While most states and territories have some form of dedicated corruption watchdog, the Commonwealth does not – unless you're a cop or working for the Immigration Department. It's possible to believe that federal politicians, public servants and lobbyists are immune from the temptations that some of their state colleagues give into, but it's also possible that things are far worse at the federal level. Bizarrely, controversial property developments that make former mayors millions of dollars often attract more attention than hastily developed policy decisions that cost the budget billions of dollars.

Take the debacle around gas policy in Australia, for example. The recent spike in gas prices – a spike that's driving electricity prices up and manufacturers out – was the direct and inevitable result of policy decisions made over the past eight years. The enormous gas-export facilities built in Gladstone were approved by former resources minister Martin Ferguson, who, in retiring from politics, went off to work for the gas industry's lobby group. Ferguson was also appointed, post-politics, to the board of British Gas, a company that signed a $20 billion contract to ship gas through the controversial new export facilities.

To be clear, there is no evidence that Ferguson has behaved corruptly. But because there is no federal equivalent of the NSW ICAC, were a public servant, gas industry employee or anyone else to have specific concerns about this web of relationships, there is no agency specifically designed to receive and investigate them.

While the federal police, the Commonwealth Ombudsman, parliamentary inquiries and even the media have a role to play in investigating corruption, all of those bodies have competing priorities, and none are resourced and required to pursue systemic corruption in the way that state-based bodies like NSW's ICAC are. It is an intriguing omission.

Counter-intuitively, the visible and vigorous pursuit of corruption is good for politicians, the public's faith in our democracy and even for the economy. Let's start with how it helps politicians.

As the tone of federal politics has deteriorated, the frequency with which politicians are accused of "helping their mates", "putting their fingers in the till" or "rorting" their entitlements has grown steadily. And a common response from a political party under attack for behaving corruptly is to accuse the other side of similar misconduct. While such retaliation may help blunt a specific attack, the cumulative impact is a public that believes "they are all corrupt".

You can't have a democracy without politicians. But the ease with which allegations of corruption are thrown around, and the virtual impossibility of an individual politician clearing their own name, is not just undermining the public's faith in democracy, it is deterring good people from seeking elected office. A federal corruption watchdog will not make all politicians behave maturely, but the ability to refer allegations to an independent body with investigative powers will likely make people less likely to throw baseless allegations around. As Donald Trump is finding out, making unfounded allegations can give you a good day and a bad year.

A federal corruption watchdog will also help to provide business with more of the "certainty" it is always seeking. When individual companies, or industries, secure excessive influence over the government's policy decisions, the unintended consequences can be significant, for rival firms and the economy as a whole. Take the mining tax, for example.

While there was nothing covert about the way the mining industry flexed its political muscles to avoid paying taxpayers more for its resources, the consequence of the mining industry's success is higher taxes for every other industry. The same is true for the gambling industry's success in convincing then prime minister Julia Gillard to back down on poker-machine reforms. While gambling lobbyists clearly delivered returns for the gambling industry that were well in excess of their multimillion-dollar salaries, the costs of their success are borne by the retail sector and the health budget alike.

But as well as economic problems, such as the loss of retail sales that accompany the growth in problem gambling, creating a policy environment in which those with privileged access to politicians can disproportionately affect public policy also creates a much riskier investment environment for those businesses with no interest in politics.

The omni-shambles of Australian energy policy provides the clearest possible example of what happens when the private sector has no faith in the ability of governments to make, and stick to, long-run policy. After 10 years of ruthless lobbying and politicking, we now have the remarkable situation of our energy market being unprepared for the closure of a 50-year-old power station. Who could have anticipated that?

Governments are neither the cause of, nor solution to, all the world's problems. But poor governance and a lack of transparency can significantly harm not just the public's faith in democracy but the attractiveness of Australia as a place to invest. Corruption harms jobs and growth.

We know we have had problems. We know Securency, a then government-owned note-printing business, paid bribes to attract business. We know the government-owned Australian Wheat Board paid bribes to secure business. And we know that companies that operate here in Australia, such as mining giant Rio Tinto, are being investigated by the federal police after reporting themselves for making potentially illegal payments to secure business in Guinea.

We know NSW ICAC investigations have led to the resignation of two premiers and the retirement of a dozen MPs for receiving illegal donations. We know former NSW energy minister Ian MacDonald faces charges for corruptly awarding a lucrative coal lease. We know we need to do more to stop corruption.

The Turnbull government is so keen to attract foreign investment it has proposed a $48 billion corporate tax cut. But plenty of countries with lower corporate tax rates than Australia struggle to attract foreign investment for the simple reason that they are not considered safe and stable places to invest. Setting up a federal corruption watchdog with real teeth, like NSW's ICAC, is a cheap way to protect one of Australia's genuine competitive advantages: its reputation as a safe place to do business.

Corruption exists in Australia and it likely exists in the Commonwealth sphere. But even if it didn't, it would be worth setting up a body to search for it, if only to convince ourselves and foreign investors of our virtue. A Parliament willing to keep track of every phone call in the country to help win its "war on terror" should be more than willing to impose greater scrutiny on itself. The public are told they have nothing to fear if they have nothing to hide. Perhaps it is time that same approach was applied to those who make the laws of the land.

Richard Denniss is The Australia Institute's chief economist. Twitter: @RDNS_TAI