The federal government is standing by royal commissioner Dyson Heydon, in the wake of Labor, Greens and union calls for him to step down over a Liberal Party fundraiser.
Mr Heydon had been billed to deliver the Sir Garfield Barwick address in Sydney on August 26, but on Thursday morning signalled he would pull out.
The brochure for the $80-a-head dinner, which has been on the NSW Bar Association website since April, notes that cheques should be payable to "Liberal Party of Australia (NSW Division)".
"A receipt will be issued," it says. "All proceeds from this event will be applied to state election campaigning."
Mr Heydon said in a statement that before any journalists had contacted him on Thursday he had advised the dinner organisers that "if there was any possibility that the event could be described as a Liberal Party event he will be unable to give the address, at least whilst he is in the position of royal commissioner".
He briefly interrupted the inquiry hearing in Sydney on Thursday morning to take some advice.
While Labor called for Mr Heydon to be stood aside, unions and the Greens said the royal commission itself should end.
However, Attorney-General George Brandis said there was no more eminent lawyer in the country than Mr Heydon.
"Any suggestion that Mr Heydon would be lending his political support to one side of politics over the other is absurd," Senator Brandis said.
"I would be absolutely certain that Mr Heydon, who has a life-long reputation for the punctiliousness and fierce independence of his conduct, would not have been aware of that (political fundraising aspect)."
Senator Brandis, who delivered the first of the Sir Garfield Barwick addresses in 2010, said he had not been aware Mr Heydon had been scheduled to speak.
Shadow attorney-general Mark Dreyfus said Mr Heydon should stand down from the $80 million inquiry.
"The bias and political nature of this royal commission is now clear for every fair-minded Australian to see," he told reporters.
He said if Mr Heydon did not stand aside then Federal Court action should be considered.
ACTU secretary Dave Oliver said unions could boycott the royal commission or take legal action.
"I'm not ruling anything in or out at this stage," he said.
"We want it shut down."
Manager of opposition business Tony Burke told parliament, as he attempted to suspend business to debate the issue on Thursday, that it was an "absolute disgrace".
"By his own actions he has disqualified himself from conducting the royal commission," Mr Burke said.
The inquiry was initiated by the Abbott government after the 2013 election in a bid to investigate union misconduct and corruption.
Opposition Leader Bill Shorten appeared on the witness stand for two days this year, answering questions about his time as the Australian Workers Union boss.
Mr Shorten told reporters in Canberra that it was "incredibly serious" a royal commissioner investigating Prime Minister Tony Abbott's political opponents would attend a Liberal fundraiser.
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