The Baird government faces having to significantly amend its election funding laws to get them through the Parliament, including scrapping new limits on what unions can spend on advertising before next year's state election.
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As the upper house prepares to debate the proposed laws on Tuesday, the NSW Nurses and Midwives Association is also threatening to launch a High Court challenge to the spending limits if they become law.
Premier Mike Baird has introduced legislation that overhauls the funding model for the March 2015 election in response to revelations at the Independent Commission Against Corruption about rorting of donations laws before the 2011 poll.
The bill cuts the amount of money registered third-party campaigners such as unions and business groups can spend on election advertising from $1.1 million to $250,000 each.
Nurses and Midwives Association general secretary Brett Holmes said the amount bought "nothing" on television. "If you go to $250,000, that basically takes us off air," he said.
The association is not affiliated with the Labor Party but runs television advertising on issues affecting its members, such as nurse-to-patient ratios.
The legislation states the third-party spending cap does not apply to issues-focused advertising that avoids advocating a vote for a candidate or political party.
Mr Holmes said his association never advocated a vote for a party or candidate but that the Coalition had accused it "time and time again of doing so".
The proposed expenditure cap for third parties would also capture Labor-affiliated unions such as the Electrical Trades Union, which is running a campaign against government plans to privatise 49 per cent of the state's electricity network.
The NSW Greens are considering amendments to the government's bill that would further clarify what constitutes election advertising to guarantee issues-based campaigns are not caught by the spending cap.
The party is also considering amendments that would reflect its belief that if the amount able to be spent by registered third-party campaigners was reduced, then so should the amount able to be spent by political parties.
"We believe any changes can't unfairly target particular voices during an election campaign," Greens MP Jamie Parker said.
The Christian Democratic Party and the Shooters and Fishers Party, which share the balance of power in the upper house, are negotiating a mutually beneficial set of amendments with the Greens and the ALP.
The Christian Democrats and the Greens are opposed to a provision in the bill which means that if they fail to get a candidate elected in the lower house the amount of taxpayer funding they may claim is significantly reduced.
Labor wants the third-party expenditure cap to remain at $1.1 million. Christian Democratic Party leader Fred Nile said his party was likely to support the ALP's amendment in return for Labor backing its changes.
