Liberal candidates are "gutted" and weighing up legal action against the party after an administrative debacle left them off the ballot for next month's NSW local government elections.
Furious Liberal sources told the Newcastle Herald that the party's failure to lodge nominations for an estimated 130 or more candidates had left them thousands of dollars out of pocket.
Candidates each have paid $1200 lodgement fees to head office and spent hundreds or thousands more on campaign material.
Some of those omitted, including Newcastle ward three candidate Matt Bailey, stand to lose more than $160,000 in probable councillor income over the next four years.
NSW Opposition leader Mark Speakman has described the paperwork error as a "debacle" and "probably the worst act of mismanagement that I can think of in the organisation's history".
"Yesterday I asked the state director to provide a briefing today to MPs at Parliament. He declined to do so," Mr Speakman said in an email to Liberal MPs on Thursday.
"I have told the state director that his position is no longer tenable and he should now resign."
Mr Bailey said he was "deeply saddened and struggling to find any clear answers" after the administrative blunder cost him a winnable place on the ward three ballot.
"My whole team had followed the correct process and we had our forms completed and submitted to the party on time," he said.
"I feel especially sad for the dozens of other candidates who have had their democratic rights stripped away from them and for the community, who now won't have an opportunity to choose a Liberal representative in ward three."
Liberal sources said the chaotic campaign could have repercussions in the coming federal election, where Opposition leader Peter Dutton will try to paint the Albanese government as economically incompetent.
Mr Dutton said during a radio interview that heads should roll.
Party sources said the failure stemmed from the NSW Liberal secretariat underestimating how much time it would take to lodge nominations for about 350 candidates.
Liberal candidates lodged their own nominations with the NSW Electoral Commission at the 2021 council elections, but the party centralised the process this year.
Some candidates submitted their paperwork to Liberal head office after being preselected weeks ago but received an email from the party secretariat only 24 hours before nominations closed saying they must "urgently complete your nomination as a Liberal candidate with the NSW Electoral Commission".
The party failed to complete its part of the online nomination process for a swathe of candidates.
The Herald has been told party staff worked into the early hours of the morning last weekend lodging nominations before the NSWEC deadline at midday on Wednesday.
Maitland deputy mayor Mitchell Griffin told the Herald that he had seen the writing on the wall on Tuesday evening and nominated himself as an independent as a safeguard.
Mr Speakman said the party should have told candidates on Wednesday morning to complete their own nominations when it became clear some would miss out.
"It's a basic matter of competence and administration," he told reporters.
"If you don't have the resources to handle these nominations, you call for more.
"And, if you're still not satisfied there are enough resources, you let the candidates nominate themselves."
Deputy Liberal leader and senior MP Natalie Ward said Mr Shields "didn't give appropriate notice that anybody else needed to help".
Mr Shields has attributed the mistake to a lack of resources and apologised to the Liberal-endorsed candidates who were not nominated.
One source said factional infighting had delayed the endorsement of some candidates, including in Newcastle, where lord mayoral hopeful Callum Pull and ward one candidate Rochelle Manning were endorsed as late as Monday night.
Both made the cut as the party scrambled to lodge forms before the deadline.
The secretariat failed to nominate about one in three Liberal candidates across the state, including Mr Bailey in Newcastle, sitting councillor Ben Mitchell and candidate Michael Cooper in Maitland, and all four sitting councillors in Cessnock.
The party also failed to submit any candidates in Wollongong, Shoalhaven, Northern Beaches, Campbelltown and Blue Mountains.
Independent election analyst Ben Raue, from the Tally Room website, counted 136 missing candidates in NSW, including 38 sitting councillors.
Sources said those who missed out included members of the party's left, right and centre factions.
One source said the Cessnock candidates had spent about $15,000 on election material and fees, some of which needed to be returned to donors.
Each of the four Cessnock incumbents, Paul Dunn, Karen Jackson, John Moores and Paul Paynter, stands to lose more than $120,000 over the next four years in councillor pay.
Multiple Liberal sources said some of the aggrieved candidates across the state were weighing up a class action against the party.
One said he had raised the issue of compensation with the party's state executive.
"I'll be pushing for it," the source said.
The absence of a Liberal candidate in Newcastle's ward three could be crucial in deciding the council's make-up after the September 14 vote.
Labor holds two of the three seats in the ward as part of its majority of seven councillors, including lord mayor Nuatali Nelmes.
Incumbent Liberal councillor Katrina Wark won a ward-three seat in 2021 with 18.7 per cent of the vote but failed to win party endorsement this year.
She is now running as an independent in a field devoid of a Liberal candidate.
Labor and Liberal sources were divided over whether the Liberal absence would help the Greens, Cr Wark or independent Mark Brooker win a seat, but all agreed it could help Labor.
The Greens won 13.1 per cent of the vote in 2021 and two independents, Mr Brooker and Dave Wild, won 19.4 per cent between them.
It remains to be seen whether conservative voters turn to either Mr Brooker or Cr Wark this year or opt for a left-leaning candidate.
