We may never know what truly motivated the eight-day divorce between the Liberal and National Parties following their devastating election loss, writes Dr Andrew Russell.
Australia went to the polls on 3 May, and the results were disastrous for the Liberal-National Coalition (henceforth “the Coalition”). Despite the Albanese Government presiding over record levels of inflation and a consequent reduction in the standard of living, it was returned to power with a substantially increased majority. US Democratic Party pollster James Carville is famous for saying “it’s the economy, stupid”, but clearly Australian voters weren’t much persuaded by the Coalition’s fiscal-issues-centric campaign; despite the Albanese Government’s poor track record, the Coalition experienced its greatest defeat in 80 years.
Why and how did this atypically large loss happen? Part of the answer is the Trump Effect, which also impacted the Canadian election held immediately before the Australian one. Both nations rely heavily on the US as both a trading partner and a defence partner, and some of Trump’s rhetoric has given rise to worries which the political left in both nations managed to weaponise against the political right. This tactic worked well in both countries because the national identities and political cultures of both contain a streak of Amerigophobia—voters in both nations were encouraged to see a rejection of their own domestic centre-right as a way to “prove we’re not like America” and “stick it to Trump”, despite Trump being absent from Australian and Canadian ballots. In particular, Australia’s Greens Party repeatedly put out campaign materials which alleged the Coalition wanted to bring “Trump-style politics” to Australia. Unsurprisingly, said materials did not specifically identify any Coalition policies they considered “Trump-style,” or what (they believed) constituted “Trump-style” politics.
It strains credulity to propose that the Trump Effect alone explained the result in Australia (especially since, while it was the Greens who tried to fan the flames, they ended up losing three of their four seats in the lower house). With a view to ascertaining other factors in play, I interviewed some members of the Coalition. The first was a senior MP who requested anonymity. The second was Richard Williams, former policy chair of the LNP in Queensland. The third was a senior Coalition source, not an MP (henceforth “senior non-MP”) who also requested anonymity. The fourth, who also requested anonymity, was a Coalition Senator (henceforth “senatorial source”).
Campaign messaging needs to be more than a series of policy announcements.
One problem with the campaign was simply a matter of internal organisation. According to my senior MP source, the campaign was managed in a highly centralised manner, where almost everything was determined by Peter Dutton and his staff. This group allegedly demanded an unusually high level of party discipline. This kind of centralised, demanding leadership style—within any organisation—runs the risk of stifling the internal communication that the leaders of organisations depend upon in order to make informed decisions. This may explain why the Coalition, despite having extensive internal polling infrastructure, either didn’t realise how badly they were performing or didn’t adjust their campaigning practices (or adjust said practices quickly enough) in response. Indeed, my senatorial source substantiated that there were methodological flaws in how the Coalition conducted its polling, and that there were signs things were going poorly which were either misinterpreted or completely missed. However, the errors made by the Coalition extended beyond the internal management of the campaign to the campaigning itself.
One such problem, according to both Mr Williams and my senior non-MP source, was the slowness of the Coalition in announcing policy specifics. This vagueness, unsurprisingly, created an impression that the Coalition wasn’t being upfront with voters and/or wasn’t particularly confident about the policies it was announcing. My senior non-MP source also said that two specific policies caused electoral damage—the first being the policy of curtailing public sector Work-From-Home, and the second being the pledge to shrink the public service by 41,000 positions via forced redundancies. The latter policy, in particular, was seen as suddenly announced and lacking in detail on which jobs would be terminated. The Work-From-Home policy, meanwhile, was electorally off-putting both when announced and when subsequently dropped; the mid-campaign flip-flop only fuelled the impression that the Coalition lacked confidence in its own platform.
Another issue in play, according to my senior MP source, was the lack of “a cohesive three-point narrative”. Campaign messaging needs to be more than a series of policy announcements. There needs to be some sort of unifying thread that justifies the policies (a narrative), and that narrative needs to be easily explicable and capable of being condensed into three concise and repeatable points. The lack of this was clearly one of the causes of the aforementioned impression that the Coalition lacked confidence in what it was selling to voters.
Perhaps the most headline-grabbing consequence of the election result arose on 20 May, when the National Party dissolved the coalition agreement. While some commentators, for example Sky News’ Laurence Karacsony, predicted the split would last until the next election, the schism lasted only eight days. On the 23rd, the Liberal Party gave in-principle agreement to four core policy demands that the Nationals insisted upon, and on the 28th, the split was healed (primarily due to the efforts of the Liberals, according to my senatorial source) and Sussan Ley and David Littleproud unveiled their Shadow Cabinet.
Whilst the split lasted little more than a week, when it initially happened, it seemed as if the Coalition still had one more campaign blunder, one that they were just late in committing. At first glance, the split looked like a case of “shooting themselves in the foot”—yes, it occurred in the aftermath of an historically bad election outcome, but the appearance of disunity substantiated the impression of voters that the fractured entity wasn’t fit to govern. However, that criticism of the split is easily countered with reference to earlier schisms in Australian federal politics (if these are so toxic to electability, why do they happen quite regularly?). In “(A failed) Australian realignment”, the IPA’s Cian Hussey wrote about this in The Spectator Australia, online edition, on 25 May.
With three years until the next election, this short lived split will unlikely be remembered by many Australians when they next go to the ballot box (although Mr Williams worried that “if people don’t remember, Labor will trot it out at the next election”). In addition, my senior MP source pointed out that there was a cost to the split in the form of foregone opportunities to go on the offensive against Labor, and my senatorial source believes that the split will undermine the National Party’s negotiating position within the Coalition going forward. Either way, the mere possibility that this event may have future consequences for the Australian centre-right means that paying attention to the driving forces behind the split is prudent. Before doing so, however, some context must be provided.
“Big tent” political parties—those that contain a number of different ideological factions—are an inevitable feature of electoral systems that determine the government via single member electorates rather than proportional representation (which encourages each ideological faction to operate as its own independent party). Australian politics is no exception to this—the Labor Party once had (and may still have) an economically right-leaning wing shaped by the lessons of the Hawke-Keating era, but the party itself was founded by union-movement socialists and has strong internal factions representing the working-class socialist left (the “Old Left”) as well as the middle-to-upper-class progressive left (the “New Left”).
The Liberal Party also has internal divisions—the most prominent of these being between those who are relatively consistent advocates of free market economics (the “dries”) and those inclined towards a mixed economy (the “wets”). The “teal independents” may be constructively thought of as a renegade “wet” Liberal faction—they’d be Liberals if it weren’t for their (arguably excessive) concern about anthropogenic climate change (and the generous financial backing of billionaire businessman Simon Holmes à Court).
Unsurprisingly, such factionalism exists within the National Party too. Whilst one faction within the Nationals generally aligns with the “dries” of the Liberal Party, the other big faction positions itself as advocates for the interests of rural Australia and the primary industries, and believes in using the government to advance these interests. This second faction flirts with (and often embraces) socially conservative positions and tends to support subsidies and “pork-barrelling” for Australian farmers and other regional entities. A common epithet applied to this faction is “agrarian socialists”.
As my senior Coalition MP source testifies, however, many members of the party are positioned on a spectrum between these two positions and there are many strong personalities within the National Party with their own personal ambitions (this latter point was also highlighted as a persistent factor within National Party culture by Richard Williams). My senatorial source also said that some of the Victorian-based members of the National Party have longstanding issues with aspects of the coalition agreement.
The Nationals are a rowdy bunch, and consequently internal tension within the National Party has often precipitated schisms in which members who skew towards “agrarian socialism” have left the National Party and set up their own rural-rightist-rent-seeker parties—Katter’s Australia Party, founded by long-time National Party MP Bob Katter (who, when he was a National Party member, was sometimes referred to by colleagues as “the Mad Katter”), is a particularly colourful example.
Factionalism means that party unity is, inescapably, a perpetual work-in-progress and often a performance for the cameras rather than a substantive reality. In other words, we shouldn’t be surprised when political breakups, both within one and between two “big tent” parties in coalition with each other, happen. There are classical liberals in both the Liberal and National parties, and it can be fairly presumed that they’re happy to work with each other, but when the “agrarian socialists” of the Nationals are dragging the Coalition towards an economically leftist (and sometimes religiously flavoured) variant of right wing populism, and the “wets” among the Liberals are letting the Labor and Greens parties dictate the terms of the debate even on the most critical of policy matters, unity becomes impossible. Combine this with the reality (as Cian Hussey’s previously discussed article substantiates) that party splits and coalition ruptures have been regularities in Australia’s post-federation political history, and the relevant question stops being ‘why did the Coalition break up?’ and instead becomes ‘how did the Coalition hold together for so long despite all these internal fights and only break up now?’
Former Nationals MP Bob Katter.Photo: Courtesy of Bob Katter MP
Publicly, National Party representatives persistently insisted the split was over substantive policy issues. My senior non-MP source also insisted that this was absolutely the case, however Mr Williams believes that the aforementioned issue of big egos and personal ambitions also played a role, and Williams’ assessment was endorsed by my senior MP source, who explicitly said party room tensions involving big players like Barnaby Joyce, Michael McCormack and Matt Canavan were a contributing factor. My senatorial source, however, believes that the policy motivations were a mere pretext and that the split was driven by personalities—in particular, Nationals leader David Littleproud allegedly had reservations about Sussan Ley (the new Liberal leader after former leader Peter Dutton lost his seat). Whatever the role policy actually did play, it is necessary to look at precisely what policies were at issue.
Party unity is, inescapably, a perpetual work- in-progress.
The Nationals’ big four policy demands were that the Coalition: support an end to the federal moratorium on nuclear energy; retain divestiture powers to be used against the supermarkets; retain a regional investment fund; and boost rural telecommunications connectivity (according to my senatorial source, the Liberals were quite surprised that the Nationals believed any of these policies were at risk of being abandoned). The latter trio of demands are consistent with the National Party’s rural-economic-populist tendencies. Whilst competition is important in markets, larger firms are also able to achieve economies of scale that reduce costs sufficiently to make serving regional Australian markets viable in the first place. That said, my senior non-MP source made clear the underlying rationale behind the policy of retaining divestiture powers is to reduce the bargaining power of supermarkets relative to suppliers from rural Australia. However, the first demand is consistent both with a desire to reduce costs for rural Australians and with the principles nominally embraced by the Liberal Party. As Williams observed, the interrelated issues of energy policy and net zero are matters of deep concern within the Nationals’ party room.
To describe energy policy as “important” is an egregious understatement. Abundant, reliable, inexpensive energy is a non-negotiable prerequisite to an advanced, prosperous society, and expensive energy hurts poorer people the most. Whilst energy abundance is notably important to emerging industries like Artificial Intelligence, all other industries benefit from it, including the primary industries that the Australian economy (and the National Party’s constituency) is so reliant on.
Another critical energy-intensive sector is defence. A nation without abundant energy is a nation headed for impoverishment and inviting invasion. Europe’s experiences with green energy and consequent deindustrialisation serve as a cautionary tale here—part of the reason the European Union cannot effectively stand up to Putin’s Russia is that they listened to the siren song of the environmentalist movement (which some allege is funded by Russian government money), shut down most of Germany’s nuclear reactors, bet the farm (almost literally in some cases, given the costs imposed upon European farmers) on intermittent renewables, and ended up dependent on Russian natural gas for years. European energy consumers and the nation of Ukraine are now living with the consequences.
Australia may not have the largest manufacturing base, but it does have energy-intensive primary industries (hence the Nationals are so concerned with the issue) as well as a rising regional hegemon suspected of harbouring adversarial intentions towards us (the People’s Republic of China). It also has very large expanses of otherwise-unusable, geologically inert land, as well as abundant domestic uranium supplies, which means the nation is atypically well-positioned for safe nuclear energy generation and waste storage. It has been repeatedly demonstrated that nuclear power is the safest form of energy we have (as measured in terms of deaths per megawatt—see the work of Yale University’s Steven Novella), and that it is at least no more costly than (and according to some studies, cheaper than) renewables.
It is unlikely the Australian public’s economic literacy will improve any time soon.
The environmental benefits of nuclear power include, but are not limited to, the fact that it is a zero-emissions form of energy—nuclear power plants are much more space efficient than solar farms (thus sparing more land and consequently preserving animal habitats and plant biodiversity), it doesn’t kill birds like wind farms do (thus preserving animal life), and it doesn’t produce the same hazards in disposal that solar panels (and the rare earths used in them) do. This final point flows into an important geopolitical consideration—the rare earths used in most solar panels come from mainland China, and it is simply not in Australia’s national security interests to fund an extremely powerful ethnonationalist regime with well-documented resentment against the West, a willingness to violate its treaty obligations (the PRC’s treatment of Hong Kong is almost certainly in breach of the Sino-British Joint Declaration) and reasonably-suspected imperialist ambitions.
Unfortunately, ALP governments at both state and federal levels (in part due to pressure from their unofficial partners in the Greens) have worked to push Australia down a European-style path, where fossil fuels are phased out but only renewables are allowed to be built (and hydroelectric projects are strangled with both lawfare and green tape). As the IPA’s Dr Kevin You has shown (The Denmark Fallacy and South Australia’s Rocky Renewable Energy Transition), the results have been depressingly predictable. South Australia, which is Australia’s most enthusiastic adopter of variable renewable energy (principally wind and solar), has the nation’s highest energy prices as well as recurrent challenges with electricity regularity. IPA commissioned polling also makes clear that majorities of Australians prioritise affordability (followed by reliability) as the most critical focus for energy policy, above achieving net zero, and a strong plurality (only a few percentage points short of a majority) of Australians are not willing to pay even a single dollar towards achieving said goal. In other words, whilst Australians may have conflicted feelings about nuclear power itself, the reality is that nuclear power is currently the only feasible zero-emissions technology consistent with the priorities of mainstream Australians. Consequently, in getting the Liberal Party’s consent to retaining a pro-nuclear policy, the National Party has kept the Liberal Party aligned with the energy outcomes most Australian voters want.
In the end, however, we must ask what this catastrophic election result (and its immediate aftermath) means for the Australian centre-right. From a pro-market perspective, the fact that the Coalition had to backtrack on policies that would have reduced the size of the bureaucracy (through forced redundancies) as well as increased each individual bureaucrat’s productivity (through curtailing Work-From-Home) is deeply saddening—it indicates that too many Australians don’t understand that much of the public service is a parasite class. The ultimate election result—the re-election of the party of the public service—means that for the next three years we will likely see a continuing Europeanisation of the Australian economy and further entrenchment of a mindset that the private sector is nothing more than a means to the ultimate end of supporting the public sector. Clearly, the Australian public lacks a sophisticated understanding of economics, and since our education systems are dominated by budget-maximising bureaucracies and self-interested partisan unions, it is unlikely the Australian public’s economic literacy will improve any time soon. Our electricity bills will continue to climb and, if energy policy continues along its current trajectory, we may start experiencing the same kind of widespread supply intermittency that parts of Europe have inflicted upon themselves.
One wonders if such harsh consequences might be necessary to awaken the Australian electorate to the fact that the only zero-emissions electricity source capable of providing them with the energy outcomes they actually want is nuclear power.
We may never know what truly motivated the eight-day divorce between the Liberal and National Parties, but by getting the Liberals to retain a commitment to nuclear power, the Nationals made a contribution towards sanity in energy policy. In light of the election results, however, this is cold comfort for the Australian centre-right. For those of us who are not in the privileged position of being on the public sector payroll, things are likely to get worse before they get better, and the Coalition needs to step up and fearlessly speak in support of all of those who are not lucky enough to be the beneficiaries of government largesse.
Dr Andrew Russell is an economist, philosopher, and musician based in Brisbane. He specialises in Austrian, evolutionary, institutional, and public choice economics. His PhD at RMIT in Melbourne was a dissertation on the economics of casino gambling. His Substack can be found at www.drcasino.substack.com
This article from the Winter 2025 edition of the IPA Review is written by Dr Andrew Russell.
