Labor’s historic election victory continues to reshape Australian politics (and its opposition)
For the first time in almost forty years, Australia’s National Party will not form a coalition agreement with the Liberal Party
Published 21 May 2025
Labor’s victory already made the 2025 election one of historic outcomes: the biggest Labor majority since 1943, and the first time an Opposition leader has lost their seat at a federal election.
But the breaking news is arguably even more important. For the first time in almost forty years, the National Party will not form a coalition agreement with the Liberal Party.
Unsurprisingly, the National Party pushed hard for the Coalition to retain its nuclear energy policy.
It seems that this was a bridge too far for the new Liberal leader, Sussan Ley.
Other key sticking points were the Nationals support for divestiture powers to break up supermarkets that abuse their market power, as well as a $AU20 billion ‘regional future fund’ that would invest in regional Australia.
Australian Prime Minister Anthony Albanese will be quietly thrilled at the announcement of the split.
Not only has he unseated the leaders of two rival parties – the Green’s Adam Bandt and the Liberal’s Peter Dutton – he has now broken the Coalition. It’s difficult to understate the historical significance of this event.
Historians often describe Australian politics as a contest between Labor and the non-Labor parties. This binary framing which lumps all non-Labor parties together reflects the often-overlooked fact that the Australian Labor Party (ALP) is the only political party which can form government by itself.
This was especially true during the early decades of Australia’s federation.
Prior to the 1920s, the non-Labor vote was split between two conservative parties: the Nationalists and the Country Party (forerunners to the Liberal and National parties, respectively).
Australia’s first-ever Coalition government was formed in 1923, between Nationalist leader Stanley Bruce and Country Party leader, Earle Page. Over the coming decades, the Nationalists were replaced by the United Australia Party, which was in turn replaced by the Liberal Party in 1944.
Regardless of its various permutations, the underlying logic of the Coalition remained the same: unless urban and rural conservatives worked together, Labor could not be kept from power.
This historical context is precisely why the announcement by the National Party is so significant. It is an admission that the Coalition no longer serves its original purpose.
In his press conference announcing the decision to not re-enter a coalition with the Liberals, Nationals leader David Littleproud stated that: “[Sussan Ley] needs to rebuild the Liberal Party. They are going on a journey of rediscovery. This will provide them the opportunity to do that; without the spectre of the National Party imposing their will.”
There is no need to read between the lines. This is a clear admission that the Coalition has hurt, not helped the Liberal Party.
The Nationals, however, are not splitting to assist the Liberals.
Previous Coalition agreements have prevented National and Liberal candidates from contesting the same seats. Without a new agreement, we can expect to see Nationals candidates running in seats against incumbent Liberal MPs.
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This kind of contest only compounds the electoral challenge facing the Liberal Party. The Liberals must now fight for votes on both their left and right flanks.
In metropolitan areas, the Liberals must compete with the Teal independents on their left, who now hold six formerly safe Liberal seats.
These once-upon-a-time Liberal voters want action on climate change, greater representation of women in federal politics and a more socially progressive Liberal Party.
In rural and outer-suburban areas, the Nationals will likely double down on the climate wars and remain sceptical (if not outright hostile) to net zero by 2050.
If the Nationals succeed in courting disaffected conservative voters, perhaps those who oscillate between supporting One Nation and the Liberal Party, and the Teals retain their grip on moderate inner-city voters, then the Liberals could find themselves without an electoral base entirely.
The challenge facing the Liberal Party is now truly existential.
In the immediate aftermath of the 2025 election, it would seem that they have nowhere to go.
Despite hopes of winning back some seats off the Teals, the Liberals have (provisionally, pending a recount) lost another seat, Bradfield, to Independent Nicolette Boele. The seat of Goldstein remains close, between the Teal incumbent and Liberal, Tim Wilson.
Albanese is an astute politician. He knows that the Teals are an electoral wall, so to speak, which stands between the Liberal Party and majority government.
Undoubtedly, during this term, we will see the Labor Government make policy concessions to the Teals, so that voters in these seats feel no need to go running back to the Liberals.
This dynamic raises the incentive for the Teals to form a more solid and united bloc, in order to maximise their leverage and extract policy concessions from the Labor Government.
Could we see the Teals form a quasi-party, entering the socially progressive but fiscally conservative space vacated by the Liberal Party?
As history shows us, centre-right parties in Australia only last as long as they serve their overriding mission: to keep Labor out of power.
With the Liberals seemingly incapable of fulfilling that mission anytime soon, we may see the emergence of a new force to reunite the anti-Labor side of Australian politics.
To paraphrase former Prime Minister Malcolm Turnbull: there has never been a more exciting time to study Australian politics.