Scott Morrison will damage relations with China and risk an electoral backlash if he inks a preference swap deal with controversial businessman Clive Palmer, former WA Liberal premier Colin Barnett said.

Key points: Mr Barnett said Mr Palmer has an "appalling" record in public affairs

Mr Barnett said Mr Palmer has an "appalling" record in public affairs He urged "wise heads" to prevail in the Liberal Party to stop a formal preference deal

He urged "wise heads" to prevail in the Liberal Party to stop a formal preference deal It is understood the Liberal Party will put Mr Palmer's party second on how-to-vote cards

Clive Palmer is running for a Senate spot. ( ABC News: Nick Haggarty )

In a scathing assessment, Mr Barnett said Mr Palmer was unsuitable for a parliamentary career and had an "appalling" record in public affairs, particularly his dealings with Beijing.

In an interview with the ABC, Mr Barnett urged "wise heads" to prevail in the Liberal Party to stop a formal preference deal with Mr Palmer's party.

It is understood the Liberal Party will put Mr Palmer's United Australia Party second on how-to-vote cards, or third if there is a Nationals candidate, with a view to securing UAP preferences that could aid the re-election prospects of Coalition MPs in rural Australia, especially Queensland.

Mr Barnett said this deeply worried him.

"I am concerned if a formal deal is done between the Liberal Party and Clive Palmer," he said.

"It may help in some seats, if United Australia Party preferences flow to the Liberal Party, although I doubt that would be certain.

"But my real fear and concern for the Liberal Party is that many Liberal supporters, perhaps soft or swinging voters, will react adversely to any sort of deal with Palmer.

"And the consequence could be that in some country areas, the Liberal Party may hold on to seats because of the arrangement, but in other areas — particularly metropolitan cities, the major cities — there is a danger of a backlash.

"And indeed it could be the case that while a couple of seats might be saved, a number, significantly more, could be lost simply because of this," Mr Barnett said.

Federal Liberals downplay connection

Senior Liberal Minister Michaelia Cash talked down the significance of any preference deal and said the decision was up to the state divisions.

Minister Cash refused to say whether she would be comfortable issuing how-to-vote cards. ( ABC News: Matt Roberts )

"They weigh up everything. They look at the different parties, they look at the different policies and at the end of the day, that is a decision the state parties have made," she said.

Minister Cash was employment minister when the federal government pursued Clive Palmer and his businesses to recover millions of dollars in entitlements owed to workers.

The Minister refused to answer whether she would be comfortable issuing how-to-vote cards that would recommend putting the United Australia Party second on the ballot paper.

"Ultimately, what we are asking people to do is to Vote Liberal one. We want their first preference," she said.

When pushed on whether she supported such a deal, Minister Cash made her position clear.

"If the party organisation has made that decision then yes, I support it," he said.

Australia-China relationship at risk?

Colin Barnett warned a deal between the Liberal Party and the United Australia Party could be seen by China as increasing the billionaire's influence over Australian politics.

"Clive Palmer has been quite outrageous in the way he's dealt with a Chinese state-owned enterprise called CITIC on the Sino Iron Project, a project of over $10 billion," Mr Barnett told the ABC.

"He has been litigious, he has tried to frustrate the project throughout. And I think this is a real loss of faith potentially, or face for the Chinese.

"If [Mr Palmer] gets into a position of power in Canberra, I think that will damage relationships with China, may even threaten Chinese investment in Australia and Chinese purchase of Australian goods and services.

"I think there's a big economic trade risk if Clive Palmer is seen by the Chinese to have undue influence over Australian politics," Mr Barnett said.

United Australia Party candidate Colin Thomson has dismissed the concerns.

"I think our trade with China is important, it's a big contributor to our economy. I think with regards to what we've been talking about as a party is how we limit the foreign ownership," he said.

Learning from the past

Mr Barnett used his own bitter experience with preference deals to warn the federal Liberal Party.

In 2017, the Liberal Party of WA struck a preference deal with Pauline Hanson's One Nation.

"I was unaware of that arrangement — but that's now history. The Liberal Party struck an arrangement," he said.

"It may have saved one seat, the seat of Geraldton in the state election, but I would suggest the Liberal Party probably lost half a dozen other seats simply because Liberal supporters were simply offended that the Liberal Party had reached an agreement with One Nation.

"And I think to a similar extent the same could happen if there is an agreement, a formal agreement with Clive Palmer and his United Australia Party.

"I think it's a big risk for the Liberal Party and I hope wise heads prevail and they step back from any formal agreement or deal," Mr Barnett said.