Speaking at a forum on political financing organised by the Bar Council, Abdul Rashid said that the proposal was rejected on the the excuse that people will set up parties simply to take advantage of the funds.
"Many years ago, I raised this topic with the government but I was told just to focus on electoral laws, and run elections as best as (the EC) could.
"The (government's) argument against it was simple, that the country may suddenly see the growth of political parties. The country will be crowded by political parties, they say, just to take advantage of the grant," he said.
Speaking candidly of his experience to an audience of about 200 at Sunway University last night, Abdul Rashid said that he had proposed the government "provide small grants and small subsidies for political parties".
The retiree who was EC secretary from 1979 to 1995 said this is especially for small parties to maintain their organisation and tremain active, something which is a great challenge for them in contrast to large more powerful parties.
'EC can't deliver free, fair elections'
To a question from the audience, mostly made up of university students, Abdul Rashid said that he believes that Thailand and Indonesia are "more democratic" as the EC there have greater power.
"Things are very different in this country compared with other countries. Thailand and Indonesia are more democratic than us. The EC there can stop elections half way on suspicion of corrupt practices.
"Here, all (the EC) can do is advise people that if they have complaints, keep them, and after the election, take the complaints to court, " he said.
Abdul Rashid who helmed the EC from 2001 to 2008 added that the legal framework does not allow the electoral body to deliver free and fair elections in Malaysia.
"We have no (clause) within the Election Act that gives power to the EC to even adjudicate or solve problems that come up during an election.
"We get lots of complaints that we cannot solve, not even petty disputes and we cannot ask for these laws to be put in because it is not part of our terms of reference," he said.
The EC, he noted, shares powers with other organisations like the police or the Malaysian Anti Corruption Commission and ends up acting like a forwarding house.
"We are really frustrated, because people come to us to complain and we are unable to do anything but the channel it to the police when the power that should be ours," he said.
He added that the EC is also unable to ensure fair access to media, which is being taken advantage of by the "party in power which campaigns through the media".
"If they campaign on TV, people came to me and said, 'Hey, are you sleeping?'...but I can only (tell complainants) to go to the Malaysian Anti Corruption Commission because this is considered abuse of authority," he said.
The government had rejected a proposal to reform political financing by providing state funding for political parties, said former Election Commission chairperson Abdul Rashid Abdul Rahman.
That said, he stressed that the EC is an efficient body in carrying out the work within its terms of references.
"What is in our powers, we handle very well. Polling, nomination are first class. No cheating. Counting of votes, first class. Announcement of results, first class.
'Manipulation before polling day'
"Whatever the weaknesses of the commission, we have here a body that is very efficient in organisation and delivers excellence for the country," he said.
Responding to this fellow panelist DAP Rasah MP Anthony Loke agreed that there is little room for cheating on polling day but manipulation can happen before that.
"The other day, I complained that 20 people of different surnames and races were registered as voters under one address in my constituency.
"The EC replied, they cannot limit the number of names registered to one address. So this means there can be 1000 poeple registered under one address," he said.
Also on the panel was Universiti Malaysia political economist Terence Gomez.
The event's convenors said that they had contacted four BN parliamentarians to join the panel but all had prior engagements.