Are Tony Abbott and Mike Baird drowning or just waving? By not reaching for Liberal hero John Howard’s lifeline of fundamental reform of the NSW Liberal Party, they may be making a career-threatening mistake. When the full details of the Howard panel’s reform recommendations eventually came out late last week, both leaders ducked for cover. In the run-up to next March’s NSW state election, neither had the stomach to take on the entrenched vested interests of factional warlords and lobbyists who control the party. Yet this is essential for political survival in March; it requires presenting the electorate with a new clean image to replace the ICAC-tainted mud. “Reform” is the key to re-election.

So the two local MPs representing Sydney’s Manly beach, Prime Minister Abbott and NSW Premier Baird, are currently caught in a political rip that threatens to take them (and their governments) into seriously troubled waters. While Abbott’s top agenda item is currently his difficulties with the Senate (and some federal coalition colleagues), he will eventually have to face up to the same problem of internal party dissention that threatens to do dreadful damage to Baird’s ICAC-battered brand. Until the NSW Liberal Party’s fundamental problems are resolved, both governments remain at risk.

Highly regarded and with a good public image, Mike Baird can do little more than watch while so many of his parliamentary team get dumped thanks to ICAC. He seems to have taken the “do nothing” option on party reform until after March on the grounds that the prospect of internal division over reform proposals outweighs the risk of the ICAC smell still doing damage to an un-reformed, faction-ridden, divided party. Abbott knows he has a huge stake in Baird’s problem; he initially played the key role in getting the now-stalled process under way. But by bowing to his state colleague’s wishes to delay reform, Abbott has resiled from his “pledge” to bring about “these important reforms…and not just to talk, but actually embrace reform… before the end of [2014]”. Nothing has changed, except the will of the two leaders, the strength of the negative reaction of the state executive, and its sudden declaration of an “election period” which stifles dissent.

For Baird, the problem is much more immediate than for Abbott, who has until 2016. Baird needs an immediate circuit-breaker from the ICAC smell that hangs over so many of his colleagues’ transparent breaking of the one-sided NSW laws about political donations. In the electorate’s eyes it is immaterial that this illegal activity was aimed at leveling the political-funding playing-field, rather than the sort of personal enrichment of those Labor luminaries who have graced ICAC. All are seen as crooks; and the Liberals were elected to get rid of the crooks.

At a time when the Liberals’ public image is under unprecedented pressure, former PM Howard has provided a program of reform that, if grasped and acted on before March, is the circuit breaker Baird is yet to realise he desperately needs. It has the prospect of showing the Liberals getting their house in order. By doing nothing, Baird is hoping that Labor’s image in March will be even worse. Is it any wonder voters are looking for options outside the major parties? .

But Baird’s reluctance to countenance pre-election reform is no surprise in the context of the state executive’s self-interested desire to kill off the Howard proposals. There was little fanfare in the almost reluctant release last week (in a “click here” attachment to a penultimate paragraph of a lengthy memo) of the Howard panel’s strong, wide-ranging recommendations for significant reform. When this “expert panel” was appointed last year by a faction-dominated state executive under pressure from Abbott and former Premier O’Farrell, the joint press release promised that its report would be dealt with “in the second half of 2014”. But it has now been shelved; with the upcoming state election the excuse. Yet the election date was always known and the request for deferment seen by a growing number of dissident party members as yet another leadership delay against a mounting campaign for reform.

Despite the modest media response to its official release, the Howard panel report implies devastating criticism of the faction-dominated present state executive with fellow panel members (former ministerial colleagues Philip Ruddick and David Kemp and former NSW president Chris McDiven) going far beyond a simple recommendation to introduce plebiscites of all resident Liberal members for selection of local candidates, state and federal, in order both to ensure a broader range of candidates — and give democratic rights to members and incentives to join the party. In a barb clearly directed at the current state executive, the report notes that “plebiscites can contribute to the weakening of factional influences” and that “Factions which seek on a continuing basis to promote their own loyalists by excluding non-loyalists from party positions and engage in activities designed to damage other party members… do not advance the overall welfare of the party, inflict reputational damage upon it and can frequently contaminate the preselection process”. And in a swipe at the present executive’s unprecedented use of “special powers” on not-so-special occasions, (particularly branch creation), the panel recommends their being severely limited. No wonder those with vested interests in the current faction-friendly rules are resistant to implement the Howard reforms.

Baird may get the worst of all worlds. By seeking to avoid an internal pre-election fight over reform, he is not only risking taking an unreformed odourous party to an election, he also faces the very real prospect of internal dissention on a large scale because reform is not proceeding. There is a petition circulating among grass-roots members calling for the federal Liberal organisation to intervene to force NSW to proceed with reform. “We are tired of factions exploiting our party”, it says adding that “Very few members of our party (unlike those in every other state but one) have a say in who our candidates for parliament are because the factions dominate this most critical process”. It claims that the “culture of hyperfactionalism (in NSW) is not unrelated to the string of senior party figures appearing before ICAC recently”. Ouch!