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MICHAEL:

From Schwartz Media, I’m Michael Williams, filling in for Daniel and Ruby. This is 7am.

Just a week after taking charge in the wake of the Liberals’ disastrous election result, Opposition Leader Sussan Ley now finds herself without a Coalition partner.

Nationals leader David Littleproud says he walked from the agreement after the Liberals refused to lock-in a list of requests, while Ley insists she won’t let her party be “held hostage” to unreasonable demands.

The split is a setback for the Liberals – but it may be worse for the National Party, who won less than four per cent of the primary vote at the last election.

Today, special correspondent for The Saturday Paper Jason Koutsoukis on why the Coalition broke up, and what it will take to bring them back together.

It’s Thursday, May 22.

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Audio excerpt – David Littleproud:

“And thank you for coming here today. Since the devastating defeat and my re-election as leader of the National Party and Sussan Ley, the leader of Liberal Party, we have set out on a journey of trying to reshape a Coalition agreement.”

MICHAEL:

Jason, one of the things you learn as you become an adult is how hard it is to see a relationship that you thought was forever, suddenly in ashes, breaking up unexpectedly. And you have to talk through that with your friends and counsel them in all kinds of different ways. Jason, you were in Parliament House when David Little Proud fronted the cameras and said the Nationals would, and I quote, sit alone on a principal basis. That's a pretty cold breakup. Take us into that moment. Did anyone see it coming?

JASON:

Well, it certainly was a cold breakup and they certainly gave us the impression that, you know, mummy and daddy needed to spend some time apart and do some soul-searching.

Audio excerpt – David Littleproud:

“I've got to say when I had a meeting with Sussan less than half an hour ago, the dignity that she showed in how she took this and how she sees a way forward was a reaffirmment that this is an opportunity to reset ourselves and to do that in an environment where we can. I think that's important. There's no animosity, there's no angst, there's no hate. It's one predicated on respect and understanding and I think that that is the position that we'll go forward on.”

JASON:

The day before though, on Monday afternoon, there were signs that the negotiations weren't going well. And we were hearing that it was a very real possibility that a Coalition agreement would not be signed. And those rumours gathered momentum on Tuesday morning when there was a story in the Australian Financial Review, actually, the story led the paper on Tuesday morning, saying that a split was on the cards.

But we didn't really know for sure until that confirmation finally came through. And despite the rumours that we'd been hearing, it still was a big surprise to us that they had actually decided to go their own separate ways.

MICHAEL:

What did David Littleproud say were the sticking points that made negotiations with Sussan Ley and the Liberal Party collapse entirely?

JASON:

Well, David Littleproud said negotiations had collapsed because the Nationals had insisted that the new Coalition agreement lock in five specific guarantees.

The Nationals' non-negotiables were ongoing support for that nuclear power policy that the Coalition had taken to the May 3 election.

They wanted the Coalition or the Liberal Party to continue to support a policy to grant the government divestiture powers to break up major supermarkets if they abused their market dominance.

The Nationals also insisted on a $20 billion Regional Australia Future Fund to bankroll long-term regional infrastructure and jobs in regional Australia.

They also wanted to guarantee baseline telecommunication services in the bush.

Audio excerpt – David Littleproud:

“Those four, including the universal service obligation, these were positions that we made very clear to Sussan. And I think...”

JASON:

There was also a fifth demand, although this was one that was sought by the Liberals, and that was a guarantee of shadow cabinet solidarity. So essentially, if the shadow cabinet comes to a decision on a policy or other kind of political issue. Then the Liberals are saying that all Shadow Cabinet members have got to be prepared to go out and support that decision, regardless of whether or not they supported it in the Shadow Cabinet meeting. The Nationals apparently didn't agree to that.

They wanted the freedom for National members of the Shadow Cabinet to cast conscience votes on contentious Coalition policies. And I think the most obvious one is this policy or the commitment the Coalition has made to have net zero emissions by 2050.

A lot of Nationals don't support that policy. They want to dump it. And I guess that's why they insisted on having this kind of provision to have a conscience vote in Shadow Cabinet, which is really unprecedented and unreasonable in my view and I think Sussan Ley did absolutely the right thing in not caving into that demand and the other demands that the Nationals made.

MICHAEL:

So, we know how the negotiations ended, but what are you hearing about how they played out behind closed doors? Did they begin cordially enough?

JASON:

Well, I think the negotiations were cordial, but what really stands out to me is the rush that the Nationals seem to be in to want to lock the Liberal Party into these policy commitments.

Last week, of course, we saw Sussan Ley elected as the first female leader of the Liberal Party. And straight away, Sussan started to sit down and talk with David Littleproud about the new Coalition agreement. There was, of, course, a big complication, which was that Sussan Ley's mother was in palliative care. She passed away over the weekend. So that was a very difficult thing for Sussan obviously to navigate, and on Monday morning, Sussan Ley was ready to start negotiating with David Littleproud again, and he drove down to her electorate from Canberra and they had a face-to-face discussion in Albury. That was when I think that Sussan realised that there were some pretty big obstacles to making a new Coalition agreement. And that's how that news filtered back to Canberra that the negotiations had pretty much stalled.

One thing that really surprised me was that David Littleproud gave Sussan Ley about 30 minutes notice before he walked out and told the press gallery that he would be declaring the Coalition agreement to be dead.

MICHAEL:

How much is this a product of different interpretations of the election result? You know, the perception amongst the National Party, party room is that they had quite a good election. The liberals went backwards. Littleproud and his team clearly felt like they were going into the negotiations with a position of power. Do you think the Liberals thought they were bluffing? Were trying to call a bluff?

JASON:

I don't think they thought they were bluffing, but I do think the Liberals are very annoyed by the Nationals thinking that they're in a position to make these kinds of demands. Yes, the Nationals held their own, 15 seats in the Lower House, but they only get about, I think it's less than 4 per cent of the national primary vote. The Nationals have absolutely no hope of governing in their own right. They can't be in government without an agreement with the Liberal Party to share power, so I think it really has annoyed a lot of Liberals who feel that not only have the Nationals been a drag on their vote in Australia's big cities, they’ve just been asking for too much and they're a small part of the Coalition and as one Liberal has said to me this morning, the tail has been wagging the dog for too long.

Audio excerpt – Sarah Ferguson:

“David Little Proud, welcome to 7.30.”

Audio excerpt – David Littleproud:

“Yeah, thanks for having me.”

MICHAEL:

The two party leaders, Sussan Ley and David Littleproud, both went on 7.30 after the announcement and both of them were asked who blew up the Coalition?

Audio excerpt – Sarah Ferguson:

“Who blew up the Coalition, the National Party or the Liberal Party?”

Audio excerpt – David Littleproud:

“We got to a position in the National Party party room.”

MICHAEL:

How did they each frame what had happened?

JASON:

Sussan Ley is very much pinning the blame on David Littleproud. She has said that it was his decision to walk away from the Coalition.

Audio excerpt – Sussan Ley:

“I'm very disappointed that the Nationals have chosen to walk away from the Coalition but I remain very respectful of David Littleproud and his team.”

JASON:

And David Littleproud has confirmed that. He's not blaming himself. He's saying that it was the Liberals who weren't able to come to an agreement.

Audio excerpt – David Littleproud:

“Sussan wanted to go through an elongated process of policy formation that would have to restart effectively what we did over the last three years.”

Audio excerpt – Sarah Ferguson:

“But let's just go through them just to be clear for the viewers.”

JASON:

But I think most people would be thinking this morning that David Littleproud has treated Sussan Ley pretty shabbily and has acted rashly. I think even some Nationals are concerned that this is the beginning of a slow moving train wreck for the Nationals.

MICHAEL:

Not that slow moving, but definitely a wreck.

JASON:

Definitely a wreck and I think it's going to take a bit of time for this to sink in. But I wouldn't be surprised if in a year's time the Nationals come back with their tails between their legs begging for a Coalition agreement.

MICHAEL:

After the break - what will it take for the Nationals to come crawling back?

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MICHAEL:

Jason, I want to ask what the split means now in practical terms for this next parliament and what's coming up. What does it mean for how things are going to function in the months ahead?

JASON:

Well, the official opposition, which is recognised by the parliament, will be the Liberal Party, because they have the largest grouping on the opposition benches. So they will be the official opposition. That means Sussan Ley gets to hand out all of the shadow cabinet and the shadow ministry positions. Those positions come with extra salary and staff and other resources. So it's a big bonus for the 53 members of parliament who are in the Liberal Party. The Nationals miss out on all of those things. It also means that the opposition will get more of the questions that are asked in question time. So I think in question-time, there's about 20 questions are asked of the executive, and 10 of those go to the government. The other 10 will be divided between the Liberals, the Nationals, and the crossbench. And I think it's clear that the Liberals will get the majority of those questions.

MICHAEL:

You made it pretty clear, Jason, that the Coalition can't really win an election without each other. What's the logic from David Littleproud here? What's the end game of a move like this?

JASON:

Well, I can certainly see the advantages for the Liberal Party, because the Liberals can really rebrand themselves and make a pitch to the big cities that they can be a party of the future. Sussan Ley has been talking about meeting voters where they are, and I think the Liberals could do that a lot more easily without the nationals holding them back on key issues like climate change. Which the Nationals are so reluctant to sign up to any policies which would look to reduce Australia's greenhouse gas emissions, except nuclear power. So I can see advantages in this for the Liberals, but I can't see any advantages for the Nationals.

They're already a rump party. Not only do they miss out on being part of the Shadow Cabinet and the extra resources that come with that, they also face the possibility, the strong possibility, that the Liberals will run candidates against sitting Nationals MPs at the next election. So instead of going forwards at the election, the Nationals face the very real prospect of going backwards.

Sussan Ley, we should remember, is a member of parliament who represents the electorate of Farrer. This covers a huge swathe of rural and regional New South Wales, southern New South Wales, when she came into parliament in 2001. It was after Tim Fischer, the Nationals leader, had retired from politics.

She won that seat against a Nationals candidate. I know how satisfied Sussan Ley was with that result, and I think one thing that Sussan Ley has always wanted to do is take more seats off the Nationals, and now she's got a huge chance to do that.

So I think this is a disaster for the Nationals. I cannot understand why David Littleproud has chosen this path. I think he's been talked into it by people like the Victoria National Senator. Bridget McKenzie, who's always been very suspicious of the Liberals. but I think this is going to bite them on the bum pretty hard in the months and possibly years ahead.

MICHAEL:

Jason, if you could put on your jaunty couples counsellor hat for a moment and, and offer a little bit of a sage counsel here, what do you think the pathway back would look like? What needs to change for a conscious recoupling between the Liberals and the Nationals?

JASON:

Well, I think the biggest issue is net zero. And I think the nationals really have to have a long think about how they will try to lower greenhouse gas emissions as we approach 2050. I think the Liberals very much want to stick with net zero and show voters in electorates like Wentworth, Kooyong, and Bradfield that they are serious about climate change. These are seats that no longer belong to the Liberal Party. They're now all held by teals, and a key issue for voters in those seats has been climate change. So I think the liberals really have to show voters they're serious about it, and they just cannot have the Nationals holding them back any longer.

And I think, the other thing that the nationals should consider is the advice that the former Prime Minister John Howard has been handing out, which is to to start talking as soon as possible about getting this Coalition agreement back together because the sooner they get talking and get this Coalition agreement back on track, the sooner they can realistically start planning to form government again.

MICHAEL:

Jason, thanks for joining me.

JASON:

Michael, absolute pleasure, great to chat with you.

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MICHAEL:

Also in the news today…

The British government has suspended free trade talks with Israel and imposed new sanctions on West Bank settlers in response to Israel’s latest military offensive in Gaza.

The move follows mounting international pressure over a blockade that has pushed Gaza to the brink of famine, with Australia joining 22 other nations in condemning Israel over the decision to allow limited aid into the strip.

And

The Reserve Bank has modelled the impact of a trade war on Australia, saying unemployment could reach 6 per cent should the United States' so-called Liberation Day tariffs be reintroduced, and countries retaliate.

In a statement following Tuesday’s decision to cut the official cash rate by a quarter of a percent. The RBA said “there is still considerable uncertainty about the final scope of the tariffs”.

I’m Michael Williams. 7am will be back tomorrow.

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