A NSW Liberal MP, Marie Ficarra, has stood aside after being implicated in a scheme to solicit donations for the party that is at the centre of the latest Independent Commission Against Corruption (ICAC) inquiry.

The inquiry, which began hearings on Monday, was set to focus on three other state Liberal parliamentarians accused of failing to disclose political donations.

The MPs - Chris Hartcher, a former energy minister, Darren Webber and Chris Spence, all from the Central Coast - are accused of corruptly soliciting, receiving and concealing payment from various sources between 2009 and 2012 in return for political favours.

A company called Eightbyfive was allegedly set up as a slush fund for prohibited political donors to secretly funnel money to the MPs.

It is alleged that property developers, banned from giving political donations in NSW, are among those who contributed to the company.

It is also alleged that Australia Water Holdings (AWH), at the centre of a previous ICAC inquiry that led to the resignation of Premier Barry O'Farrell, donated $183,000 to Eightbyfive.

Counsel assisting the inquiry Geoffrey Watson SC told the inquiry that evidence will show Ms Ficarra is implicated.

"Marie Ficarra solicited a donation from the property developer, Tony Merhi, knowing that Mr Merhi was a prohibited donor," he said.

"Both knew what they were doing was wrong. The same evidence will show Ms Ficarra was complicit in the Eightbyfive scheme."

A spokesman for Ms Ficarra, an upper house MP, says she vigorously denies the allegations.

In a statement Ms Ficarra says her record against developers, lobbyists and speaking out against corruption is well documented in the NSW Parliament.

She has voluntarily stood down as a member of the Parliamentary Liberal Party pending the conclusion of the ICAC hearing.

Ms Ficarra was parliamentary secretary to Mr O'Farrell but a spokesman for Premier Mike Baird says the position has not yet been reappointed.

Meanwhile, NSW Resources Minister Anthony Roberts has acknowledged he was a close friend of the Gazal family, who were named in ICAC today as illegally donating funds to the Liberal Party.

Mr Roberts says he joined Nabil Gazal on his yacht for a short holiday in 2007 but paid his own airfares and associated costs.

He says he did not disclose the matter because he was not required to and held no shadow portfolio at the time.

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Premier Baird is vowing to overhaul the political culture of NSW in the wake of the latest ICAC revelations.

In a statement, Mr Baird says the time has come for a public debate on whether political campaigns should be publicly funded.

He says he has also asked the newly appointed director of the state Liberal Party, Tony Nutt, to deal with any donations made in contravention of the law.

Mr Nutt says he has sought urgent and detailed information regarding the ICAC allegations.

He says it is important the party complies with the law and acts with integrity in the conduct of its affairs.

ICAC told of Tinkler's response to donations probe

Meanwhile Mr Watson has revealed mining identity Nathan Tinkler's angry response when he learned two of his Hunter businesses, one of which was Buildev, were linked to the company at the centre of the inquiry.

Mr Watson told the inquiry that Mr Tinkler asked "Who is ICAC?" when told by a colleague that it was investigating the firm Eightbyfive.

Mr Watson added that Mr Tinkler did not hold back when responding to an email about the commission's probe.

"Oh mate you are **** kidding me. What have I ever had to do with this business? I can't trust anyone," Mr Watson read to the inquiry.

"Sharpie (who Mr Watson said is thought to be the co-owner of Buildev) is a legend and I am a **** idiot. Another one of Sharpie's lobbyist mates.

"I am no doubt going to have to wear the headlines and I don't even know their names nor have never met."

ICAC to 'expose flaws' in political funding laws

Mr Watson said in his opening statement the current inquiry would "expose systemic flaws in the political funding laws of New South Wales".

He told the packed hearing room that ICAC did not claim the Liberal Party was corrupt as an entity.

"This is an examination of what's wrong with the system ... and all political parties in Australia should take note," he said.

"There is evidence of serious breaches of Australia's political funding laws."

Mr Tinkler and Karen MacNamara, the Federal MP for the seat of Dobell, are among the 30 people due to give evidence this week.

The list includes Troy Palmer, one of Mr Tinkler's senior executives, and former Newcastle MP and minister for the Hunter Jodi McKay.

Wealthy property developers will also be called, along with Liberal Party official John Caputo, who has been linked to Liberal Party fundraising on a federal and state level.

The public inquiry before Commissioner Megan Latham is expected to run for up to a month.