But it will not look retrospectively at allegations, and public hearings may only be held in some cases.
Instead, the newly-announced Commonwealth Integrity Commission will investigate alleged corruption and prepare a brief of evidence for prosecutors.
“This is a real proposal, with real resources, real teeth,” Prime Minister Scott Morrison told reporters in Sydney.
“These are sensible changes we’re outlining today. They learn the lessons, I think, from many of the failed experiments we’ve seen at a state jurisdiction level.
“I have no interest in establishing kangaroo courts.”
The new body will be split into two parts – one investigating corruption in law enforcement, and the other investigating it in the public sector.
The current Australian Commission for Law Enforcement Integrity will be wrapped up into the new body, and given more responsibility to investigate bodies like the tax office.
The public sector integrity division will investigate criminal corruption involving government departments, parliamentarians and their staff, the staff of federal judicial officers, and in some circumstances organisations that get federal money.
Attorney-General Christian Porter said new offences will be created, including “aggravated corruption by a public sector official”.
He said the commission will not be a star chamber running show-trials where guilt is already presumed.
“It is not a body that will conduct public hearings and it will not write reports where it makes findings of corruption on a piece of paper against an individual,” Mr Porter said.
“It is an investigative body, with serious investigative tools.”
Work on changes to Australia’s anti-corruption regime began under former prime minister Malcolm Turnbull, but the coalition had previously stopped short of committing to create a new body.
Labor, the Greens and independents pressured the Coalition into passing a motion in parliament in November calling for an integrity commission to be set up.
The Coalition aims to avoid the problems the NSW and West Australian anti-corruption bodies have faced by splitting the investigation body into two section, with specific powers.
Higher-risk law enforcement bodies, with significant scope to hide corruption, will be investigated with different powers than the other public service bodies.
The government has asked for public feedback by February 1 on the proposed model, which is available online.
Local News Matters
Media diversity is under threat in Australia – nowhere more so than in South Australia. The state needs more than one voice to guide it forward and you can help with a donation of any size to InDaily. Your contribution goes directly to helping our journalists uncover the facts. Please click below to help InDaily continue to uncover the facts.