The notorious Melbourne underworld figure Tony Mokbel is now a free man after prosecutors dropped a final drug trafficking case against him.

In South Australia, detectives have declared the disappearance of 4- year-old Gus Lamont is now being treated as a "major crime."

The Federal Government has announced plans to sell nearly 70 Defence Department sites across the country and reinvest the proceeds in the defence force.

In its first meeting of the year, the Reserve Bank has decided to increase the interest rate to 3.85 per cent in an attempt to slow the growth of inflation.

The leader of the National Party, David Littleproud,  has retained his position after an attempt to topple him failed this afternoon.

After a stand-off with the states, the Federal Government has agreed to allocate an extra $25 billion to fund public hospitals for the next five years.

The approaching visit to Australia of the Israeli President Isaac Herzog is already dividing opinion, as anger about the Israel-Palestine conflict continues.

In Victoria, fire fighters are battling six major bushfires, three of which are out of control.

A severe heatwave is continuing to grip much of south-eastern Australia. Victoria has recorded a new all-time temperature record, with one town reaching 48.9 degrees.

Australia Day has been observed with citizenship ceremonies and celebrations across the country.