Mr Smith tested different gatherings to take after his lead in what he said was an initial move towards a distinctions framework that would "compensate caring acts, not political and individual support".
In the event that connected crosswise over legislative issues, the standard would have shut eight out of 10 of the names on David Cameron's dubious acquiescence respects list, he said.
The Pontypridd MP impugned Mr Cameron's rundown – which included numerous Downing Street staff members and Conservative contributors as "glaring cronyism".
What's more, he blamed Mr Cameron's successor Theresa May for turning a visually impaired eye" to a circumstance which he said had extended doubt in governmental issues.
He promised to convey a conclusion to the "time of political cronyism unequivocally" and acquaint principal change with the political respects framework if chose to supplant Jeremy Corbyn as pioneer on September 24.
The five-year respects boycott would stay set up until an aggregate update of the framework was finished, he said.
Mr Smith said: "David Cameron's abdication respects list has brought the framework into notoriety and developed individuals' question of governmental issues. In all honesty it was obtrusive cronyism.
"It's basically not adequate for Theresa May to choose not to see to this circumstance – we require major change of the distinctions framework so it can compensate great deeds and reestablish individuals' trust in legislative issues.
"That is the reason, as Labor pioneer, I would present a five-year prohibition on previous Labor Party staff members, counsels MPs and benefactors from getting a honor or turning into an individual from the House of Lords. I am approaching the various political pioneers to take action accordingly until the framework can be upgraded.
"This would be the initial move towards conveying a conclusion to the time of political cronyism for the last time."