Queensland Premier Annastacia Palaszczuk has apologised swiftly to parliament after being found in contempt for taking funding from Katter's Australian Party for refusing to denounce former senator Fraser Anning.
Ms Palaszczuk threatened to take away the discretionary funds she gave the minority party years earlier if its three Queensland MPs did not condemn Mr Anning for his speech using Nazi terminology.
In a report tabled in parliament on Tuesday, the ethics committee found her actions amounted to improper interference with the free performance by the KAP members and constituted contempt.
"I accept the findings of the report," she told parliament.
"I accept responsibility for the actions I took which led to those findings and I offer my unreserved and sincere apology to the House."
Mr Anning was widely condemned for using the Nazi-associated phrase, "final solution" during his first speech in federal parliament.
Ms Palaszczuk pulled funding for a special staffing arrangement when MPs Robbie Katter, Shane Knuth and Nick Dametto refused to call Mr Anning out.
She was then referred to the Crime and Corruption Commission, which found the premier technically broke the law through her actions but left it up to the parliament to decide what to do next.
The ethics committee found the premier intended her actions but did not intend to commit wrongdoing.
"The committee is cognisant that the premier believed that her actions in calling out 'hate speech' and putting what she believed to be legitimate pressure on others to also condemn hate speech, was in the public interest," the report said.
"But the premier is a senior, long-serving member and arguably should have realised the consequences of her actions."
Robbie Katter said the premier's apology was heavily qualified after multiple Labor ministers rose in parliament to acknowledge she had taken a stand against racism.
"(The) sentiment that is coming across is that there was all this background and need for it, and that it was all these disgusting acts and that's why it was done, justifying it," he said.
"I'm offended by a lot of things in this parliament but I don't get to use my position or be able to intimidate or bully people into a position."
Mr Katter said the party is considering its options, including whether or not it could or would refer the matter to the Director of Public Prosecutions.
The ethics committee described the CCC's handling of the matter as "problematic".
"It was not fair to the premier to essentially declare there was prima facie evidence of commission of a crime, but that prosecutorial discretion would be exercised not to proceed," it's report said.
"The CCC also created an expectation that a contempt had been committed, when that was a matter for this committee to examine and ultimately a matter for the Legislative Assembly to determine."
It recommends the Parliamentary Crime and Corruption Committee consider the CCC's assessment and public reporting methods and its use of prosecutorial discretion.