Prime Minister Malcolm Turnbull says the Liberal Party was too broke to pay its federal director for several months in 2015 as he defended his record-breaking $1.75 million donation to boost campaign coffers.
Appearing to confirm speculation that donations to the party had all but dried up under the leadership of former prime minister Tony Abbott and infighting among party office-holders, Mr Turnbull told Channel 9 that federal director Tony Nutt had been asked not to take a salary for a number of months after taking on the job in October 2015.
On Monday, Mr Abbott hit back.
"Due to the good work of the director and office-bearers, the party was always able to meet its costs in my time as leader," Mr Abbott said in a statement to Fairfax Media.
Last week it was revealed the Prime Minister had broken Australia's political donations record with a boost to the Liberal Party after last year's federal election, leading to criticism that Mr Turnbull had paid to secure his leadership and to remain at The Lodge.
Mr Turnbull told interviewer Laurie Oakes on 60 Minutes that party officials had been forced to look "very carefully" at internal Liberal finances.
"At the end of 2015, when Tony Nutt became the director of the Liberal Party, the party had so little money he had to work for several months without any pay, so the party was very short of money," he said.
"It is a big challenge that we face. The corporate sector, particularly public companies, are much more reluctant to make political donations to anybody.
"We face enormous financial resources from the unions and Labor, so there is no question we are at a massive disadvantage financially nowadays and it has big implications for our democracy."
Mr Turnbull wouldn't say if he had ordered a financial audit of the party organisation.
"It is very important that we constantly review both how we raise money and how we spend money, but the big difference is that the Labor Party, the unions, organisations like GetUp! have a massive financial advantage over our side of politics... and everyone saw that on their television screens during the election."
Because Mr Turnbull's $1.75 million donation was made after the June 30 cut-off date for disclosure, it won't be included in Australian Electoral Commission reports for another year.
Mr Turnbull used the interview to dismiss suggestions Australia will be indebted to US President Donald Trump if he proceeds with the refugee resettlement deal, insisting there is no quid pro quo for future military support.