Australia news LIVE: Ship attacked near Strait of Hormuz as Iran says it is reviewing US response to 14-point proposal to end war

Good morning and welcome to the national news blog from The Sydney Morning Herald and The Age. Follow along for rolling coverage of breaking news from Australia and around the world.

Here’s what you need to know this morning:

• Iran says the United States had responded via Pakistan to its 14-point proposal to end the war and that it was reviewing the response, state media reported.
• US President Donald Trump had previously expressed doubt it would lead to a deal.
• A search is under way for two US service members who went missing in a training exercise in Morocco.
• The accused killer of Kumanjayi Little Baby, 47-year-old Jefferson Lewis, has been charged with murder. He is expected to appear in Darwin Local Court on Tuesday.
• A man charged with killing his brother and parents in a drug-induced frenzy in their Sydney home will appear in court today.
• A decision on whether to extend the three-month cut to the fuel excise tax will come after the federal budget. The cut was introduced at the start of April, with petrol and diesel costs slashed by 26.3 cents a litre in response to soaring prices caused by the US-led war on Iran.

Treasurer Jim Chalmers said the government would keep pursuing the prime minister’s goal of universal childcare “when we can afford to do so”.

Anthony Albanese has said he wanted to leave a legacy of accessible and affordable childcare for every Australian child, but the war in Iran, rising inflation, and global instability had forced the government to reprioritise.

“From the prime minister right down, there is an appetite to do more in that regard when we can afford to do so,” Chalmers told reporters in Canberra this morning.

“In recognising that it will take time to get to a system which is more universal, we shouldn’t lightly dismiss the steps that we have already taken,” he said, pointing to the government’s three-day guarantee of subsidised care.

Staying with Jim Chalmers, he has denied government spending is driving inflation but said Labor would play a “helpful role” in bringing it back down.

Asked whether the pursuit of savings in the budget was a concession that government spending was driving inflation, Chalmers said the uptick in inflation at the end of last year was because of activity in the private sector.

He said the rise in inflation in the month of March was “driven overwhelmingly by higher petrol prices because of what we’re seeing in the war in the Middle East”.

“But we recognise that there are other inflationary pressures as well,” the treasurer said.

“Now we haven’t seen this big uptick in inflation because of government spending, but government spending, as I’ve said on heaps of occasions, is obviously part of aggregate demand, and so where we can play a helpful role … obviously, we look for ways to do that.”

Treasurer Jim Chalmers said spending restraint would be more foundational to next week’s budget than tax reform as he outlined the government’s desire to rebalance intergenerational inequity.

“There will … be more dollars in savings than dollars in tax reform,” Chalmers told reporters in Canberra. “Savings and spending restraint is doing a lot of the heavy lifting.”

Chalmers said the budget would be calibrated to address intergenerational inequity.

“The intergenerational pressures are really serious,” he said.

“Now we recognise and respect the really big contribution that older Australians have made and continue to make to our country and to our economy, but a lot of Australians and particularly younger Australians are finding it really difficult to get into the housing market.”

Finance Minister Katy Gallagher said savings would be found in every government portfolio as Labor foreshadows more savings than new expenditure in next week’s budget.

“The budget will include $2.7 billion in savings,” Gallagher told reporters in Canberra.

She said savings from the public service would come from reduced spending on external labour and non-wage spending, such as travel and hospitality.

“This is essentially extending the existing savings measure we have put in place in previous budgets, and it will also have significant savings from unallocated funding across a number of departments. It will also include re-prioritisation within defence … and also an effort around reducing fraud and non-compliance across the NDIS.”

Japanese Prime Minister Sanae Takaichi touched down in Australia last night as the world’s middle powers work to bolster relations amid persistent global uncertainty and the oil shock caused by the war in Iran.

Foreign Minister Penny Wong said Australia’s partnership with Japan was important for several reasons.

“They’re a partner with whom we work economically. They’re a partner with whom we work diplomatically. We obviously have a defence relationship in terms of procurement from Japan. They’re a very important partner in the region,” Wong told ABC News Breakfast.

This masthead reported today that Australia was being urged to consider Japan as a fallback option to obtain submarines should the AUKUS pact collapse.

Wong said the government was “focused on AUKUS”.

“That’s a capability that is important for Australia. It’s in our national interest. It’s about having a capability that enables us to contribute to both deterrence and assurance, and those are things necessary for peace and stability. So we’re focused on delivering all this.”

Foreign Minister Penny Wong would not confirm reports out of Syria that the Australian government is refusing to receive a cohort of 13 Australian women and children with links to Islamic State who are seeking repatriation.

“I can’t speak for the Syrian government. I can only speak for the Australian government. And what I am saying is we are not acting to repatriate them,” Wong told Seven’s Sunrise.

Wong said the government had done all it could within the law to prevent the cohort returning.

“You can’t kick out people [from Australia] … the only thing you can do is put in place a temporary exclusion order. And [Home Affairs Minister Tony] Burke has and will act only in accordance with the advice from agencies, and only to the extent he’s able to.”

Foreign Minister Penny Wong has emphasised the need for the Strait of Hormuz to reopen, but stopped short of committing Australia to joining US President Donald Trump’s “Project Freedom”.

“There are certainly many ships which are trapped in the Strait of Hormuz, and … I have spoken before about the need to open the strait, both for the energy markets and also to get those ships through and those seafarers out safely,” Wong told Seven’s Sunrise.

“We’ve been engaging with the US, with the UK, with France on efforts to reopen the strait. We will continue to engage with them. What we do want, however, is Iran to cut a deal, make sure they get a negotiated outcome that opens the strait and is to the satisfaction of the United States and the rest of the world.”

Trump said earlier today that “Project Freedom” would help stranded ships leave the Strait of Hormuz, and would free people, companies and countries that are “victims of circumstance”. He also said US representatives were having discussions with Iran that could lead to something “very positive for all”.

US President Donald Trump says a project will start today to help stranded ships leave the Strait of Hormuz, but offered few details.

In a long social media post a short while ago, Trump said that “neutral and innocent” countries have been affected by the Iran war, and “we have told these Countries that we will guide their Ships safely out of these restricted Waterways, so that they can freely and ably get on with their business”.

“The Ship movement is merely meant to free up people, companies, and Countries that have done absolutely nothing wrong – They are victims of circumstance,” he wrote.

He said “Project Freedom” would begin on Monday morning (Middle East time).

Social Services Minister Tanya Plibersek has been grilled about the contents of next week’s federal budget, as the government continues to be pressed on tax and housing reforms.

Plibersek refused to hint at any major reforms that may be in the budget, which is expected to focus on intergenerational inequity and fairness. Prime Minister Anthony Albanese has signalled that tax changes would be aimed at promoting aspiration, such as the right of people to own a home.

Plibersek said the government hasn’t “confirmed anything in the budget”, but reiterated that helping Australians find a foothold in the housing market was a key goal.

“We’re absolutely determined to make sure today’s Australians can hope for a house of their own, in the same way their parents and grandparents could,” she told Seven’s Sunrise. “We really need to focus on housing policy in this country.”