One Nation reckons it will "cause some damage" at the next NSW election and suggested it's worth the coalition government's while to strike a preference deal.
The Pauline Hanson-led party has applied to be registered for the March 2019 poll and is already on the lookout for candidates.
NSW One Nation senator Brian Burston says there are plans to contest most - if not all - rural seats, as well as fringe Sydney electorates.
"We will cause some damage to them (the coalition) in terms of support," Senator Burston told AAP on Thursday.
"The National Party will fear us, and if they're pragmatic enough and want to survive in some of their seats, they've got to put preferences."
Senator Burston said One Nation was open to doing deals with both major and minor parties, but has his eye on the Liberal-National coalition.
"I'm not sure why a conservative coalition wouldn't want to preference a conservative party of similar thinking in terms of policies," he said.
"Labor will probably shut us out, but I think the coalition's got to be a little bit pragmatic."
NSW Labor has ruled out any preference deal with One Nation and Opposition Leader Luke Foley has called on Premier Gladys Berejiklian to follow suit.
"No mainstream party should deal with a party that trades in racial discrimination," Mr Foley said in a statement on Thursday.
"Labor will not do any preference deals with One Nation and Labor will not give preferences to One Nation at the 2019 state election."
In a statement, a spokesman for Ms Berejiklian said any preference deals were a matter for the Liberal Party.
"NSW has optional preferential voting and we will be encouraging people to vote one for the Liberals or Nationals at the next election," the spokesman said.
Senator Burston believes the state's optional preferential system will work in favour of minor and micro parties.
Ms Hanson is expected to headline the NSW election campaign as the "star of One Nation", he said, and will be involved.
Power prices and regional infrastructure will be a key policy focus.
"Sydney appears to be getting all the infrastructure upgrades, whereas the bush is missing out. Rural towns are dying. People are hurting and the government doesn't seem to care too much," Senator Burston said.
