Plans to overhaul Victoria’s political donations system look likely to be scuttled, with the Liberal-National opposition withdrawing its support.

The Labor government wants to tighten rules around donations.

In a proposal that Victorian Premier Daniel Andrews called the “strictest in the country”, it proposed taxpayers partly foot the bill so parties relied less heavily on receiving cash from outsiders.

Mr Andrews introduced legislation banning foreign donations and capping donations to political parties at $4000 for an individual or organisation over four years.

Union fees would be counted as affiliation fees, rather than donations, and would not be affected, which has outraged the opposition.

“From the very start of this process, it was clear that [Mr] Andrews wanted to limit some donations to his political opponents, but allow the unions to continue to financially support the Labor Party,” shadow special minister of state Ryan Smith said on Tuesday.

“The Liberal-Nationals remain committed to continuing discussions with all political parties to achieve true and fair electoral and donation reform that is in the best interests of Victorians and taxpayers.

“We believe this conversation should continue after the next election.”

Victoria’s election is due on November 24.

The proposed laws are sitting in the upper house, and the government wants them to pass with bipartisan support. But Opposition Leader Matthew Guy said he would not support changes that favoured Labor.

“This should be about finding a reform to donations, not simply taking advantage of every other political party but the government,” he said.

Under the government’s plans, taxpayers would fork out $45 million to soften the blow to parties.

Donations from individuals and organisations to parties would be capped at $4000 in a four-year term. Foreign donations would be banned.

Further changes include reducing the disclosure limit from $13,500 to $1000 per financial year, and up to a decade in prison for failing to comply. The reform also proposes the online publication of donations within weeks of them being made.

Also on Tuesday, the Victorian opposition said it would not support the government’s remuneration tribunal and parliamentary standards bill, which was introduced after government MPs were caught claiming expenses unfairly.

-with agencies