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Liberals risk expulsion to slam 'corrupt' preselection process in New South Wales -

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LEIGH SALES, PRESENTER: Jostling over election candidates in Liberal Party branches in New South Wales has become so ruthless, some party members are likening it to an episode of Game of Thrones. Even though the Prime Minister said a few months back that the Liberal Party had no factions, a huge number of people in his party disagree and some think the dominance of factional bosses is turning away talented candidates. Tonight, three Liberal Party members, including two former parliamentarians, are risking expulsion by speaking exclusively to 7.30 about the Liberal Party's civil war. Conor Duffy and Xanthe Kleinig with this report.

MALCOLM TURNBULL, PRIME MINISTER: We're not run by factions. We're not run by - well ...

(Laughter from audience)

CHARLIE LYNN, FMR NSW UPPER HOUSE LIBERAL MLC: There are factions in the Liberal Party. They're pretty ruthless. Anybody in the Liberal Party knows that and you can't deny it.

MALCOLM TURNBULL: You may - you may - you may dispute that.

ROSS CAMERON, FMR LIBERAL MP & SKY NEWS CONTRIBUTOR: I would say Malcolm was perhaps stretching it a fraction.

MALCOLM TURNBULL: But I have to tell you, from experience, we are not run by factions.

(Outrage from audience)

Nor - nor ...

JURIS LAUCIS, LIBERAL PARTY BRANCH MEMBER: I think he's either badly advised on that or it's something that he just didn't want to admit it.

CONOR DUFFY, REPORTER: Malcolm Turnbull's declaration came as factions were at each other's throats over one of the party's richest prizes. The departure of a wounded Joe Hockey started a summer of discontent over who would take his safe seat.

ROSS CAMERON: Now we managed to produce three candidates for the seat for Liberal preselection in North Sydney - three. And, you know, last time it was contested by the Liberal Party, we had 30 candidates. Now, it turns out that one of the three happened also to be the president of the Liberal Party of New South Wales. Now, I just think this is an act of self-harm.

CONOR DUFFY: Moderate factional warrior Trent Zimmerman secured the prize after a contest ordinary members called a stitch-up. Just 40 members of head office and another 48 local branch members got to vote.

ROSS CAMERON: So that is 48 out of 110,000 voters in North Sydney. That means that the people choosing the Liberal candidate for North Sydney represent less than .01 per cent of the voters of North Sydney and that's what's gotta change.

JURIS LAUCIS: It's a question of whether a few people should be able to manipulate the system so they get the candidates that they want.

CHARLIE LYNN: If the Liberal Party was a business, I think it would be deregistered because of its conduct.

CONOR DUFFY: Internal politics in NSW is famously brutal; so brutal that participants liken it to Game of Thrones. The once-dominant right faction has been frozen out. Now the left or moderates have the upper hand and are keen to use that power in preselection contests involving 22 Liberal MPs. Two contests are shaping up as particularly bitter.

Abbott loyalist Craig Kelly is under threat in his seat of Hughes.

CRAIG KELLY, LIBERAL MP: I've had enormous support, outpouring of support from supporters, from party members, from people all over Sydney, in fact people all over Australia.

CONOR DUFFY: Senior moderate and state executive vice-president Kent Johns is considering a challenge. He received a warning from Sydney shock jock Alan Jones.

ALAN JONES, 2GB BROADCASTER (Feb. 4, 2016): You better pull your head in, Kent Johns, because I'll tell you what, if you put your head up, there'll be a hell of a story that'll be told about you, Mr Johns.

CRAIG KELLY: It was very flattering that Alan gave me his support.

CONOR DUFFY: Mr Johns declined to be interviewed, but 7.30 understands the blast from Jones may have strengthened his determination to run.

CHARLIE LYNN: Yes, I believe the left do have the numbers to knock off Craig Kelly, again because their control of the numbers on state executive, which have a large say in the selection of the local members.

CONOR DUFFY: The once-dominant right faction isn't pleased with its new reduced circumstances. All three speaking out tonight are aligned or sympathetic to it.

Much of the anger is directed at a little-known state MP, Jai Rowell, who defected from the right to the left.

CHARLIE LYNN: He's been with the hard left, he's been with the hard right, he's been with the soft right, now he's with the left. So he's a bit of a factional tart. I think he'd be probably the least trusted member in the Liberal party room in NSW.

CONOR DUFFY: Jai Rowell is accused of masterminding arguably the most sensitive of all the Liberal preselection battles, rolling first-term MP Angus Taylor. No challenge has been launched, but senior sources say it remains a live option and would trigger World War III inside the party.

CHARLIE LYNN: Angus Taylor is brilliant. You know, his peers see him as being a future prime minister, he's a Rhodes scholar, he's a very successful businessman.

CONOR DUFFY: Moderate-aligned neighbouring MP Russell Matheson is the as-yet-undeclared challenger and Jai Rowell has the numbers to deliver him the seat. Matheson is close to Jai Rowell. In fact, Rowell's wife is Matheson's office manager.

CHARLIE LYNN: Yes, Rowell has the numbers to roll Taylor in Hume.

CONOR DUFFY: Critics call them paper branches and allege they exist to get Rowell crucial delegates to the all-powerful state executive.

ROSS CAMERON: Those paper branches controlled by Jai Rowell, each of them producing a delegate who behaves like Pavlov's dog, who sits there and waits till, "Oh, put my hand up when the factional boss says," go back to my iPhone, you know, look at bloody Kim Kardashian. "Oh. Yeah. Oh, what?" Put my hand up again, you know.

CONOR DUFFY: 7.30 has obtained a confidential Liberal Party memorandum that backs up the theory some of Rowell's branch members aren't overly enthusiastic party participants. This document shows 18 Rowell-aligned delegates to state council, part of the group that decides the make-up of the all-powerful state executive, were struck out for failing to attend a single meeting in 18 months. Those struck out include Rowell's wife, sister and parents.

ROSS CAMERON: This is the irony: that the big power change which has happened in NSW - you've got a bloke named Jai Rowell who nobody's ever heard of.

CONOR DUFFY: Jai Rowell says it's ludicrous that he would direct a branch to vote a particular way and issued this statement to 7.30:

JAI ROWELL, LIBERAL MEMBER FOR WOLLONDILLY (male voiceover): "I'm not part of any challenge to Angus Taylor. ... The branches are not made of ghost members, but are made up of hardworking local individuals. In many cases, the members have been there for more than 20 years plus. In terms of my family, they are my greatest support and have given more than fair share of time to help me and the Liberal Party locally.

CONOR DUFFY: Some of the Liberals' most revered leaders, including former Prime Minister John Howard, have called for greater democracy in the party. The alleged stitch-ups have infuriated some to the extent where they're risking expulsion to talk to 7.30. Some want US-style primaries and others simple plebiscites of all party members to decide preselections.

JURIS LAUCIS: Unfortunately, parliamentarians, I feel, are scared that they will lose their position if they speak out or else they are already under the power and influence of the powerbrokers and I think that's a very sad thing.

ROSS CAMERON: I think what you have to do is you have to keep - you have to be willing to protest. You have to be willing to say, "This is not good enough." You have to be prepared to have those difficult conversations like the one we're having now, where I'm having to be critical of my own side because we are behaving like some sort of Chicago, Tammany Hall, backroom - you know, it's a corrupt process. Let's call it what it is.

LEIGH SALES: Conor Duffy with that report, produced by Xanthe Kleinig.