Cracks emerge in reunited Coalition over trade deal and AI

October 29, 2026 — 4:41am

The Liberal and National parties are showing their first signs of strain since they split earlier this year, as the junior Coalition partner stakes out aggressive stances on free trade and artificial intelligence.

Friction has recently emerged between the reunited parties, but unlike the fraught dynamic between former leaders Sussan Ley and David Littleproud, Angus Taylor and Matt Canavan respect each other and the Nationals leader is granted room to manoeuvre and fight the prospect of regional wipeout as One Nation threatens Nationals seats.

The disruptive sway of One Nation on Coalition policy came to a head in two closed-door meetings in Canberra this week.

In a Liberal-only meeting on Tuesday, former minister Alex Hawke, a factional opponent of Taylor, spoke out against the Nationals’ position on a proposed trade deal with the EU. A fortnight ago, Canavan declared without the leadership group’s approval that both parties were opposed to the deal.

Hawke argued that Canavan had no right to dictate the Liberal position and said voters could see the economic damage caused by the Trump administration’s stance on tariffs and trade.

“If we don’t have our own identity on key economic issues, then the Nationals will dominate us and that will be at our expense electorally,” Hawke told his colleagues, according to sources in the room.

Hawke praised Taylor for defusing the situation when Canavan, a maverick for years before becoming leader, moved unduly quickly. The backbencher added that it would be seen as “nutty” for a free-market party to outright oppose a deal with the world’s second-biggest trading bloc.

Hawke’s position reflected the frustration of Liberals about Canavan front-running the process. Moderate Liberals also have concerns about the substance of the deal worked up by Trade Minister Don Farrell, which Taylor has described as a dud. Critics in both Coalition parties argue the proposed agreement locks future governments into the Paris climate accord, shortchanges dairy and red meat producers, and embeds contentious, pro-union labour rules.

Labor used a series of set-piece speeches in question time to wedge the Coalition on the EU deal. Farrell has said his door is open to negotiate, but Labor has not indicated it is willing to make any changes to win Coalition support, instead being likely to work with the Greens.

On AI, the Nationals and conservative Liberal Garth Hamilton are pushing back against a mooted Liberal-Labor consensus on welcoming data centres and changing copyright arrangements to encourage frontier AI labs to make Australia their second home for training.

David Littleproud, who has the largest data centre in the country planned in his Queensland seat of Maranoa, used a Nationals-only meeting on Monday to argue against any notion of weakening copyright laws.

Littleproud told this masthead on Tuesday that Anthropic’s investment in the $32 billion data centre showed tech companies wanted to use Australia’s vast land and resources.

“They’re threatening not to come. That’s bullshit. They are coming,” he said. “I’m totally opposed to copyright changes and most of the party room doesn’t support it.”

Littleproud said the data centre could create 1400 jobs, but he cast doubt on it by saying its owner could lose social licence if it built the 20,000 hectares of renewable energy he argued would be needed to power it without other energy sources such as coal. “That’s bigger than Sydney,” he said.

Hamilton, a target of Pauline Hanson, holds the nearby electorate of Groom and became the first major-party MP to call for a moratorium on data centre construction. The Greens also support a moratorium and One Nation has expressed scepticism.

Nationals senator Ross Cadell told this masthead: “Not only should there be no change, but we should potentially tighten it. There are real problems on copyright: it’s property theft.”

Cadell sits on the bipartisan AI committee designed to create political consensus on artificial intelligence, which a range of Labor and Liberal figures believe to be critical to future prosperity and national security.

The hardening positions on AI among Nationals complicates Taylor’s position in talks with the prime minister. The Liberal leader has held talks with Anthony Albanese to offer bipartisan backing on copyright reform, but Labor remains caught in a policy bind: how to ensure creatives are compensated without imposing a rigid licensing regime that exposes AI companies to lawsuits and establishes a global precedent.

The latest Resolve Political Monitor showed Labor’s primary vote at 29 per cent, One Nation’s at 25 and the Coalition at 23.

Nationals sources said the party still feared big losses to One Nation but had seen improved polling in regional areas in the past few months, mirroring findings in a recent Demos poll.

“People are noticing that Matt [Canavan] is fighting and hustling,” one Nationals source said.

Taylor is still struggling to gain attention and is in a nearly identical polling position to Ley, according to an average of all polls. But Liberal MPs, including moderates, note Taylor is more relaxed in the job eight months in, with slicker social media and more policy announcements.

One right-wing Liberal MP told this masthead that Taylor would defy expectations and last until the next election because the Ben Roberts-Smith saga had damaged the best alternative, Andrew Hastie.

News24 host Peta Credlin underlined the criticism of Hastie on Tuesday. “I’m not so sure that conservatives would regard Hastie as one of their own any more,” she said on her program.

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