Attorney-General Mark Dreyfus says the national anti-corruption watchdog will have the same powers as the nation’s intelligence agencies to tap encrypted messaging apps.

The government introduced its bill to set up the integrity commission, which is set to cost $262 million over the next four years, to parliament last Wednesday.

The body would operate independently of the government and have powers to investigate serious or systemic corrupt conduct across the Commonwealth public sector.

Mr Dreyfus confirmed that after obtaining a warrant, the commission will be allowed to tap the phones of politicians – including the prime minister’s – and have the same ability as ASIO to intercept encrypted communications.

“Everyone needs to watch out,” he told the ABC on Sunday.

“We don’t want corrupt activity infecting our system of government.

“That’s why we are creating a long lasting anti-corruption commission for Australia.”

Public hearings sticking point

He said the bill specifically dealt with safely storing sensitive information that could be gathered from the country’s intelligence agencies and defence force.

A major sticking point for crossbenchers has been the high threshold for public hearings, which under the government’s bill would only be held in “exceptional circumstances”.

Retired judges have also thrown their support behind public hearings, saying they will improve transparency and public confidence.

The attorney-general doubled down on the high legal test, defending the government as having struck the right balance.

When asked if the provision would enable a person to legally challenge their hearing being held publicly, Mr Dreyfus said there were good reasons for private hearings which included national security matters.

“There’s a lot in this bill that’s designed to make sure that people who are trying to escape from an investigation won’t be able to,” he said.

Mr Dreyfus also said the government will consult with the coalition on the appointment of the body’s commissioner.

Opposition Leader Peter Dutton said after the bill had been introduced, he wanted the government to work with him on the commission.

When asked if political donations would be investigated, the attorney-general reaffirmed the commission could probe any third-party, but defended donations as being legal.

Mr Dreyfus said reports union officials would be exempt from investigation by the commission, were wrong and inaccurate.

Protections for whistleblowers and journalists as well as safeguards to protect reputations are also included in the proposed commission.

-AAP