The broken Liberals have a dilemma: Was Angus Taylor the problem or is he the solution?

The shattered Liberal Party is about to make a fateful choice about a new leader when the early frontrunner, Angus Taylor, is yet to convince his colleagues that he is the man for the job.

The conservative side of the party is backing the shadow treasurer, putting a solid bloc of votes behind him, and he also has support from some moderates – notably Jane Hume, the Victorian senator and finance spokeswoman.

Shadow treasurer Angus Taylor looms as a potential replacement for Peter Dutton. Credit: Oscar Colman

But the secret ballot is unlikely to be decided on neat and tidy factional lines when Liberals admit they are in an existential crisis after their Saturday night smackdown.

Taylor appeals to the right, but deputy leader Sussan Ley promises a more centrist approach to keep the party together. Dan Tehan, the immigration spokesman, has an outside chance as a compromise candidate.

One Liberal says the outcome should be about steering the party away from further disaster rather than dividing the spoils between right and left.

“I don’t think there’s any point worrying about who’s in first class and who’s in third class if we’re all on the Titanic and heading toward the iceberg,” he says.

In other words, now is not the time to play games with the deckchairs. The Liberals have been driven out of urban electorates they used to dominate, and they can never return to government if they fail to fix this problem.

The moderate wing of the party is sceptical about Taylor and sees him as part of the problem because he was central to the argument on the economy over the past three years – and therefore central to the defeat on Saturday.

Taylor’s supporters are arguing that he drafted a bolder agenda – for instance, on tax reform – but was blocked by former leader Peter Dutton. The critics dismiss this as spin.

“I don’t see any scenario where someone who has failed to prosecute the case against the government on the economy turns out to have the secret economic agenda for the future,” says one Liberal. “The incompetence is clear.”

Liberals now acknowledge in public the weakness of their economic agenda. “I feel that we had zero economic policy to sell,” NSW senator Hollie Hughes told ABC Radio National on Monday. She blamed Taylor for failing to land a blow on Treasurer Jim Chalmers. “I have concerns about his capability. I don’t know what he’s been doing for three years.”

Outgoing Liberal senator Hollie Hughes in Sydney following Saturday night’s crushing defeat.Credit: Steven Siewert

Hughes has an axe to grind: Taylor marshalled the numbers on the right to have her dropped from the Senate ticket, which means she is out of parliament on June 30. Even so, other Liberals agree that the economic plan was too thin and that Taylor has to take responsibility. Can he be the solution if he was such a big part of the problem?

No less than former treasurer Peter Costello warned that the opposition failed to do enough about falling living standards and heavy federal spending. “The Coalition presented no coherent policy about how to deal with these issues,” he told The Australian Financial Review.

The leadership contest is close for one big reason: Ley also shares responsibility for the election outcome. As the deputy leader, she was part of the team that oversaw the agenda for the past three years. No candidate for the leadership is a fresh face who offers a clean break from the past.

The numbers are difficult to predict because the party room is in flux. The strategic failure under Dutton, who tried to appeal to “battlers” in the outer suburbs without doing enough to win back “teal” voters in wealthier suburbs, has reduced the Liberal ranks by at least 13 seats.

Former opposition leader Peter Dutton and deputy leader Sussan Ley.Credit: Alex Ellinghausen

This could weaken the support for Ley. The cruel twist for the moderates is that they lost so many MPs under an agenda set by the conservatives. The frustration about this is obvious when moderates such as Andrew Bragg and Dave Sharma, both senators from NSW, say that “culture wars” turned away voters.

The moderates have lost former minister David Coleman, Jenny Ware, James Stevens, Keith Wolahan and Bridget Archer. The conservatives have lost former minister Michael Sukkar, Ross Vasta and Luke Howarth.

The Liberals paid the price every time Dutton copied US President Donald Trump by promising to cut government services or stop “woke” agendas. They paid the price when he complained about working from home.

This is also a problem for Hume because some of her colleagues blame her for the perception that the Liberals wanted to curb working from home, given she fuelled the complaints about it with a speech on March 3.

Hume has been a good addition to the senior ranks over the past three years, but she is caught up in the recriminations over the campaign. Some colleagues are furious with her for a television appearance in which she suggested “Chinese spies” were handing out how-to-vote leaflets for Labor. The Labor team turned this into a social media campaign that hurt the Liberals in Chinese communities.

The Liberals are in a crisis that will take years to address. Their branches are getting older and smaller, while they struggle to find younger and more diverse candidates for parliament.

Credit: Matt Golding

Dutton allowed these structural problems to remain, while getting glowing feedback from the late-night hosts on Sky News.

A leadership battle that pits conservatives against moderates will not fix the structural flaws, either. The conservative MPs who love a “culture war” will be permanently exiled from government if they refuse to share power with moderates who can win urban electorates.

Who can bring the party together? Nobody sounds convinced that Ley is the answer. Some are even more sceptical about Taylor.

Read more on Labor’s landslide election win

• Inside story: How the Coalition campaign was a catastrophe months in the making.
• Some seats are still too close to call. Here are all the races that remain in doubt – plus every seat that’s changed hands.
• Interactive: See how your polling booth voted in this election.
• Live results: Track every seat in the country.
• Live blog: Anthony Albanese plans second term, Liberals plan a leadership change.

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