EXCLUSIVE

Pushing for democratic reform: Former PM John Howard.

Pushing for democratic reform: Former PM John Howard. Photo: Alex Ellinghausen

The NSW Liberal Party is set to be rocked by the recommendations of an expert panel chaired by former prime minister John Howard and its expected advocacy of a radical overhaul of how federal and state candidates are chosen, dramatically altering power structures within the party.

The panel, commissioned by Prime Minister Tony Abbott, is set to recommend that the state party radically overhauls how federal and state candidates are chosen.

The issue of whether to introduce plebiscites – or direct election of lower house candidates by Liberal Party branch members –has torn the NSW division apart in recent years.

The dominant left and centre right factions, which have a significant say in preselections through their control of the party's powerful state executive, are vehemently opposed to the move, claiming it will lead to more ethnic and religious branch stacking.

But the right and others in the party are pushing hard for the change, arguing it will democratise the process.

Last November Mr Abbott and then premier Barry O'Farrell intervened to announce the appointment of Mr Howard to chair an expert panel tasked with examining "the party's processes for preselection of candidates".

Fairfax Media has obtained a draft report that recommends introduction of plebiscites.

Dated May 4, it says the panel believes increasing party membership "is vital to its ability to campaign effectively and to present a diversity of quality candidates".

"The incentive of being able to play a direct role in selecting a Liberal candidate is a powerful one for any person contemplating joining the party," it says.

The draft report recommends the introduction of a plebiscite system for choosing lower house candidates whereby all financial party members in an electorate would be eligible to vote.

In what appears to be a safeguard against branch stacking, it says participants must have been party members for at least two years.

The draft report is attached to an email from Mr Howard to panel members Philip Ruddock, Chris McDiven and David Kemp.

Mr Howard notes Mr Ruddock's concern about the prohibitive cost of the system, but says this has not proven to be the case in the Victorian division's experience.

Mr Howard also addresses Ms McDiven's concern that plebiscites would prompt "Clive Palmer-style campaigns" but says this can be prevented with a spending cap.

He also acknowledges Ms McDiven's suggestion that the reform be introduced as "a staged move" but warns the party could look weak, given Labor has been trialling community preselections for lower house seats.

"My strong personal view is that, given the experimentation now embraced by the Labor Party with broader preselections, our Party would look very timid if it proved unwilling to move to a plebiscite system," he says.

Any move to a plebiscite system would require the endorsement of 60 per cent of the party's state council – a notoriously difficult figure to achieve.

The draft report notes it "would require the open advocacy of that change to the State Council by both Federal and State Parliamentary leaders".

On Tuesday NSW Liberal state director Tony Nutt confirmed the panel's report has been received and that "further comment will be made in due course".