A key senator believes the Turnbull government’s proposed business tax cuts and the revelations coming out of the banking royal commission are two separate issues.

While Tim Storer is yet to be convinced that the cost of implementing business tax cuts are worth it, he is not calling for the banks to be exempt from a cut in the corporate tax rate to garner his support like other senators.

“I see the two issues to be distinct and separate,” the South Australian senator told reporters in Sydney.

Business Council of Australia chief executive Jennifer Westacott told a Senate hearing into the government’s 10-year tax plan that the revelations coming out of the royal commission are “deeply disappointing”.

But she pointed out the major banks wouldn’t get an incremental tax cut until 2023 and the full reduction until 2026/27, and in the meantime would be paying a bank levy of $1.5 billion a year.

She said to use tax policy to punish a sector is only going to punish their customers, many small businesses, shareholders and bank staff.

“Why are we going to punish the economy? It is not going to solve the problems that the royal commission is clearly highlighting,” she said.

One Nation leader Pauline Hanson welcomed Prime Minister Malcolm Turnbull saying it was a political mistake not to call a royal commission sooner.

“Let’s get on with the job now,” she told ABC TV on Tuesday.

Senator Hanson wants the banks to cover the cost of the royal commission, instead of the taxpayer, and for the inquiry to be extended to liquidators and mortgage insurers.

Former government minister Fiona Nash has admitted the coalition got it wrong in not calling a banking royal commission sooner.

Ms Nash, who was forced out of parliament during the dual citizenship saga, joined other Nationals colleagues in offering the concession.

“I was in government at the time, I think we got it wrong. I think we should have done it sooner.”

Her admission follows former deputy prime minister Barnaby Joyce’s, as well as cabinet minister Matt Canavan – who too admitted he was wrong.

His colleague Mathias Cormann says the government had genuinely believed, before announcing the royal commission, that there had been enough inquiries into the sector and it was time for action instead.