is making decisions on behalf of all of us, that should be seen by the electorate and the voting public," Mr Oakeshott said.

"It should be seen prior to the vote occurring so that questions can be asked and voters can decide whether they're comfortable with that donation or not."

Mr Oakeshott said the current system was "privatising" politics and allowed policy to be determined by backroom deals, but he maintained cleaning up the system is not only a matter of the amount of money raised and spent.

"Personally I don't mind if a candidate raised a million dollars and spends a million dollars," he said.

"So long as the voters in that constituency are aware of it, and have drawn conclusions that it's not influencing that person's decisions in Parliament.

"Empowering the ballot box is the answer."