News and politics live updates: RBA chief Michele Bullock hits out at Labor’s proposed tax changes

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Reserve Bank of Australia governor Michele Bullock has warned Labor’s negative gearing and capital gains tax plans are a financial stability risk.

House prices last month plunged in Sydney and Melbourne after Treasurer Jim Chalmers announced in his fifth Budget that negative gearing would be restricted to brand new homes from July 2027 as the 50 per cent capital gains tax discount was replaced with a 30 per cent tax on inflation-adjusted gains.

Ms Bullock said the exodus of investors was likely to create financial stability problems.

“Sometimes with investors in the housing market, from a financial stability perspective, I’m not talking about whether it’s right or wrong, but they tend to come into the market when the market’s going up and they tend to get out of the market when the market’s going down,” she told reporters in Sydney on Tuesday.

“So they tend to exacerbate the housing cycles and that could have financial stability implications.”

Reserve Bank governor Michele Bullock has warned home borrowers face more rate hikes as the aftermath of the Middle East war pushed up inflation, despite her monetary policy board unanimously voting to leave rates on hold for the first time this year.

The cash rate was left on hold at 4.35 per cent - marking the first RBA decision with no increase since December.

She said the pause would give the board time to better understand how previous rate rises are flowing through the economy.

“Leaving rates on hold today will allow the board to assess how these previous increases are flowing through the economy,” she told reporters in Sydney on Tuesday.

“I want to be very clear that inflation remains too high.”

Ms Bullock pointed to global uncertainty as another factor complicating the outlook, including potential shifts in energy and commodity markets if geopolitical tensions ease.

“If the conflict does end and the Strait of Hormuz is reopened, this should support the flow of commodities and lower prices but this could take some time and an orderly resolution is still not assured meaning there are still upside risks to inflation and downside risks to growth.”

She also warned that inflation expectations becoming entrenched in the economy could make the challenge significantly harder to resolve.

“If expectations of higher cost growth get embedded into price and wage-setting decisions across the economy, this would lead to even higher and more persistent inflation and it would require even more tightening in monetary policy to get inflation under control,” she said.

Bullock made clear that further tightening remains on the table if inflation does not continue to ease.

“Today’s decision does not rule out further tightening in monetary policy if that is what’s required to bring inflation down.”

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Treasurer Jim Chalmers has welcomed the Reserve Bank’s latest decision to hold interest rates steady, saying it provides a degree of stability while broader global risks continue to weigh on the outlook.

Speaking in Brisbane, he said the result was consistent with the government’s expectations following the recent federal budget, but warned international conditions remain difficult to predict.

“We’re pleased with developments in the Middle East but we’re realistic about how long it will take for the global economy to normalise and what that means for us,” he said.

“The end of this war can’t come soon enough. Australians have already paid a really hefty price for this conflict on the other side of the world.

“In Australia, we’ve seen inflation come off a bit, but we still know that those inflationary pressures are there, made worse by the war in the Middle East and its aftermath.”

Dr Chalmers described the RBA decision as a relief for millions of borrowers.

“It doesn’t make life any easier for people but it doesn’t make life harder either.”

​Read more.​

Home borrowers have been given a reprieve with the Reserve Bank unanimously voting to leave interest rates on hold for the first time this year despite inflation still being too high.

The monetary policy board’s nine members all voted to leave the cash rate unchanged at 4.35 per cent, a day after US President Donald Trump announced a peace deal with Iran that is expected to take the pressure off inflation as oil tankers are again able to leave the Strait of Hormuz.

The decision was in line with futures market expectations of no move on Tuesday and marked the first RBA meeting since December 2025 without a rate rise, following increases in February, March and May.

But the RBA hinted the next move was still likely to be a hike with April’s inflation rate of 4.2 per cent being well above the RBA’s 2-3 per cent target, marking the ninth consecutive month outside the band.

“It will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required,” the Reserve Bank’s monetary policy board said on Tuesday.

“The latest data show that headline and underlying inflation are still too high.”

Read the full story.

After Anthony Albanese yesterday appeared to leave the door open to extending the fuel excise cut beyond June 30, the Prime Minister fielded a range of questions today about what might be on the cards.

This included the idea of leaving the lower excise in place for diesel even if it increases back to usual levels for petrol, and extending a waiver of heavy vehicle user charges.

“We will give consideration to all of those matters appropriately,” Mr Albanese says, noting that the ceasefire deal in the Middle East was only announced yesterday.

He again points to the income tax cuts that start on July 1.

Anthony Albanese is speaking to media at the house of two young new homeowners in Clifton Springs in Victoria’s Bellarine Peninsula.

The Prime Minister knocks over reports this morning that the government is contemplating including carve-outs for start-ups and other small businesses in the changes to capital gains tax discounts that it wants legislated in the next fortnight.

He describes the bill before Parliament now as the framework, and says there will be further legislation later in the year.

“What we’ve had is consultation up to this point. That (Treasury) discussion paper will go out, which will enable further input, which will be fed into the legislation later this year,” he said.

Senate watchers are preparing for the traditional end-of-session legislative stand-off in the next fortnight.

This time the Government’s high-stakes bills are the ones that cut billions from the NDIS, and impose the controversial changes to the capital gains tax discount and negative gearing while setting up the $250 working Australian tax offset and the $1000 standard deduction.

Two speedy committee inquiries into these bills are due to report this week, clearing the way for debate to start on Monday.

However, the NDIS committee has just been given a three-day extension on its inquiry, which was supposed to report today.

It will now report on Friday, the same day as the committee that’s examining the tax bill.

Finance Minister Katy Gallagher has refused to be drawn on whether the Government will extend its temporary fuel excise relief, saying ministers are closely watching global oil markets following the US-Iran ceasefire agreement.

With the rebate due to expire at the end of June and a decision expected within days, Ms Gallagher said fuel prices remained under review as events in the Middle East continue to unfold.

“Let’s see what happens from the agreement that’s been reached in the Middle East. We saw the price of oil fall quite a bit yesterday, but it has been moving around a bit over the last couple of months,” she told ABC Radio National Breakfast.

“This is something we keep under active consideration. We want to help people with these kind of sharp hits to household budgets.”

A fiery television clash has erupted over Labor’s controversial tax overhaul, with Opposition Treasury spokesman Tim Wilson accusing the Government of misleading voters and ignoring growing concerns from small business owners.

The heated exchange unfolded after Employment Minister Amanda Rishworth defended the reforms and pointed to the ongoing Senate inquiry examining the package.

“I would say that anyone has had an opportunity to, put in a submission to the inquiry and of course there have been a number of witnesses over two days,” Ms Rishworth told Today.

“Oh get real, Amanda,” Mr Wilson shot back.

The argument quickly escalated, with Mr Wilson accusing Labor of breaking promises made before the election.

“Oh grow up Amanda, that’s not true. Small business around the country are screaming for help and your answer to this is to censor and silence them. There’s a point where Australians deserve to have their say,” he said.

“You didn’t give it to people at the last election; you lied before the Australian people before the last election, you’re now ramming it through the Parliament.”

Ms Rishworth dismissed the accusation, replying, “I’m going to stop you there, that’s just ridiculous.”