Political donations reform descended into farce this morning after the opposition walked away from Opposition Leader Tony Abbott’s personal agreement to support the controversial bill to increase public funding and reforms the rules relating to political donations. Instead, Abbott declared the Coalition had listened to Australians and that the bill was now “dead”.

The Labor caucus approved the bill on Tuesday, but not before Labor veteran John Faulkner savaged it and demanded the government produce the agreement nutted out between former special minister of state Gary Gray, Labor federal secretary George Wright and Liberal federal director Brian Loughnane. After an intense public backlash and growing criticism of the bill from Coalition MPs, this morning Attorney-General Mark Dreyfus handed to the media a letter from Abbott to him from last Friday agreeing to pass the bill.

Remarkably, Dreyfus refused to answer questions on the issue and fled from the press, leaving leader of the house Anthony Albanese to later prosecute the government’s line that Abbott couldn’t be trusted even when he made commitments in writing.

At a media conference, Abbott did not deny repeated questions that he had been rolled by his senior colleagues over the issue. Abbott also struggled to explain why the Coalition had claimed yesterday it could not commit to support the bill until it had seen it, when his letter to Dreyfus revealed he had been “provided with a near final draft of the Bill and will leave settlement of the final legislation with the Shadow Minister”. Abbot wrote to Dreyfus:

“I am satisfied with the agreement reached and indicate the Coalition’s intention to support the legislation and to deal with it, as requested, before the end of the sittings.”

Abbott said that the Opposition had initially advised the government last night that it needed more time to consider the bill and would not support it if it were introduced as scheduled today, before deciding this morning to oppose it outright.

Labor seized on Abbott’s backflip to argue the Opposition Leader, famous for saying in 2010 that only his written words could be fully relied on, couldn’t be trusted at all. Independent MP Tony Windsor also cited Abbott’s backflip on his written commitment as further evidence of the misgivings that prompted him to not back Tony Abbott as prime minister in 2010.

But Abbott’s discomfort is a convenient distraction for Labor from an issue it has comprehensively botched, preferring to negotiate with the Liberals a cynical deal to hand political parties a 40% increase in public funding rather than pass an existing bill to improve the transparency of donations with the support of the Greens in the Senate. The deal between Gray, Loughnane and Wright remains secret, despite Faulkner’s call for the details to be made available to MPs.

A key reason for Faulkner’s anger over the bill was that it abandoned a prohibition on donation splitting that had been a feature of both the donations reform bill he had unsuccessfully tried to pass when special minister of atate, and the bill passed by the House of Representatives after the 2010 election.

Donation splitting allows a donor to give an amount up to the disclosure threshold to multiple state and territory branches of a party without revealing the total amount. It particularly favours the Labor Party, which has nine state, territory and federal branches. Faulkner told the caucus that under the bill, Labor would have been able to receive split donations worth up to $44,991 without disclosure.

The Greens this morning reiterated their support for revisiting the 2010 bill, including their wish to strengthen it to include measures aimed at “truth in advertising” in political campaigns. Greens leader Christine Milne told Crikey earlier this week the Greens had been prepared to back the 2010 bill even if Labor knocked back its “truth in advertising” measures.

Beyond this morning’s momentary silliness of Dreyfus’ bolting from the media and Abbott’s patent discomfort at being rolled by his colleagues, this means reforms to the federal Parliament’s ridiculous donations disclosure rules — under which, for example, we have to wait up to 18 months after an election to find out who donated to a political party — look likely to be off the agenda for the medium term, unless Labor is prepared to have the courage to to the Greens about updating and passing the 2010 bill, rather than negotiating a deal with the Liberals. It is also another spectacular example of Labor’s political tone deafness and misjudgment.

The whole affair has left both Labor and the Liberals looking grubby and self-serving. For once, the deep public cynicism toward politicians is entirely justified.