The Australian Labor party must renew or risk collapse like other centre-left parties including the US Democrats, the national president Wayne Swan has said, cautioning his own side against complacency after its election win and the chaos engulfing the Coalition.

In an interview with Guardian Australia, the former treasurer also said Labor “shouldn’t be afraid” of engaging in contentious policy debates as he suggested modern voters wouldn’t embrace a “tame” agenda.

As the Liberal party confronts an existential crisis following its worst-ever federal election loss, Swan offered a clear-eyed assessment of the challenges facing Labor despite its 94-seat win at the May ballot.

The two major parties are expected to release their internal election reviews later this month which will also include recommendations for the future.

Swan said Labor couldn’t simply rely on the Coalition “stuffing it up” to remain in power, given its primary vote of 34.6% – while enough its landslide win against Peter Dutton – was still low by historic standards.

“We are nowhere near as in front, if they [the Coalition] had their act together, as we think we are,” he said.

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“Because it doesn’t take much … for our primary vote to drop down below 30%, in a preferential voting system, for a Nigel Farage-type [rightwing] coalition to come along and sweep up the conservative parties and engage in a full-throated contest.”

As an urgent priority, Swan said Labor must renew its ageing grassroots membership base in suburban and regional areas. He said Labor was making a deliberate push to build support in Coalition heartland, such as Queensland’s Sunshine Coast.

In a blunt assessment, Swan said local Labor branches can be “too much of a closed-shop from time to time” and the party needed to be better at “engaging with people and talking with them, and not at them”.

“We’re not engaged in some pilgrimage espousing the gospel,” he said.

“We have to meet people where they are, and we have to meet people in the way in which they interact with people, not in some highly stylised political way.”

Progressive critics have marked down the Albanese government for eschewing major reform, such as winding back negative gearing or re-introducing a carbon tax, in favour of incremental progress on climate, housing, health and education.

Swan – who oversaw the response to the 2007 global financial crisis – said the government had a “pretty strong centre-left agenda” that reflected the core of Labor’s mission to “create prosperity so we can spread opportunity”.

But he said the party should be prepared to debate more contentious policies, predicting a contest of ideas at Labor’s three-yearly national conference in Adelaide next July.

Swan will step down as ALP president at the conference, with former Labor minister Kate Ellis to assume the role.

“I think we’ll have a debate in the Labor party about the extent to which our agenda could go further in some areas,” he said.

“There will inevitably be a debate about what particular areas of policy we might want to do more in. Can we afford to do it? Do we have the revenue to do it?

“We shouldn’t be afraid of having that debate as we go forward and looking about at the policy alternatives before us, and indeed, that’s what we do through our national conference process.”

Asked what risks Labor faced if it failed to evolve at an organisational level and with its policies, Swan was blunt.

“We end up looking like the Democrats in the US or any number of once large, proud, centre-right parties around the world that have collapsed,” he said.

“I’m not suggesting we are going to die. We can continue to prosper if we are true to our creed … we can continue to succeed where many others have failed.”