Mr Morrison said some of the state investigations had "sadly" led to political persecutions that undermined public confidence, turning investigations into the "playthings" of the political arena. "We have looked at all the alternatives and we believe this is the best way to achieve this," he said. "This is a real proposal with real resources, real teeth." The Prime Minister said the government had been working on the proposal since January. The Age and The Sydney Morning Herald reported last month that Attorney-General Christian Porter had prepared a cabinet proposal for a national integrity commission but the plan was derailed by the Liberal Party leadership spill in August.

Mr Porter said on Thursday the new body, to be called the Commonwealth Integrity Commission, would not have retrospective powers, saying this was to be avoided in criminal law, and he said the "detailed drafting" would look at protection for whistleblowers. The Integrity Commission will have two divisions, one focused on law enforcement and the second on public administration including the conduct of politicians. The law enforcement division will have jurisdiction over agencies such as the Australian Criminal Intelligence Commission, the Australian Federal Police, the Department of Home Affairs, the Australian Transaction Reports and Analysis Centre and some parts of the Department of Agriculture and Water Resources. These agencies are currently overseen to the Australian Commission for Law Enforcement Integrity, which will be absorbed into the new Integrity Commission. The jurisdiction of this division will be expanded beyond the existing ACLEI to include the Australian Competition and Consumer Commission, the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission and the Australian Taxation Office.

Loading The public sector division of the Integrity Commission will have jurisdiction over public service departments and agencies, Commonwealth companies and corporations, parliamentarians and their staff. This division will also have jurisdiction over Commonwealth service providers and any subcontractors they engage. The discussion paper for the plan says the law enforcement division will have the power to compel the production of documents, question people, hold public and private hearings, arrest suspects, enter and search premises, seize evidence, undertake controlled operations and assumed identities, and undertake integrity testing. A significant difference with the public sector division, which includes oversight of politicians and their staff, is that it will not be able to hold public hearings.

The public sector division would have the power to compel the production of documents, question people, hold private hearings, and enter and search premises. The discussion paper also says the public sector division would not be able to make findings of corruption, criminal conduct or misconduct at large. It would instead refer matters for prosecution. Loading Replay Replay video Play video Play video It would be up to government agencies including departments and various authorities, such as the parliamentary authority that oversees expenses, to refer matters to the CIC. "The CIC will not investigate direct complaints about ministers, members of Parliament or their staff received from the public at large," the discussion paper states.

Mr Morrison announced the plan on Thursday morning after weeks of fending off demands from Labor to set up the new authority. When challenged by Opposition Leader Bill Shorten on a national integrity commission in Parliament on November 25, Mr Morrison had said: "While the Leader of the Opposition is off on some sort of fringe issue, what we are focused on is the strength of our economy." Loading Mr Shorten has promised to set up a national integrity commission within 12 months of the election of a Labor government, saying it will be an independent statutory body. The Labor proposal is to appoint one commissioner and two deputy commissioners with fixed terms and broad jurisdiction, acting as a "standing royal commission" with the power to compel witnesses and carry out its own investigations.