While some MPs believe intervention in NSW is warranted, it is understood federal leader Anthony Albanese is reluctant to wade into a factional dispute with his party’s right-wing.
But Mr Jones told The Sun-Herald the party had failed to change its culture.
“This is the long legacy of doing Whatever It Takes,” Mr Jones said, referring to the book penned by former NSW right-wing power broker Graham Richardson.
“It’s a crisis for the NSW branch, but we should never let a crisis go to waste,” he said.
“Time to revisit the reform agenda: fundraising; campaign finance laws; campaigning and the cabal that has run the show.”
A senior NSW Labor source told The Sun-Herald the state branch had a culture of poor governance and oversight which could be traced back generations.
“The real problem here is it seems a kid gets encased in Young Labor, brought into head office and five or six years later given the keys and is in charge of the largest branch of the oldest political party in Australia – and no one is exercising an appropriate oversight function,” the source said.
“No one said ‘wait a minute, you can’t do this, it’s not on’ – that’s the failure of executive leadership. And then there’s the failure of those whose role it is to oversee the work of the executives.
“There are lots of good people inside NSW Labor but they’ll need some help to reform themselves.”
In an email to voters in his electorate, Mr Jones said Labor was not alone in subverting NSW donor laws, with five Liberal MPs caught out in the past.
“But this one belongs to the Labor Party and it is incumbent on us to rectify it,” he said.
He said the scandal had shown the need to overhaul the entire donation system once and for all.
“Everything should be on the table: including caps on funding, the role of public funding and the need to better align state and federal laws,” Mr Jones said.
“Attempts to game the system by one party or government are short-sighted,” he said.
“We all die a little when scandals like this corrode public confidence in the operation of our political and democratic institutions.”
Federal Labor MPs in NSW have told The Sun-Herald they are disgusted by the ICAC scandal, but few have commented publicly while the inquiry is ongoing.
However former NSW Labor premier turned senator Kristina Keneally – who was strongly backed by Ms Murnain – has suggested the party needs to hire older general secretaries and depart its headquarters in Sussex Street, because of the term’s association with the NSW Labor culture.
“I am incredibly distressed by the revelations that have been come forward at ICAC,” Senator Keneally told reporters in Canberra on Friday. “I am angry and frustrated that this has been allowed to occur.”
A NSW MP told The Sun-Herald they didn’t believe any true reform could occur within the party without removing the union influence.
“Unless you literally kick unions out of the Labor Party, which no one is going to do, then it’ll just go back to that,” the MP said.
Latika Bourke is a journalist for The Sydney Morning Herald and The Age, based in London.
Tom Rabe is a journalist with The Sydney Morning Herald