Hain calls for higher standards in Labour councils.
The Neath MP told the Western Mail that the days of Labour councillors "disappearing into the town hall and drawing their allowances" are gone.
Instead he said that the men and women who will stand for election in May's contest will be bound by contract to reach out beyond "tribal Labour voters" and engage in community campaigns.
Mr Hain is adamant that success at local government level is crucial if Labour is to win a majority in the Assembly, where the party holds 30 of the 60 seats, and increase its share of MPs.
He said: "It's the absolute key to winning a majority in the Assembly next time and the general election next time."
Arguing that the party's local base was eroded during the 13 years when it was in power, he said: "When you lose councillors, you lose your local base. That happened to the Tories in their 18 years of government and that happened to us."
The Shadow Welsh Secretary led the Refounding Labour review of the party and is an advocate of building links at a community level with people who are not party members.
He said: "We've got to have everybody absolutely meeting the highest standards of probity... Our Labour councillors will be better than other party councillors in terms of the standards they'll be expected to meet."
The number of Welsh Labour councillors fell from 731 in 1996 to 345 in 2008.
However, Plaid Cymru Carmarthen East & Dinefwr MP Jonathan Edwards doubted that Labour would make inroads in areas such as Carmarthenshire - where the party saw its number of councillors fall from 25 to 11 in 2008.
Mr Edwards said: "Labour will find it difficult to gain ground in any areas like Carmarthenshire."