Good morning, this is Eleanor Ainge Roy bringing you the main stories and must-reads on Thursday 12 July.

Top stories

Donald Trump left those attending the opening day of the Nato summit stunned and in disarray after making a surprise demand for members to increase their defence spending to 4% of GDP and proclaiming “Germany is a captive of Russia”. Trump left the assembled presidents and prime ministers floundering, unsure whether he was serious about the 4% target. After making the announcement, the US president walked out. Later, the White House press secretary, Sarah Sanders, confirmed the 4% figure. It is double the current 2%, which many countries do not meet.



Later in the day, Angela Merkel pushed back against Trump’s extraordinary tirade against Germany, denying her country was “totally controlled” by Russia and saying it made its own independent decisions and policies. Hours after Trump singled out Germany for criticism, Merkel said: “I have experienced myself how a part of Germany was controlled by the Soviet Union. I am very happy that today we are united in freedom.” Merkel has been one of the most outspoken critics of Trump among European leaders, and US media report Trump is keen to see her replaced. Observers say the Nato summit is shaping up to be the most divisive in its 69-year history.

It’s staying away. Croatia has defeated England 2-1 in a tense semi-final to claim their first ever spot in a World Cup final. Kieran Trippier’s first half goal buoyed hopes of a win for Gareth Southgate’s side, but their joy unravelled in the second half with an equaliser from Ivan Perišić, which was followed by another goal from Mario Mandžukić in extra time. Croatia will now play France in the World Cup final.

Licences needed for coal seam gas exploration in New South Wales have been effectively extended indefinitely past their expiry date, due to a legal loophole. Conventional and coal seam gas operations require a petroleum exploration tenement. A Guardian Australia analysis of the NSW government’s tenements database shows 14 titles listed under “current titles” that are past their expiry date. Despite being past the expiry date – some by as much as six-and-a-half years – under NSW law the tenements remain in force until the government deals with the renewal application. If the government does not approve or deny a renewal application, a tenement can remain in effect without being subject to the safeguards and reporting requirements built into the renewal process.

Australians are underpaying a total of $8.7bn in income tax, according to tax office estimates, made as part of a crackdown aiming to net an extra $250m a year. Today the Australian Taxation Office has released its first “tax gap” estimate, based on a randomly selected sample of returns. Returns prepared by tax agents actually had a higher rate of adjustment for error (78%) than self-prepared returns (57%). The most common causes of the gap are incorrectly claimed work expenses, incorrect claims for rental property expenses and non-reporting of cash wages, which the ATO intends to target in the crackdown.

The Queensland government has been warned not to “write a blank cheque” for the national energy guarantee by offering unconditional support. The Smart Energy Council, which represents the solar industry, is lobbying the Labor states to either reject the Neg in its current form or to make their support for the mechanism conditional so that emissions reduction can be ramped up later. On the other side of the argument, the Nationals and conservative Liberals are continuing internal lobbying efforts to persuade Malcolm Turnbull and Josh Frydenberg to sign up to transitional assistance for coal as part of any settlement of the Neg.

Sport

Tennis great Roger Federer has been knocked out of Wimbledown in a stunning surprise victory for Kevin Anderson, a man who had never taken so much as a single set off of Federer in any of their four previous matches. Anderson beat Federer 2-6, 6-7 (5), 7-5, 6-4, 13-11 and will now face either Raonic or Isner in his next match.

The Maroons defeated the Blues 18-12 in Brisbane to provide a fitting farewell for Billy Slater and deny NSW their first Origin series whitewash in 18 years.

Tensions at the Tour de France around Chris Froome and his Sky teammates showed little sign of abating on Wednesday, where the defending champion was booed once again at the start village for stage five. Peter Sagan claimed his second stage win of the 2018, taking the green jersey in Quimper.

Thinking time

Six authors nominated for the National Biography awards reveal what most surprised them about their subjects. Tim Winton, Joan Healy, Bernadette Brennan, Deng Thiak Adut, Judith Brett and Troy Bramston reveal their high points and painful moments of writing their nominated books. “The older I get the wilder and riskier and, yes, the luckier my life looks. No suit, no cardigan? No worries,” Tim Winton says of The Boy Behind the Curtain.

Every time Australia delays the removal of a critically ill child from Nauru, the stakes get higher, writes immigration correspondent Ben Doherty. “Slowly, literally one by one, through Australia’s legal system, the children on Nauru are finding a path to the care their doctors have been insisting – in some cases for months – that they need.” But the impact on those left behind on the island is profound. And the message they are hearing from Australia’s policy is exceedingly dangerous.

Today’s Life on the breadline contributor reflects on the disconnection poverty brings. “While money alone will never make you happy, a lack of it does have negative consequences. I have a total of $170 a week for everything – yes, everything for a week, about $24 a day – after rent is paid. I must prioritise health, food, bills and oftentimes it is simply ‘no’. So I miss out on participating – I become disconnected from support networks and social activity.”

Media roundup

The Australian splashes with the PM’s potential backing of a plan to underwrite and subsidise new power generation for industrial and commercial users, signalling a possible end to the energy wars within the Coalition.

The Solomon Islands, Australia and and Papua New Guinea have signed a deal for a new underwater internet cable, the ABC reports, as China ramps up its criticism that Australia is trying to curtail its influence in the region. Malcolm Turnbull described the $137m spend to lay the cable as a “practical” way of providing aid to Pacific neighbours.

Rick Thorburn, who murdered his 12-year-old foster child Tiahleigh Palmer and was sentenced to life in prison, is being moved between different jails and cells, the Courier Mail reports, as police believe he is at risk of being killed by a fellow prisoner.



Coming up

Malcolm Turnbull and Bill Shorten will both be in Queensland on Thursday as they continue their push to win the Longman byelection. Turnbull will be at a childcare centre in South Brisbane, while Shorten will be on Bribie Island at the local ambulance station.

Hundreds of mourners are expected to pay their respects to Australia’s top Islamic leader a day after his death in Melbourne. Grand Mufti Sheikh Abdul Azeem al-Afifi died in hospital in Melbourne’s north before dawn yesterday.

Supporting the Guardian

We’d like to acknowledge our generous supporters who enable us to keep reporting on the critical stories. If you value what we do and would like to help, please make a contribution or become a supporter today. Thank you.