"Now they're trying to find where all those bodies are buried," says Newcastle local Geoff Evans. ''We're probably standing on them now."

Finding where the bodies are buried has become something of a hobby for Novocastrians such as Evans. A sustainability consultant and spokesman for the Newcastle Inner City Residents Alliance, he has watched the Independent Commission Against Corruption uncover breathtaking corruption in his city, with allegations of insider dealing and secret payments, of money in brown paper bags, of lies, counter-lies and smear campaigns.

"I call it the Newcastle Godfathers, because that's how the place is run," says Evans, who has been campaigning against a controversial 17-storey development slated for the city's heritage district. ''ICAC has really exposed how business is done in this city, by a cabal of insiders stitching up deals that suits a small number of politically connected developers."

The ICAC claimed two Liberal local scalps - Newcastle state member Tim Owen and Charlestown MP Andrew Cornwell, both of whom resigned from Parliament after admitting taking tens of thousands of dollars from local developers, including Hunter Valley businessman Hilton Grugeon and Newcastle lord mayor Jeff McCloy.

Another casualty was Liberal MP for Swansea Garry Edwards, who stood aside after it emerged he had accepted $1800 cash from McCloy.

"People up here are really, really pissed off," says long-time local John Miner. "In Sydney perhaps they're more used to it, but for us, this level corruption is not something that has been part of our culture.''

But it goes far beyond Newcastle. The ICAC has exposed a corridor of corruption stretching north along the coast from Sydney.

It is difficult to overstate the damage being wrought by the ICAC hearings, not only on the NSW Coalition government but also to the reputation of the NSW Liberal Party, and potentially that of the federal Liberal brand as well.

Indeed, with the Charlestown and Newcastle byelections looming just months before the March 2015 election there is more than an echo of how things were playing out for Labor before its disastrous showing at the March 2011 poll.

The similarities are startling. In June 2010, the Labor MP for Penrith, Karyn Paluzzano, admitting to lying to the ICAC over rorting of parliamentary expenses.

Then premier Kristina Keneally demanded her suspension from the ALP. Within 24 hours Paluzzano had resigned from the NSW Parliament and a byelection loomed at a particularly difficult time for the incumbent government.

The 26 per cent swing against the government was so fierce, the win by Liberal Stuart Ayres set what was at the time a record for a NSW seat.

The dates for the Newcastle and Charlestown

byelection have yet to be decided but they are likely to be held within weeks. A backlash against the government is guaranteed and the Liberal Party is regarded as having no chance of retaining the seats.

Of course, even with the appalling evidence emanating daily from the ICAC hearings, no one is yet suggesting the government is likely to lose next year's election.

On one reading the ALP knows that the Liberals' ICAC troubles are occurring in regions they expected to swing back in 2015 anyway: the central coast and the Hunter. But the unknown factor is whether the Hunter byelections spark momentum for a far bigger swing against the government than previously anticipated and further erodes the size of the government's electoral buffer.

Already some Liberals are privately conceding that evidence previously heard at the ICAC has confirmed losses for the government in key seats on the central coast. Wyong MP Darren Webber and Chris Spence, member for The Entrance, have announced they will not recontest after being implicated in a scheme to funnel illegal political donations from property developers - illegal donors since late 2009 - into their 2011 campaigns.

Terrigal MP and former energy minister Chris Hartcher - accused at the ICAC of being the mastermind behind the scheme (which he denies) - has yet to announce if he will run again.

The current round of hearings mean the Liberals are virtually assured of losing seats in the Hunter which only a couple of years ago they might have been hopeful of retaining in 2015. So the key focus - as usual - will be in western Sydney. The ALP has long expected a handful of western Sydney seats to naturally swing back to Labor control.

The reputational damage to the government from the ICAC increases the potential for losses in western Sydney. If that happens, the post-election margin for the Coalition suddenly becomes far less comfortable.

Assuming Labor wins both Hunter byelections, going into the election the Coalition will hold 67 seats in the Legislative Assembly compared with Labor's 23. The Greens hold one seat, Balmain, and independents hold another two.

If the Liberals lose 15 seats to the ALP (a figure ALP strategists are working on) the government's majority shrinks from the present 48 seats to 18, a much healthier prospect for Labor next time around.

As the Liberals reel under the ICAC fallout, the sheer bare-faced cheek of the Novocastrian developers can still astonish.

For instance, last March Hilton Grugeon's company SNL erected a cartoon billboard at the site of its contentious $23 million Whitebridge development, south-west of Newcastle. The billboard showed Grugeon winning a three-way horse race, clutching wads of cash and grinning, being trailed by a Whitebridge Community Alliance member holding a ''vocal minority'' sign, and by local Greens representative Phillipa Parsons, who is riding a donkey.

"I just laughed at it," Grugeon told journalists. "A community that can't laugh at itself has problems.''

Lord mayor Jeff McCloy is from the same mould. A larger than life character who became mayor in 2012, McCloy made much of the fact that he donates his mayoral salary to charity. In the witness box McCloy bemoaned the fact that he often felt like a "walking ATM". The evidence at the hearing was that leading up to the 2011 state election, McCloy drove around in his Bentley dispensing wads of cash to Liberal candidates.

Andrew Cornwell, the Cardiff vet, was in the middle of an operation on a dog when he was summonsed outside to meet McCloy. As they sat in the property developer's limo, McCloy handed over $10,000 which Cornwell later used for his campaign.

McCloy also gave $10,000 in cash to former air commodore Tim Owen, who wrested the seat of Newcastle from Labor's Jodi McKay by a small margin.

McCloy not only argued that his donations were merely for the greater good of Newcastle, he even dropped off dossiers to the press over the luncheon adjournment claiming he was inspired by Mother Teresa's poem Do It Anyway.

"And that had what to do with $10,000 being passed over in an envelope in the back of a Bentley, what did Mother Teresa have to do with that … were you working from her inspiration when passing over the cash?" asked counsel assisting, Geoffrey Watson, SC.

"And so, for example, if you were prohibited from making a donation do you take inspiration from it and 'do it anyway'?" asked Watson.

The "Do It Anyway" motto seems to have been one also favoured by Tim Owen, a respected military figure who did tours of duty in Iraq and Afghanistan before putting his hat in the ring to stand for Parliament.

On Monday he lied to the commission, saying that he had received a small but unspecified amount of cash from McCloy. Owen then claimed that he returned the money the next day, popping the envelope of cash into McCloy's letterbox with a note which read "No thanks."

He was most unconvincing as to how he found McCloy's address in order to return the cash. The following day his dubious account unravelled after questioning by McCloy's barrister, Ian Faulkner, SC.

It seemed to slip Owen's mind that he had only met up with the lord mayor two days earlier to work out their "story". It transpired that rather than returning a small amount of cash, Owen had kept the $10,000 cash that McCloy had given him. "My wife will divorce me," Owen allegedly said to McCloy. ''I've sworn on a stack of bibles that I didn't receive any money."

Having lied to the commission, divorce is the least of Owen's worries. Both he and Cornwell resigned from Parliament this week.

It has been illegal for property developers to donate to NSW politicians since 2009, but the Hunter Valley Liberal candidates and their patrons concocted what one witness at the ICAC called ''crazy'' schemes for raising cash.

Hugh Thomson, Owen's campaign director, claimed that he had heard of - but not suggested - a potential scheme to sell artwork for ''inflated prices'' to disguise the fact that illegal donations were being made to a candidate.

The artwork scam had a particular resonance. Days before Thomson climbed into the witness box, Cornwell and his wife Samantha Brookes had given detailed accounts of how they ''re-gifted'' a painting by local artist Rex Newell to property developer Hilton Grugeon at Christmas 2010 and he insisted on paying an inflated $10,120 for it. The average price of a Newell was a few hundred dollars.

There are still several weeks of ICAC hearings remaining during which it is expected that Newcastle's once favourite son, the embattled coal mogul Nathan Tinkler, and key figures in the Liberal Party in charge of fund-raising and finances, will be called to give evidence.

They are likely to include finance director Simon McInnes, who the ICAC has heard knew about the alleged practice of ''washing'' banned donations by first passing them through a Liberal-linked fund-raising entity called the Free Enterprise Foundation.

The focus on the Free Enterprise Foundation - a federally registered body - potentially draws in for scrutiny senior figures like national Liberal party director Brian Loughnane.

Also likely to be on the witness list is Senator Arthur Sinodinos, who was treasurer and president of the NSW division during the period under close examination.

At the moment no one - possibly not even the ICAC - knows where its investigations will lead federally.

Should it begin to cause the same kinds of issues for the federal Liberals as their NSW counterparts, election funding could soon become a problem not only for Premier Mike Baird but also Prime Minister Tony Abbott.