Except for Queensland, the Liberal party has almost always been the stronger Coalition partner, so it is the Liberal leader who usually becomes the Prime Minister or Premier if the parties win government.
The status of the Coalition varies across the Commonwealth and states.
At the Federal level, there is a Coalition between the Liberals, Nationals and Country Liberal Party. This was briefly broken in 1987, but was renewed after the 1987 federal election. In September 2008, Barnaby Joyce became leader of the Nationals in the Senate, with the party moving to the crossbenches. Joyce stated that his party in the upper house would no longer necessarily vote with their Liberal counterparts.
A Coalition between the Liberals and Nationals exists in New South Wales.
Queensland is the only state in which the Nationals have traditionally been the stronger coalition partner. The Nationals under Joh Bjelke-Petersen broke the Coalition in the 1980s and governed in their own right from 1983 to 1989, but governed in Coalition under Rob Borbidge from 1996 to 1998. In 2008, the parties agreed to merge, forming the Liberal National Party.
In Western Australia, the National Party of Western Australia has was in Coalition with the State Liberal government from 1993 to 2001 (see Hendy Cowan), but the Coalition was subsequently broken. In 2008, the Liberals, Nationals, and an independent MP will form the government after the 2008 election, but this is not characterised as a "traditional coalition", with limited cabinet collective responsibility for National cabinet members.
In South Australia, the two parties merged to form the Liberal and Country League in 1932. This in turn joined the Liberal party in 1973, and a separate Country Party (later National Party) emerged, which has only ever had two representatives: Peter Blacker from 1973 to 1993, and Karlene Maywald since 1997. Since, 2004, Maywald been a Minister in the Rann Labor government, informally creating a coalition between the ALP and the National Party at South Australia's state level of government. The National Party, however, rejects the notion that it's in a coalition with Labor at the state level. State National Party President John Venus told journalists that: "We (The Nationals) are not in coalition with the Labor Party, we aren't in coalition with the Liberals, we are definitely not in coalition with anyone. We stand alone in South Australia as an independent party." Flinders University political scientist Haydon Manning disagrees, saying that it is "churlish to describe the government as anything but a coalition".
The National Party is not organised in Tasmania.
In the Northern Territory the two parties merged in 1975, forming the Country Liberal Party. CLP Senator Nigel Scullion is the current deputy leader of the National Party, and was the leader of the Nationals in the Senate until Barnaby Joyce took that position in September 2008.
Coalition arrangements are facilitated by Australia's preferential voting systems which enable Liberals and Nationals to compete locally while exchanging preferences in elections, thereby avoiding "three-cornered-contests", usually with the Australian Labor Party (ALP), which would weaken their prospects under first past the post voting. From time to time, friction is caused by the fact that the Liberal and National candidates are campaigning against each other, usually without undue long-term damage to the relationship.
Indeed, the whole point of introducing preferential voting was to allow safe spoiler-free three-cornered contests. It was a government of the forerunner to the modern Liberal party that introduced the necessary legislation.
For example, this preferential voting system was implemented in October 1918, after a by-election for a federal seat in Western Australia caused an ALP candidate to win after the conservative vote was split in two. Two months later, a by-election held under preferential voting caused the initially-leading ALP candidate to lose after some lower-placed candidates' preferences had been distributed.
As a result of variations on the preferential voting system used in every state and territory, the Coalition has been able to thrive, wherever both its member parties have both been active. The preferential voting system has allowed the Liberal and National parties to compete and cooperate at the same time. By contrast, a variation of the preferential system known as Optional Preferential Voting has proven a significant handicap to coalition co-operation in Queensland and New South Wales, because significant numbers of voters don't bother to express all useful preferences.