LABOR veteran John Faulkner has received the backing of senior ALP figures for his push to ensure members found guilty of corruption are automatically expelled from the party.
Senator Faulkner on Tuesday warned community cynicism about a lack of integrity in politics was "corrosive of democracy".
He pointed to the recent Independent Commission Against Corruption (ICAC) hearings in NSW which are hearing serious allegations against Labor figures.
"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 to the University of Melbourne Law School on Tuesday.
"They are a small minority in a very big majority of decent, ethical people. But the fact that they are few in number does not diminish the gravity of the accusations against them, or the seriousness of their acts."
The party has also been rocked by scandals involving the Health Services Union and the Australian Workers' Union.
NSW ALP secretary Sam Dastyari agreed the party could not go on with "politics as usual" and reform was needed.
"I get to talk to a lot of different party members, and quite frankly they are all appalled what they are hearing coming out of ICAC (Independent Commission Against Corruption) every day," Mr Dastyari told Sky News after the speech.
Senator Faulkner said the party should have a "one strike and you're out" policy for any Labor member found guilty of acting corruptly.
"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. Our party would be immeasurably better off without such people," Senator Faulkner said.
Finance Minister Penny Wong said on Tuesday she supported the "one-strike" policy.
Senator Faulkner also called for an end to factions being able to "bind" MPs in caucus votes or ballots, something also supported by Mr Dastyari.
"There is ... 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," Senator Faulkner said.
The former minister said federal lower and upper house MPs needed to "get serious" about a code of conduct, which he suggested should be drafted by a joint select committee and accompanied by a parliamentary integrity commissioner.
A motion by independent MP Rob Oakeshott on a code of conduct passed the lower house last week, but it did not cover senators and failed to gain the approval of the coalition.
Senator Faulkner also said the government needed to finalise its national anti-corruption plan as well as public- and private-sector whistleblower protection schemes before the 2013 election.
Mr Dastyari said it was important to reform the party and government, but some changes would take longer than the next election.
"The big message out of this is ... reform or die," he said.
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