Water flowing out of Australia’s largest urban water supply will add to the risk of flooding after a damaging and complex low pressure system caused widespread havoc.

Warragamba Dam west of Sydney was expected to begin a “moderate spill” overnight into Thursday after days of heavy rain, WaterNSW said.

“The duration and volume of the spill will ultimately be determined by rainfall received across the catchment,” it said.

Thousands of people are without power, trees have been uprooted and beaches eroded after the wild weather system battered large parts of Australia’s east coast.

State regulations do not allow water to be released at Warragamba Dam before predicted rainfall or to mitigate floods as it supplies 80 per cent of Sydney’s drinking water.

Spills at the dam are not uncommon, previously occurring in May, and three times in 2024.

Warragamba Dam flows into the Hawkesbury-Nepean river catchment, where the bureau has warned flooding could occur on Thursday.

Other, smaller dams were also spilling after reaching capacity following heavy rains.

The downpours formed part of a “vigorous” east coast low the Bureau of Meteorology predicted would move into the Tasman Sea.

Lord Howe Island residents were warned to prepare for increased winds and elevated seas, with waves up above five metres.

Damaging winds with gusts up to 100km/h were expected to continue through the morning around parts of northern NSW.

More than 3400 incidents were reported to the SES during the weather event, beginning on Monday, with 10 flood rescues.

Additional crews from the ACT were joining the response and recovery efforts late on Wednesday.

About 8000 Endeavour Energy customers were without electricity as crews worked to restore power on Wednesday night, down from a peak of 30,000.

Dozens of properties were under evacuation warnings due to flooding at Burrill Lake and Sanctuary Point near Jervis Bay.

In nearby Sussex Inlet, Fay Brown was stranded when roads approaching the Badgee Bridge flooded.

Without a four-wheel drive, Ms Brown would have used a flood access road, but the local council continued a long-standing practice of blocking the road rather than allowing residential access.

“This happens every time we have heavy days of rain. I’ve lived here 11 years and been stuck on at least five occasions,” she told AAP.

“Once we were stuck there for four days.”

Australia has been told to develop a clear vision for foreign policy as it attempts to navigate an unpredictable relationship with the United States.

The future of defence spending, tariffs and Australia’s nuclear submarine agreement with the US and UK remain unclear after Foreign Minister Penny Wong’s meeting with Secretary of State Marco Rubio in Washington.

Australia’s military budget did not even come up in conversation, according to Senator Wong, despite previous US calls for Australia to lift its defence spending.

While the other two topics were discussed, there was little sign negotiations had progressed.

The government needed to outline a clear direction, La Trobe University’s international relations emeritus professor Joseph Camilleri said.

“What Australian governments – this one included – struggle with is a lack of coherent foreign policy and that then shows itself in these meetings,” he told AAP.

Australia should instead clarify how its relationship with the US relates to its Southeast Asian neighbours on one hand, and with China on the other, and that could trickle through to the position the government takes on issues like the war in Ukraine, conflict in Gaza and tensions between Israel and Iran.

But there were considerable differences in perspectives and views the government hadn’t been able to handle coherently, according to Professor Camilleri.

“It just tries to deal with foreign policy as best it can in small pieces,” he said.

“They are hemmed in by powerful pressures on different sides and to think through a coherent alternative would require a very bold initiative.

“Most governments, this one included, are not taken to bold initiatives.”

There are interests within the US, including intelligence, security and military agencies, and in Australia, such as the coalition, that are committed to the alliance.

“We need a real focus on this alliance – it’s crucial to our prosperity, to our security as a country,” opposition defence spokesman Angus Taylor said.

However, Australian voters’ declining trust in the US under its Republican president was made clear at the federal election in May, where Donald Trump’s volatility appeared to contribute to Labor’s landslide win.

When asked if the US remained a reliable partner while led by Mr Trump, Senator Wong said Australia understood he had a “different view of how America is to be in the world”.

“We respect that, we also recognise how important our relationship is and we believe that is understood here in Washington,” she said.

“(This) is a relationship where the alliance has been in the hands of governments of both political persuasions and it will always be so.”

US President Donald Trump says the United States has struck a trade deal with Vietnam, after months of negotiations, that imposes a 20 per cent tariff rate on many imports from the Asian country.

The rate is lower than an initial 46 per cent levy Trump announced in April on goods from Vietnam, largely as a result of its big trade surplus with Washington.

“It is my Great Honor to announce that I have just made a Trade Deal with the Socialist Republic of Vietnam after speaking with To Lam, the Highly Respected General Secretary of the Communist Party of Vietnam,” Trump said on Truth Social.

Trump said that goods from Vietnam would face a 20 per cent tariff and that any trans-shipments from third countries would face a 40 per cent levy.

Vietnam would also provide the United States with more market access, with US exports to the country facing no tariffs, he said.

“It is my opinion that the SUV or, as it is sometimes referred to, Large Engine Vehicle, which does so well in the United States, will be a wonderful addition to the various product lines within Vietnam,” Trump said.

The White House and the Vietnamese trade ministry did not immediately respond to a request for comment.

The last holdout of the big four banks has brought forward its prediction for the next interest rate cut after retail sales data again came in softer than expected.

ANZ chief economist Adam Boyton expects the Reserve Bank of Australia to cut the cash rate by 25 basis points at its meeting on Tuesday, bringing the bank in line with economists at CBA, NAB and Westpac.

Retail spending rebounded 0.2 per cent in May as cooler temperatures sent Australian consumers flocking back to shops in search of winter apparel, the Australian Bureau of Statistics revealed on Wednesday.

But that was below consensus expectations of a 0.5 per cent lift, with weaker sales elsewhere confirming the subdued start to the year for household spending.

Sales were flat in April, driven in part by unseasonably warm weather putting customers off winter clothes purchases, and leading to May’s bounce-back.

With trade uncertainty weighing on sentiment and underlying inflation around the mid-point of the RBA’s target band, cutting rates would be “the path of least regret” for the central bank, Mr Boyton said.

“Given today’s data showing a weak six-month trend in retail sales, the most recent reads on consumer confidence showing the prior uptrend remains stalled and ongoing uncertainty around US trade policy as we approach the expiry of the tariff pause, we now expect the RBA to cut the cash rate by 25 basis points at its July meeting,” he said.

Hanging over the RBA’s decision is the end of a 90-day pause on US President Donald Trump’s “liberation day” tariffs, which expires the day after the meeting.

If Mr Trump loses patience over the slow progress of negotiations and reinstates unilateral tariffs, there could be another spike in market volatility, CBA chief economist Luke Yeaman said.

While Australia’s economy is more insulated from global shocks, weak consumer spending remained the key watch point for 2025, he said.

“Our internal and retail sales data, it’s all come in a little more soft than we would have expected,” he said.

“It could be some scarring that’s flowed from the last few years of sharp falls in disposable income and a high cost of living. 

“And if that’s the case, all our forecasts might need to come down a little and that could open the way to potentially a few more rate cuts over the course of this year.”

Should the big four banks’ prediction of a July cut come to fruition, a median mortgage holder with a $600,000 debt would see their monthly repayments drop by $90.

Lenders began lowering their offerings before the meeting, with ANZ on Wednesday cutting its one- to five-year fixed rate mortgages by up to 35 basis points.

The ABS also reported building approvals rose by 3.2 per cent in May, following two straight months of falls, as volatile apartment consents roared back 11.3 per cent.

Despite an uptick in approvals in the second half of 2024, the trend has since flatlined, putting Australia’s construction industry on track to fall well short of the national housing accord target of 1.2 million homes in five years.

Property Council chief executive Mike Zorbas said although the target was unlikely to be met, the accord – which had its first anniversary on Tuesday – was a positive signal in spurring decision-makers towards a “culture of yes” that should be applauded.

An axed duo have been reinstated as Australia’s representatives at a major international exhibition after the nation’s arts funding body backflipped on its controversial decision.

In a statement on Wednesday, artist Khaled Sabsabi and curator Michael Dagostino said they had accepted an invitation to once again represent the nation at the 2026 Venice Biennale after being uninvited in February.

“This decision has renewed our confidence in Creative Australia and in the integrity of its selection process,” they said.

“It offers a sense of resolution and allows us to move forward with optimism and hope after a period of significant personal and collective hardship.”

The pair’s invitation was rescinded when some of Sabsabi’s early work, which referenced terrorism, was raised in federal parliament.

The arts funding and advisory body, Creative Australia, cancelled their invitation on the grounds their selection would cause a prolonged and divisive debate and that it posed an unacceptable risk to public support for Australia’s artistic community.

More than 4000 people, including some of Australia’s most respected artists, called for Sabsabi and Dagostino to be reinstated.

The pair again accepted the invitation to represent the nation following an external review of Creative Australia’s earlier decision.

Missteps, assumptions and missed opportunities – although no single predominant failure – were identified in the review.

“It was a complex series of events that created a unique set of circumstances which the board had to address,” Creative Australia acting chair Wesley Enoch said in a statement.

Arts Minister Tony Burke said he still had confidence in the Creative Australia board and politicians should not be in charge of the agency’s decisions.

“These are arms-length decisions,” he told ABC TV.

“When they made the decision to appoint, I said I supported it, when they made the decision to terminate, I said I’d support that.”

But Greens senator Sarah Hanson-Young said the board needed a “clean out” after causing an international embarrassment for Australia.

“People need to be held to account for this,” she said.

The fate of Australia’s nuclear submarine program remains uncertain despite the foreign minister’s attempt to sell the benefits of the agreement to her US counterpart.

The trilateral AUKUS agreement, which would provide Australia with nuclear submarines under a partnership with the US and UK, featured in Foreign Minister Penny Wong’s talks with US Secretary of State Marco Rubio in Washington.

But the meeting did little to quell the coalition’s concerns the future of AUKUS could be in peril with the Pentagon soon to conclude a snap review into whether the agreement aligns with President Donald Trump’s “America First” agenda.

Senator Wong said they had a good discussion about AUKUS and its benefits for all countries, but she sidestepped questions about whether the US was still a reliable partner under Mr Trump.

“We understand that President Trump has a different view of how America is to be in the world – we respect that,” she told reporters in the US capital on Wednesday morning, Australian time.

“We also recognise how important our partnership is and we believe that is understood here in Washington.

“This is not a recent relationship, it’s a relationship where the alliance has been in the hands of governments of both political persuasions and it will always be so.”

Opposition defence spokesman Angus Taylor said it was “absolutely essential” Americans understood the value of AUKUS to them.

“We are still no clearer about where this AUKUS review is heading, what’s expected of us and how we jointly make the most of the AUKUS arrangements,” he said.

Senator Wong and Senator Rubio spoke about deepening co-operation through AUKUS, trade, regional security and the supply of critical minerals.

Some had expected the American to touch on Australia’s military budget, after the US urged Canberra to lift spending to 3.5 per cent of gross domestic product.

But Senator Wong said the Secretary of State did not raise the issue.

Discussions instead centred on regional stability more broadly, with the two noting it was unfortunate to be meeting against a backdrop of global conflict.

“It has never been more important for us to harness our collective strength for peace, stability, for prosperity in the Indo-Pacific,” Senator Wong said.

Senator Rubio said the US and Australia had a “great partnership” and, while it was important to discuss ideas and concepts, the next steps were “concrete action”.

Their one-on-one was part of the Quad foreign leaders’ summit, which also included meetings with Japan’s foreign minister and India’s external affairs minister.

It’s the second time in six months the four-nation diplomatic partnership group has met for in-person talks.

While Senator Wong has met with her US counterpart on several occasions, Prime Minister Anthony Albanese has been under pressure to secure a meeting with Mr Trump to negotiate an exemption from tariffs on Australian goods.

The two leaders were due to speak on the sidelines of the G7 summit in June in Canada, but the meeting was scrapped at the eleventh hour when Mr Trump left early due to instability in the Middle East.

Senator Wong said Mr Rubio expressed regret about the missed opportunity and the two agreed to reschedule the meeting, although a date was yet to be set.

The foreign minister added she advocated “strongly” for the removal of Mr Trump’s baseline tariff of 10 per cent on all Australian goods sent to the US, and a 50 per cent tariff on steel and aluminium.

But Mr Taylor said the foreign minister would return to Australia “empty-handed”.

“No real progress on tariff barriers, no progress on setting up a meeting – it’s anyone’s guess as to when that’s going to happen,” he said.

A leading economist has poured cold water on hopes that the federal government could pull off a major tax overhaul at its productivity summit.

At the same time Luke Yeaman has urged Treasurer Jim Chalmers to consider increasing means testing to raise more revenue.

Mr Yeaman, the former deputy Treasury secretary under Dr Chalmers who now leads the Commonwealth Bank’s economics team, said a “grand bargain” between the federal and state governments on tax reform was unlikely, at least in the short term.

While the government could find some joy in improving areas like housing and energy infrastructure approvals and capital gains tax, large-scale reform around areas like the GST would likely prove too difficult.

“There’s no doubt that Australia needs a bolder reform agenda,” Mr Yeaman said as he released CBA’s economics update for the 2026 financial year on Wednesday.

“We’ve had a successful economy, steady growth that has led to a feeling of complacency in the system.”

With Labor holding a large majority in parliament and Labor governments in most states, expectations will be high for the government to deliver something substantial a the August roundtable, he said.

But given fiscal challenges faced by all levels of government and Dr Chalmers’s requirement that reforms be at least budget neutral will likely make large-scale reform around GST “a bridge too far” in the short term, although it could lay the groundwork for reform down the track.

Governments have typically needed to “buy” reform by spending extra to compensate people who are made worse off.

Increasing means-testing on major spending programs should therefore be revisited to achieve the government’s aims of fixing the budget deficit and help fund tax cuts elsewhere to boost work incentives and abolish inefficient taxes such as stamp duty and payroll tax.

Large outlays in recent years on energy rebates and Medicare spending have typically benefited everyone, even high-income earners with more capacity to pay.

“So I think there’s an opportunity to look at some of the key spending programs and whether you can drive more means testing and user contributions through that,” Mr Yeaman said.

Another potential area for reform was around planning and zoning, where Mr Yeaman said he saw a real appetite for change. 

Senior government figures, including Housing Minister Clare O’Neil and Assistant Minister for Productivity Andrew Leigh, have called to slash red tape slowing approvals for important projects like residential construction and clean energy generation.

“If the government wants to achieve its goals in infrastructure, housing, net zero and future industries – without that, I don’t think you’ll achieve those objectives,” Mr Yeaman said. 

“I think there’s been too much focus on new regulation to protect and manage risk. There’s an opportunity to rebalance that towards a more growth-focused agenda on regulation.”

A major cyber attack that exposed the data of millions of Qantas customers has raised serious concerns about the security of third-party systems amid concerns the airline was targeted by international hackers.

Australia’s largest carrier on Wednesday revealed details of the cyber incident involving one of its offshore call centres.

About six million customers were impacted, with some names, dates of births, email addresses, phone numbers and frequent flyer numbers exposed.

To date, no credit card details, financial data, passport numbers or frequent flyer account information had been compromised, Qantas said.

But experts warn there might be more details to come about the level of exposure of customers.

“It’s an unknown because it is an unfolding situation,” RMIT’s Centre for Cyber Security Research director Matthew Warren told AAP.

“We’re going to be informed sooner rather than later about the impact of this.”

Qantas first caught wind of the attack when it detected unusual activity on a third-party platform used by a call centre on Monday.

“There is no impact to Qantas’ operations or the safety of the airline,” the company said in a statement.

“We are continuing to investigate the proportion of the data that has been stolen, though we expect it will be significant.”

The hackers responsible for the attack have not been identified, but Professor Warren speculated it might be the work of a Russian gang looking to sell the data on the dark web.

But other cyber experts think the attack was launched by Scattered Spider, believed to be a group of young hackers living in the US and the UK.

America’s FBI warned the group had been targeting the airline sector by impersonating legitimate users to bypass multi-factor authentication and access systems.

It followed North America’s Hawaiian Airlines and WestJet being hit by similar attacks.

Scattered Spider most recently launched a ransomware attack on the UK’s retailer Marks & Spencer to knock out its contactless payment centre and online ordering.

Meanwhile, experts say the attack raises serious concerns about the security of third-party systems, given how many Australian companies outsource call centres overseas.

“Was there a security failure? Was there an insider risk?” Prof Warren said.

It is the latest major cyber attack affecting major Australian businesses in recent years.

Telco Optus was hit with a breach in which 10 million former and current customers’ names, dates of births, phone numbers, email addresses and for some, ID details, were leaked.

Health insurer Medibank also experienced a substantial breach when 9.7 million customers’ details were published on the dark web.

“This is the new normal, that we’re sitting in with these global issues,” Prof Warren said.

“Australia in this incident is the unfortunate victim of the attack.”

Qantas Group chief executive Vanessa Hudson said the company was working closely with the National Cyber Security Co-ordinator, the Australian Cyber Security Centre and independent specialised cyber security experts.

“We sincerely apologise to our customers and we recognise the uncertainty this will cause,” she said.

“Our customers trust us with their personal information and we take that responsibility seriously.

“We are contacting our customers today and our focus is on providing them with the necessary support.”

A dedicated customer support line had been established to provide customers with the latest information.

Frequent flyers were sent an email from Ms Hudson explaining that the attack exposed some customer data but reassuring them it was being taken seriously.

Customers have been urged to change their passwords and incorporate multi-factor authentication on accounts.

Qantas shares dropped about 3.6 per cent following the announcement, but they had recovered slightly to be about 2.4 per cent down by mid-afternoon.

Fiji’s leader is open to elevating the Pacific nation’s relationship with Australia to a treaty-level partnership and wants its citizens to fill the ranks of its neighbour’s defence forces.

In a keynote address at the National Press Club, Fiji Prime Minister Sitiveni Rabuka spoke glowingly of bilateral ties between Suva and Canberra in a deteriorating world.

“Unfortunately for now, I contest the region’s outlook is more uncertain than at any time since Fiji’s independence in 1970,” he said.

“Perhaps we have reached a point in our Fiji-Australia relationship where a renewed and elevated Vuvale partnership needs a further step-up to an agreement for a treaty.”

Mr Rabuka’s address will be music to the ears of Australian diplomats, who are seeking to deepen ties in the region, and defence chiefs, who face a recruit shortfall.

The 76-year-old said a treaty, which would incorporate development assistance, would secure ties beyond “the political whims of winning parties” in elections in both countries.

Canberra is pursuing a defence treaty with Papua New Guinea that would lead to its citizens being eligible to serve in the Australian Defence Force.

PNG and Fiji are the biggest two Pacific island nations in terms of population and economy.

Mr Rabuka said he would embrace Fijians serving in an expanded Australian defence outfit, just as Fijians were able to do in British forces.

“I would like to see it happen,” he said.

“Whether Australia does it or not depends on your own policies, we will not push it.”

Mr Rabuka is on a week-long tour of Australia, which began with a welcome at Government House by Governor-General Sam Mostyn on Tuesday.

On Sunday, he will watch a rugby union Test match between the Wallabies and Flying Fijians in Newcastle with his Australian counterpart Anthony Albanese.

In Mr Rabuka’s televised address in the capital, he spruiked his signature foreign policy: the Ocean of Peace.

Blake Johnson, a senior analyst at the Australian Strategic Policy Institute, said the prime minister was wanted regional challenges to be responded to by the region.

“It’s trying to unite the Pacific to push back against some of the competition that’s taking place,” he said.

Mr Rabuka said he hoped regional counterparts would adopt his 10-point peace plan at the Pacific Islands Forum leaders’ summit in Solomon Islands in September.

“Right now, we are having to cope with a China that is big – really big – and has gotten powerful and would probably like to spread its influence to the Pacific,” he said.

“Pacific leaders in all the recent discussions have tried to go for policies that are friendly to all and enemies to none.

“It is a fairly tough course to steer, but it is possible.

“We need to hold hands, we need to encourage each other to be able to maintain that view and that path.

“We do not want those superpower rivalries or big power rivalries playing out in the Pacific.”

Households and businesses could pay less for insurance under a Liberal plan for a government-owned provider, as cost-of-living issues continue to dominate ahead of a state election.

Tasmanian Premier Jeremy Rockliff unveiled his party’s signature policy on Wednesday to support families and small businesses facing rising insurance costs.

TasInsure will offer affordable insurance for home, contents, small business, community groups and events, and regional insurance.

Under the Liberals’ “most significant” campaign announcement, households could expect to save $250 or more on insurance premiums annually, and small businesses to pay 20 per cent less, Mr Rockliff said.

The insurance industry made $6 billion in profits last year, while average Tasmanian premiums rose by 35 per cent over the past two years.

The premier said the national market had failed his state.

“In the absence of a national approach, we are going at it alone to protect Tasmanians from exorbitant increases in insurance premiums,” Mr Rockliff said.

“It’ll be cheaper, it’ll be fairer, and it will be ours.”

Any profits made by TasInsure will be reinvested to ensure premiums are kept low, he added.

Draft legislation will be presented for consultation by the end of the year, and the government will need to gain national accreditation.

The Tasmanian Chamber of Commerce and Industry has welcomed the “game-changing” announcement after insurance costs were listed as a top-two concern for small businesses.

“There has been a market failure in the insurance industry caused by massive disasters in the mainland that throw the premiums out right across the nation,” chief executive Michael Bailey said.

But Labor leader Dean Winter said the policy was “dangerous, reckless and dodgy”, which puts Tasmania “on a pathway to bankruptcy”.

“It’s a premier who’s been saying he wants to privatise for the last six months, and now he says he wants to open a new public business,” he said.

“This is a desperate bid from the premier.”

The Opposition on Wednesday announced a policy to “stop bill shock” and allow Tasmanians to pay government bills monthly at no extra cost.

“We know that it’s really tough when you get bill shock – one big bill a quarter makes it really tough for people to make ends meet,” Mr Winter said.

The policy is part of a suite of proposals, including previously announced power price caps and a freeze on car registration costs, Labor said would help with household budgets.

The Greens also unveiled the second part of their budget repair plan, which they say would save the state $363 million by 2027/28.

The minor party will end $12 million in subsidies to the native forest logging industry and more than $37 million to TasRacing, while also reducing the Treasurer’s reserve back to $10 million from $40 million. 

The island state is heading to the polls on July 19, the second time in two years, after its parliament passed a no-confidence motion in Mr Rockliff in early June.

The Liberals have governed in minority since 2023, and collapsing relationships with the crossbench have triggered the past two elections.