NSW mining licensing set up to fail: ICAC

It was almost inevitable that coal mining licensing in NSW would be exploited because the system was so conducive to corruption, the state's watchdog says.

The Independent Commission Against Corruption (ICAC) has slammed the department of resources licensing process, saying it would have been "inconceivable" for any other portfolio to have been so open to exploitation for the benefit of a select few.

It comes after the ICAC found earlier this year that former mining minister Ian Macdonald rigged a 2008 tender process for a coal licence in the Bylong Valley, which financially benefited the family of his then colleague Eddie Obeid.

It also found Macdonald had acted corruptly in relation to a licence at Doyles Creek, in the NSW Hunter Valley.

The latest report, released on Wednesday, suggests assembling a steering group of senior officials from a range of departments to ensure transparency, and making auctions the default allocation method.

Bidders' finances and expertise should be more closely scrutinised, and the auction design overseen by NSW Treasury.

The state government also needs to spell out how coal mining fits into its broader policy focus, ICAC recommends.

It's proposed changes to the ministerial code of conduct and the consideration of tighter rules around disclosure of interest to include spouses and other family members.

Opposition leader John Robertson said all sides of politics had a responsibility to stop the "disgraceful" violation of government processes.

Greens mining spokesman Jeremy Buckingham said a new, broader inquiry was needed to investigate all licences handed out under the former Labor government.

The government is still considering the report.

The ICAC will release another report by the end of 2013 on whether the state government should amend the Mining Act or take legal action against any individual or company as a result of the inquiries.