Fed up with rural and provincial MPs being sidelined in favour of the minority Nationals, the federal NSW MP said he was setting his party a year-end deadline.

If amalgamation did not eventuate, Liberal MPs representing rural and provincial areas would have no choice but to set up a breakaway group within the parliamentary Coalition, he predicted.

The threat from the long-serving MP comes as the National Party considers an unpublicised report from former leader John Anderson, who has predicted his party will die if the long-standing Coalition partners do not merge.

Mr Anderson believes rural voters will flock to independents if they cannot vote for a major party.

Mr Schultz, who represents the provincial NSW federal seat of Hume, believes non-city Liberal MPs will be left with no option but to usurp the Nationals' role in the event there was no federal merger.

"We have to say to the Liberals: 'we're going to take over the role of the Nationals'. We're going to say it to the Nationals, too."

The Nationals have only nine rural and provincial MPs in the 150-seat House of Representatives, compared to the Liberals 22 out of a total Liberal tally of 54.

Labor holds the greatest number, with 29 rural and provincial MPs.

Mr Schultz is furious that the parliamentary leadership ignores the size and influence of its country and non-urban MPs, instead kowtowing to the minority Nationals who are dramatically over-represented on the front bench through the Coalition agreement.

Four of the Nationals' nine lower-house MPs are on the front bench.

The Nationals, as an independent party, shopped a list of demands to the Labor and Liberal parties in a dutch auction to get its support to form government.

Mr Schultz, a liberal MP in the NSW state and the federal parliament for a combined two decades, said rural and regional MPs were already "the de facto Nationals".