Queensland Premier Annastacia Palaszczuk has announced she will strip Katter’s Australian Party of five extra staff positions it was granted last term, after it refused to denounce federal senator Fraser Anning’s contentious maiden speech last month.

Senator Anning used his maiden speech in Federal Parliament to call for a complete overhaul of the immigration system, insisting most migrants should be from a European Christian background and all Muslims should be banned.

In that speech, he also used the phrase “final solution”, the same phrase used by the Nazis under Adolf Hitler meaning annihilating Jewish people from Europe.

Mr Anning called for a plebiscite for the public to decide if there should be “wholesale non-English speaking immigrants from the third world, and particularly whether they want any Muslims”.

He also claimed “certainly all terrorists these days are Muslims” and had previously described some migrants as “transnational parasites”.

Ms Palaszczuk had called upon the KAP to denounce Senator Anning or face losing the five extra discretionary staff granted to the state party last term during the hung parliament.

The ABC understands this includes three parliamentary staffs and two electorate staff members, and the move could be halted if the KAP changed its position.

Fraser Anning is the voice of Katter’s Australian Party in the Senate, with Bob Katter in the House of Representatives.

The party also has three MPs in the Queensland Parliament, led by Bob Katter’s son Robbie.

“Because his party will not denounce Senator Fraser Anning, I denounce his party,” she told the Labor State Conference on Sunday.

Ms Palaszczuk said “racist extremism will not be tolerated”.

“To believe as we do in equality and basic human rights means we do not merely support their existence … we stand up to and call out those who would rip them way,” she said.

“No-one uses the words ‘final solution’ except in sorrow, anger and shame.

Ms Palaszczuk said her own grandparents fled the work camps and appalling conditions and misery of World War II to come to Queensland.