NSW Labor will consider banning councillors from using ratepayers' cash to buy designer goods after revelations of spending on luxury items sunk the aspirations of high-profile upper house candidate Khal Asfour.
Mr Asfour, the mayor of Canterbury Bankstown, on Friday pulled out as a Labor candidate for the upper house, ahead of the March 25 election.
Labor leader Chris Minns said he had private discussions with Mr Asfour on Thursday night, but declined to say what was said between the pair.
Mr Minns said he took particular exception to reports Mr Asfour had spent taxpayer money on designer clothing.
"Clothing allowances are generally for hard hats and personal protective equipment, not for clothes that you wear every day in your professional capacity."
He defended backing the western Sydney mayor until two months out from polling day, saying he only learned of the reports about Mr Asfour's expenses on Thursday.
"I didn't know about these revelations. That's obviously an important part of this in any political campaign," Mr Minns told reporters.
"At any stage of the election cycle, you're going to have situations like this."
A spokesman for Mr Asfour said he had been subjected to a vicious smear campaign and relentless leaking.
Reports on Friday suggested Mr Asfour also spent money on spa treatments while travelling overseas.
"The latest headlines are the last straw," the spokesman said.
"The mayor is vehemently denying any wrongdoing and has at all times adhered to the policy set by council, a policy scrutinised by the Office of Local Government."
It comes after former Labor MP Tania Mihailuk used parliamentary privilege last year to claim Mr Asfour had property links with disgraced former Labor powerbroker Eddie Obeid.
Mr Asfour was cleared of misconduct following an upper house inquiry late last year.
Ms Mihailuk was later kicked out of the Labor Party and has since joined One Nation, taking firm issue with the way she was ostracised by her former Labor colleagues.
"It's been a difficult and trying few months. I put 27 years of my life into the Labor Party and I think they treated me really badly," she told reporters on Friday.
The former Labor MP said she felt vindicated about raising issues with Mr Asfour's conduct months before the latest allegations coming to light.
Ms Mihailuk previously served on the Bankstown council and was mayor from 2006 to 2012.
When asked if she knew directly about Mr Asfour's alleged misspending, Ms Mihailuk said there were all sorts of rumours over the years.
The Labor leader dismissed Ms Mihailuk's claims on Friday, saying they had been proven false by an Independent Commission Against Corruption investigation and an independent inquiry.
"At the end of the day, you can't say that you've got a concern about a candidate in relation to (property) developers, but then say, 'What I really meant was that it was a concern about expenses'," Mr Minns said.
One Nation MP Mark Latham said Ms Mihailuk was dumped by the Labor party for being a genuine whistleblower and Mr Asfour should resign as mayor of Canterbury Bankstown.
"If you're not suited to being in the NSW Upper House, how can you have the credibility to continue in that Labor Party position here?" Mr Latham said.
Premier Dominic Perrottet said the issues surrounding Mr Asfour's withdrawal were a matter for NSW Labor.
"It's not something that interests me," he said.
Mr Minns signalled his party would look at creating legislation to stop councillors from charging ratepayers for expenses in the next term of government.
"Expenses issues in councils in NSW are an issue," he said.
"We want to look at them in government because I don't think it's appropriate to levy ratepayers for these charges."