Treasurer Jim Chalmers says the Coalition has been left a “smoking ruin” after the Nationals sensationally split with the Liberals for the second time in a year.

Nationals leader David Littleproud on Thursday said the political marriage was “untenable” and accused Liberal leader Sussan Ley of mismanaging a spat over the hate speech laws.

Littleproud declared that his party “cannot be part of a shadow ministry under Sussan Ley”.

Both leaders went to ground after the bombshell announcement, which was on the same day Australians were mourning the Bondi terror attack, with Ley saying the focus should be on Jewish Australians.

Chalmers was asked about the break-up while discussing the latest jobs figures, which were stronger than expected, with the jobless rate falling to 4.1 per cent in December.

Chalmers said the Coalition was “disintegrating”.

“I think the kindest thing you can say about the Coalition is that it is a smoking ruin,” said Chalmers.

“I think they are paying a price for putting internal politics before public safety this week in the parliament.”

Ley’s leadership of the Liberal Party could be a casualty of the acrimonious breakdown of the Coalition, even as Liberals lay the blame for the split at the feet of Littleproud.

Multiple Liberal sources said the next few weeks remained unclear, but agreed Ley’s leadership was “terminal”.

While accusing Littleproud of blowing up the Coalition, they acknowledged the parties could not get back together with both leaders at the helm.

“It’s fluid and it’s chaos,” one Liberal backbencher told AAP.

But the backbencher endorsed Ley’s handling of the hate speech laws which precipitated the falling out, saying she had followed proper processes.

Littleproud’s leadership wasn’t safe either, Liberal sources said.

One National MP Barnaby Joyce, who defected from the Nationals, said the two conservative parties had gone through more splits and marriages “than a weekend on the Gold Coast”.

He said the leadership of his former Nationals leader was “untenable” and the party’s dramas were driving people to Pauline Hanson.

“I have to break it to you, One Nation has got massively higher membership than the Nationals and we stand in every seat in the city and in the regional areas. So you basically made yourself … the Nationals, politically irrelevant,” Joyce said.

“David just hasn’t thought this through. It is going to be a cartwheel cluster.

“I’m starting to wonder, maybe I’m missing something. Maybe they’re on a recruitment drive for One Nation,” Joyce said.

However, one of the Nationals senators who tendered her frontbench resignation on Wednesday said she was optimistic about a reconciliation once both sides had pondered their future.

“We will both be considering who we are, why we came to parliament, who we represent,” she said on ABC.

“What is in the national interest for all Australians. And I am very optimistic that we will reform the Coalition as soon as possible, because I agree, we are stronger together.”

Littleproud joined 10 other frontbenchers from his party in quitting Ley’s shadow cabinet on Wednesday, after she accepted the resignations of three senators earlier that day.

But on Thursday he declared his party “cannot be part of a shadow ministry under Sussan Ley”.

“She has also forced the coalition into an untenable position that can no longer continue,” he told reporters in Brisbane.

“The National Party is our own sovereign party, and Sussan Ley cannot force us to vote one way or another.”

In a statement, Ley said the focus should be on Jewish Australians as Australia mourns the victims of the Bondi terrorist attack.

“This is a national day of mourning and my responsibility as leader of the opposition and leader of the Liberal Party is to Australians in mourning,” she said.

It’s understood Ley spoke with Littleproud ahead of his press conference to urge a 24-hour pause in respect of the day.

It is the second time since the 2025 federal election the coalition has been on the brink, after a brief divorce between the political parties last May.

Nationals senators Bridget McKenzie, Ross Cadell and Susan McDonald resigned from their portfolios on Wednesday after breaching cabinet solidarity, a principle that requires shadow ministers to all vote the same way.

Senator McKenzie said it had been made clear to Ley what would happen if she accepted the three initial resignations.

“She made that decision knowing what the consequences would be, and you’ve seen that play out,” she told reporters in Canberra.

“We’ve all made it very, very clear that we are coalitionists.

“This is a decision for Sussan Ley, and that is obviously something that she’s going to have to be considering.”

The Nationals who have offered to quit would leave their portfolios but remain in the party as backbenchers.

The extraordinary rift between the two coalition partners was triggered by a disagreement over the government’s anti-hate laws drawn up in the wake of the Bondi Beach terror attack.

The Coalition’s shadow cabinet agreed to back the bill during a meeting on Sunday, but two days later the Nationals announced they would oppose it because of concerns about its impact on free speech.

Littleproud wrote to Ley the same day, warning all remaining shadow ministers from his party would quit if she accepted the trio’s resignations.

“As it was a partyroom decision, if these resignations are accepted, the entire NationaI party ministry will resign to take collective responsibility,” he wrote.

At an emergency meeting on Wednesday night, the remaining eight Nationals frontbenchers decided to quit their portfolios in protest.

The temporary split in May 2025 was triggered by a number of demands being made by the rural party, including an ongoing commitment to nuclear power and a pledge to introduce forced divestiture powers for the supermarket sector.

The two parties reunited after a week, but insiders believe the next separation has the potential to last much longer.

-with AAP