Labor Party members in NSW found guilty of corruption would be expelled from the ALP under a new "one strike and you're out" policy being put forward by senior party figure Senator John Faulkner.

In a wide-ranging speech about integrity and trust in the political process, Senator Faulkner took aim at those being investigated by the Independent Commission Against Corruption (ICAC) in his home state.

"It is time to publicly acknowledge that there have been some in our party's ranks with neither political principles to defend nor moral convictions to uphold," Senator Faulkner said in a speech at the University of Melbourne today.

He said while the allegations involve only a "small minority", he believes there is a strong case to overhaul how the party operates to try and stamp out the behaviour.

Senator Faulkner has suggested a range of changes, including making party rules subject to the courts and taking a tougher stance against those found guilty of wrong doing.

"A culture has developed in the NSW branch where, for some, being caught out at sharp practices is worn almost as a badge of honour," he said.

"Our party would be immeasurably better off without such people."

He has also taken aim at the power of factional bosses, arguing for an end to the "inherently undemocratic" practice of binding the votes of parliamentarians.

"I have said before that there is nothing wrong with people who share convictions on policy issues working together to progress those issues," he said.

"There is, however, a great deal wrong with a situation where a Russian doll of nested caucuses sees a tiny minority of MPs exercising a controlling interest over the majority."

'Sensible and important ideas'

NSW ALP general secretary Sam Dastyari has used Twitter to endorse Senator Faulkner's "outstanding" speech, describing his ideas for reform as "strong and considered".

"Labor must continue to reform," he said on the social networking site.

"Senator John Faulkner has outlined a series of sensible and important reform ideas for the Labor Party."

There has been an ongoing debate about the power of factions, helped in part by former prime minister Kevin Rudd's repeated calls for party reform.

Following the 2010 election, Senator Faulkner co-authored the party's official campaign review with former NSW premier Bob Carr and former Victorian premier Steve Bracks. It has never been fully released.

Senator Faulkner says it is not the first time party reform has been on the agenda, and concedes further changes will be difficult.

"Support for party reform in principle melts away when specific proposals that would change the power balance within the ALP are put on the table," he said.

"[But] it is clear that the current power balance - the current power structures - have enabled too much disgraceful conduct and arrogantly corrupt behaviour.

"It is clear, too, that some of those empowered by our current structures are resistant to measures which curtail their power."

MPs code of conduct

Senator Faulkner has used his speech to press the need for a code of conduct to apply to all Federal MPs and Senators, something that all parties agreed to in the post-2010 election negotiations.

But he has lamented the "unedifying" process that has taken place since, with the Senate rejecting suggestions put forward by a House of Representatives committee.

"Federal Parliamentarians need to get serious about a code of conduct to apply to them, not because I think Parliamentarians are ignorant or uncaring about ethics and integrity matters - generally they are not - but because the public at large is entitled to know that objective standards exist, and that these standards are open to public discussion, and public assessment," he said.

"I would like to see the Parliament try again on this issue.

"We need a Joint Select Committee to inquire into the issue of a code conduct for Members and Senators and into the establishment of a Parliamentary Integrity Commissioner.

"And, we need this to happen before the next election."

Senator Faulkner has also laid out the case for electoral funding reform, arguing that the parties have a responsibility to take the lead on such an issue given the privileged position they hold.

He says large donations have the potential to create public perceptions of undue influence, arguing that there is no excuse for further delays in reducing the level at which donations need to be disclosed.

The former Howard government increased the threshold from $1,500 to $10,000 with annual indexation, meaning the current figure at which a donation has to be publicly disclosed is $12,100.

Labor has tried to reduce the threshold but the legislation has been blocked in the Senate.

Senator Faulkner says modified legislation is "mostly drafted" and needs to be dealt with before the next election, in part because he fears how the Coalition will deal with such issues if it wins the next election.

"Transparency around political donations is vital to maintaining public trust in our political system because our electoral processes are a fundamental part of our democracy," he said.

Whistleblower protection

However, Senator Faulkner also took aim at the ALP for how it has dealt with plans to boost whistleblower protections.

He says the current protections for whistleblowers in the public service as inadequate, and it is "past time" to get serious about the issue.

"We depend on whistleblowers to alert us to misconduct or malfeasance and corruption," he said.

"An act of retaliation against a protected disclosure of wrongdoing by a whistleblower should be seen as a serious form of misconduct.

"While the Labor Party has had a long standing commitment to strong whistle-blower protections, we still await the introduction of modern and comprehensive legislation to deliver on this commitment."

Senator Faulkner has called on the Government to release its exposure draft legislation for new whistleblower laws, saying it is "essential" that the new safeguards are in place before next year's election.