Australian news and politics recap May 20: National Party splits with Libs, ending Coalition

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Committee for Economic Development of Australia head of research Andrew Barker says the Reserve Bank’s decision to cut the cash rate by 25 basis points to 3.85 per cent “will help to bring cost-of-living relief to many Australians.”

He said the RBA appeared to think “it’s job done for now on inflation” noting Governor Michele Bullock hailing the broad-based slowdown in price increases as “very good news”.

He also said CEDA expected there would be “one more rate cut this year”.

“But global developments could quickly change this assessment,” he warned.

Mr Barker noted that “uncertainty caused by US President Donald Trump’s tariffs, the resulting volatility in financial markets and geopolitical tensions has clearly weighed on the board.”

“Heightened global uncertainty means it’s even more important that governments get their budgets on a path to long-term sustainability, to ensure we can respond to any shocks in the domestic and global economies,” he said.

Anthony Albanese has discussed strategic and economic cooperation with his Singapore counterpart after his lightning trip to the Asian nation today on his way home from the Pope’s inauguration in the Vatican.

The Prime Minister labelled the relationship a “vital partnership” and thanked recently re-elected PM Lawrence Wong for hosting him.

“Australia and Singapore believe in free trade and global rules that keep our region stable,” he posted to X, formerly Twitter.

“We have so much in common. And by working together, we can deliver for our economies and for our security.”

It comes after the PM met with Indonesian President Prabowo Subianto in Jakarta, before travelling to Rome where he engaged with fellow world leaders on the sideline of the historic inauguration.

Monash University’s Isaac Gross has said the Reserve Bank’s latest interest rate cut to 3.85 per cent shows the cost-of-living crisis has begun to ease in Australia.

In a move that was widely anticipated by markets and the major banks, the RBA has cut the rate for the second time this year, delivering 0.25 percentage points of relief for mortgage holders.

It marks the first time it has fallen below 4 per cent in two years.

“The RBA’s cut to interest rates by 25 basis points this afternoon reflects the softer outlook for inflation, as the cost-of-living crisis has begun to ease,” he said.

“We currently expect two further cuts over the remainder of the year.”

Dr Gross however said the outlook was highly contingent on two major factors, the continued moderation of inflation and the potential impact of Donald Trump’s trade policy.

“Should Trump re-commit to radically higher tariffs, we would almost certainly see a large reduction in interest rates,” he said.

“On the other hand, the chance for further cuts could evaporate if inflation stays stubbornly high, which remains a real risk given the strength of recent job numbers and wage growth data.”

Murray Watt has promised to listen as he arrived in Perth for a series of meetings with all sides of the debate over a looming decision on Woodside’s proposed North West Shelf extension.

The new Federal Environment Minister has vowed to end the stalemate and make a decision by May 31, Jess Page reports.

“Looking forward to some really constructive meetings,” he said.

“There’s a lot of Ministers who’ve got an interest in the issues within my portfolio and really looking forward to some constructive chats we’ll have.

There are already signs Federal approval would be challenged in the courts, with Perth millionaire Janet Holmes a Court joining the ranks of conservation groups opposed to the $36 billion project.

At a press conference outside State Parliament on Tuesday, she signalled her support for a potential court challenge and accused Woodside shareholders of pursuing profits ahead of cultural preservation.

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Small Business Minister Anne Aly has welcomed the RBA’s rate cut and said it came after the “hard work” of all Australians and Labor’s strong financial management.

The Reserve Bank handed down its second interest rate cut of the year earlier, reducing the cash rate from 4.10 to 3.85 per cent.

For someone with the average mortgage of $660,000, the decision will lower monthly repayments by about $100 a month, or $153 per month for a home loan of $1 million.

“I think this is really great news. I’m sure that’s the sentiment that millions of Australians with mortgages will share as well,” the WA federal Labor MP said.

“As the Treasurer pointed out, that’s due to the hard work of all Australians and our previous term in Government.

“This rate cut came at a time where we’re not seeing an increase in inflation, so we’ve got low downward pressure on inflation.

“Wages are still growing and unemployment is still low.”

Former prime minister John Howard has urged the National and Liberal partys to kiss and make up, and to do it quickly.

“My advice is to reform as soon as possible and resolve their policy differences within the framework of a coalition,” he told the Australian Financial Review.

“If they are separated for too long, they will increase their differences and make resolution more difficult.”

He said the last time the Coalition was sundered, in 1987 over Joh Bijelke-Petersen’s Canberra ambitions, was not a happy experience and took a long time to recover.

Sussan Ley offered the Nationals an alternative pathway after leader David Littleproud axed the Coalition agreement.

Speaking to media in Canberra, Ms Ley said that she offered to share the shadow ministry between parties, working separately on policies before bringing them together “at the right time”.

“I proposed that we stand up a joint shadow ministry consisting of Liberal Party shadow ministers and National Party shadow ministers,” she said.

“And that we go forward in a united way and that we then work separately on policies, as we should, in our separate party rooms and come together articulating what those policies are at the right time.

“And the Nationals did not agree to that approach.”

Ms Ley will now only appoint Liberal MPs and Senators to her shadow ministry.

She said that she intended those positions to remain until the next election regardless of if the National party come crawling back.

Ms Ley acknowledged the work she had done with Nationals leader David Littleproud over recent days as an “appreciated the deep and positive engagement”.

While she described the Nationals’ decision as “disappointing”, Ms Ley reiterated that the door remains open.

“I have enormous respect for David and his team, it is disappointing that the National Party has decided today to leave the Coalition,” she said.

“I want to say is this … the Nationals’ door remains open and our door remains open and we look forward with optimism to rejoining at some point in the future.”

She said the Liberal Party must evolve to meet the demands of contemporary voters and “will modernise”.

“The Liberal Party must respect modern Australia, reflect modern Australia and represent modern Australia,” she said.

“We would work through policies as we always have, and we’ve done that very successfully in the past,” Ms Ley said.

“And I think there’s a pathway. Well, I know there’s a pathway to do that.

“So having those policy discussions, I’m not afraid of that. I’m not afraid of vigorous policy discussions from different corners of the country and different agendas.”