The record figures for the first quarter of the year are skewed due to last year’s nationwide lockdown
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An investor who put money into companies that received the Morrison government’s jobkeeper payment would have received almost twice the return as someone who invested in companies that did not receive the wages subsidy, new analysis shows.
The analysis, conducted for Labor frontbencher Andrew Leigh, shows that someone who invested a dollar in each of a basket of jobkeeper companies in March last year would have all but doubled their money, receiving a return of 99.2%.
An investor who invested in the same way in companies that did not get jobkeeper would have made a return of 57.3%.
The figures include increases in share prices and the payment of dividends, which has been controversial for companies that have been bolstered by the jobkeeper subsidy.
While companies including Super Retail Group, Toyota Australia, Domino’s and miner Iluka have promised to return jobkeeper money to the government, others including Gerry Harvey’s Harvey Norman and Solomon Lew’s Premier Investments have decided to keep the cash.
Almost the entire sharemarket has rebounded strongly over the past year after tumbling by 30% in March as coronavirus panic gripped traders.
However, some companies that received jobkeeper have massively outperformed the broader market, with Harvey Norman investors receiving a return of 112.7%, including dividends, since March last year and those who put money into Premier getting 117.8% over the same period.
Premier declared a dividend of $54m last month, of which Lew is entitled to $22.9m due to his 42.43% stake in the company.
In February, Harvey Norman said it would pay dividends totalling $249m, of which Harvey is to receive $78m due to his 31.4% shareholding in the company.
Leigh said the figures showed that too much jobkeeper money flowed to companies that did not need it, while at the same time areas such as the arts, tourism and education were struggling after the Morrison government shut down the program at the end of last month.
“Jobkeeper was meant to be a lifeline, not a boondoggle,” he said.
He said millions of dollars in jobkeeper money had been used to pay executive bonuses and dividends to billionaires.
“Companies such as Harvey Norman and Premier Investments got jobkeeper despite seeing their profits soar to record highs. Jobkeeper has even been paid to hedge funds.
“It’s just not fair that the Morrison government lavished taxpayer support on super-profitable firms, while ignoring the pleas of small businesses that now face insolvency.”
While other countries including the US and New Zealand have maintained public databases of companies that received jobkeeper-like funds, the Australian treasurer, Josh Frydenberg, has consistently ruled out the idea.
“Jobkeeper cost nearly $4,000 per Australian, and yet the program has been shrouded in secrecy,” Leigh said.
“It’s not Liberal party money, it’s taxpayer money, and the government must come clean on how it was spent.”
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SINGAPORE: Singapore’s economy grew by 0.2 per cent year-on-year in the first quarter of 2021, a turnaround after three quarters of contraction, as the country continued its recovery from the COVID-19 pandemic.
On a quarter-on-quarter seasonally adjusted basis, Singapore’s gross domestic product (GDP) expanded by 2 per cent between January and March, extending the 3.8 per cent growth in the previous quarter, advance estimates by the Ministry of Trade and Industry (MTI) on Wednesday (Apr 14) showed.
Economists polled by Reuters had expected a decline of 0.2 per cent.
Singapore’s economy has been battered by the COVID-19 pandemic. After the first case was reported in Singapore on Jan 23 last year, Singapore posted 0 per cent growth in GDP in the first quarter, followed by contractions in the following three quarters.
Last year, the economy shrunk by 5.4 per cent, Singapore’s first annual contraction since 2001 and its worst recession since independence.
“The expansion is a strong signal that our economy is slowly but surely recovering from the unprecedented impact of COVID-19 last year,” said Minister for Trade and Industry Chan Chun Sing in a Facebook post after the data was released.
“While we are cautiously optimistic, many downside risks remain which we will have to pay close attention to,” he added.
READ: Singapore maintains 2021 GDP forecast as economy contracts 5.4% last year
Singapore’s economy rose on the back of strong manufacturing activity.
The sector grew 7.5 per cent year-on-year, supported by output expansions in the electronics, precision engineering, chemicals and biomedical manufacturing clusters.
The construction sector continued to contract, albeit at a slower rate, as activity in the private and public sectors picked up.
The sector shrank by 20.2 per cent in the first quarter, compared with the 27.4 per cent decline in the fourth quarter of 2020.
IN FOCUS: After COVID-19, where are the Singapore economy, workforce headed?
Among the services sectors, the wholesale and retail trade as well as transportation and storage trade sectors shrank by 4.1 per cent in the first quarter.
A “continued weakness” in the transportation and storage sector was primarily caused by the impact of the COVID-19 pandemic affecting air, water and land transport segments. This was mitigated by the expansion in wholesale and retail trade sectors.
The information and communications, finance and insurance, as well as professional services sectors collectively grew by 3.7 per cent in the first quarter, faster than the 1.4 per cent expansion in the preceding quarter.
“Growth was supported by healthy expansions in the information and communications and finance and insurance sectors, even as the professional services sector contracted,” said MTI.
Contraction in the professional services sector was due in part to weak economic activity in the region, as well as “sluggish” domestic construction activity, which had weighed on the architectural and engineering segment of the sector, the ministry added.
The remaining group of sectors – accommodation and food services, real estate, administrative and support services and other services industries – contracted by 3.9 per cent. All sectors within the group shrank, except for accommodation, as activities continued to be weighed down by COVID-19 safe management measures.
Singapore’s first-quarter performance puts it among the first few Asian economies to turn the corner to positive year-on-year GDP growth, said Mr Prakash Sakpal, senior economist for Asia at ING.
In the second quarter, Singapore can expect to see a “significant jump” in GDP growth due to the sharp plunge of activity during the “circuit breaker” period last year, said Mr Sakpal. This will taper down over the second half of the year.
ING has forecast that Singapore’s second-quarter GDP may rise 14.2 per cent year-on-year, before settling at 4.9 per cent for the whole year.
In his Facebook post, Mr Chan said that it is “clearer than ever” that Singapore’s post-COVID-19 economy “will be a very different one”.
“The path of the pandemic remains uncertain with the emergence of new variants and the uneven global roll out of vaccine deployment,” said Mr Chan.
“The multilateral trading system remains under stress as countries prioritise unilateral trade measures in order to protect domestic interests. Our economic recovery will also be uneven with sectors such as aviation and tourism facing a protracted recovery due to travel restrictions globally,” he added.
MTI will release the preliminary GDP estimates for the first quarter of 2021 next month.
Phase 3 of Singapore’s reopening started on Dec 28 last year, with permitted social gathering sizes expanded from five to eight.
Capacity limits at public places, such as shopping malls, attractions and places of worship, were also eased.
The country has also started its roll-out of two COVID-19 vaccines – made by Pfizer-BioNTech and Moderna – while a third by Sinovac is currently under review.
As of Apr 14, about 1.6 million doses of COVID-19 vaccine doses have been administered, according to the Ministry of Health’s website. More than 1.1 million people have received at least one dose, and 535,864 have received their second dose and completed the full vaccination regimen.
The Government plans to invite people under the age of 45 to book slots from June for their COVID-19 vaccinations. The aim is to complete the vaccination programme as scheduled by end-2021.
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In decades gone by, big name Tasmanian family-run businesses flourished in Launceston.
Tasmanian family-run businesses have made a big contribution to Launceston’s economy and heritage for decades
Over recent years there has been a slow demise in the number of family-run businesses operating in the city
Those still in business say they have had to change how they operate in order to keep up with consumers and their demands
Dozens of family-owned enterprises used to line the streets of the city, but over the years there’s been a slow demise, and many have been forced to shut up shop.
Hardware stores with historic origins like Harts, Genders and Cleavers have ceased to exist, and department stores like Ludbrooks and McKinlay’s are no more.
Both were household names in Launceston, with McKinlay’s origins dating back to 1886 — but they were the last of Launceston’s family-owned department stores to close, in 1984.
Grocery store Ingles, in the city’s Quadrant Mall, is also long gone, and dozens of corner store shops in the city have disappeared.
‘The town is being hollowed out’
Eric Ratcliff from the Launceston Historical Society said the businesses made a significant contribution to the city and region.
“They were enormously important,” he said.
“The money they made came into the town and didn’t disappear to shareholders somewhere else.
Not only did the businesses have an economic impact on the city, but they also contributed to the streetscape and heritage of Launceston.
Many of the buildings still exist and are being used as national retailers or offices, but some remain vacant.
Dr Ratcliff said they helped make the city vibrant when they were flourishing.
“The CBD was much livelier than it is now,” he said.
“On an ordinary weekday it looked about what it does on a football weekend on Saturday.”
He said the growth of multinational companies and big-box developments has hurt family-run businesses in the city, and larger corporations have become more prominent.
“The town is being hollowed out by having just big boxes selling everything instead of Harts for hardware and Greens for hardware and Cleavers,” Dr Ratcliff said.
Adapting to change
Some family businesses that have been around for a long time have survived, but have had to adapt to a changing society to try and stay relevant.
Robert Luck runs Allgoods, which has been in his family for more than 70 years.
“We first started selling army surplus, army disposals and from that we’ve progressed into clothing, footwear, camping and outdoor products,” he said.
“It was started basically by my uncle, and I actually started here in 1978 so I’ve been here for about 43 years now and I was able to buy the business in 1990.”
He said the business has had to change over the years to continue being viable.
“We use more technology, we have a different point of sales system, we have computerised stock control,” Mr Luck said.
“We are also a reasonably solid online business as well as being a bricks and mortar business so we’re trying to be the best of both worlds.
“We’ve won a few battles and we’ve lost a few over the years, we’ve opened stores and we’ve had to close them if they haven’t performed, but you need to move on.”
Mr Luck’s son, Sam, is the company’s succession plan.
“It’s over 75 years old and I’m the third generation involved in it now,” Sam said.
“It is definitely a very important part of us, it’s been successful and hopefully I can continue to make it successful.”
Demise of businesses a sign of the times
Gourlay’s Sweet Shop has been producing confectionary in Launceston since 1896.
The business was sold by the Gourlay family in the 1970s, but has continued to be operated by the Wood family ever since.
“We would be very foolish to change the name because Gourlay is very well known to Tasmanians,” owner Michael Wood said.
He said they also have to work hard at staying relevant.
“Number one importance is customer relations and presentation to the customer,” Mr Wood said.
“Secondly a good quality product is important.
He said it’s a sign of the times to see the demise of many family-run businesses.
“We are not exempt from the hard times like COVID which has been pretty tough, but it’s a matter of keeping your finger on the pulse of your costs and making sure you can keep on top of that because it will soon slip away from you.”
Andrew Pitt, who manages Neil Pitt’s menswear in Brisbane Street said family-owned businesses remain important in the city.
He said his business and another long-standing menswear store, Routleys, have been able to survive for decades when many other shops have gone under.
“I don’t know whether it speaks to the fact that men like shopping in stores rather than online or that personal service,” Mr Pitt said.
“Things have changed over the years of course but the core proposition is still the same, it’s still very much an offering of great service and quality clothing.”
Only time will tell how many family-run businesses in the city will remain in the future.
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Apr 12, 2021 • 15 minutes ago • 3 minute read • Join the conversation
LONDON — Britain’s economy will be back to its pre-COVID-19 level around the middle of next year, according to economists in a Reuters poll who said unemployment would peak at 6.2% as 2021 draws to a close and the pandemic job support scheme ends.
The UK has suffered the highest coronavirus-related death toll in Europe. But a swift vaccine rollout and plummeting infections has allowed the government to begin easing restrictions and on Monday non-essential retail and outside hospitality reopened.
Last year the economy shrank by the most in more than three centuries, but the April 7-12 poll of around 70 economists said it would expand 5.0% this year and 5.5% in 2022. In a March poll those forecasts were 4.6% and 5.7%, respectively.
With much of the country’s dominant service industry closed, and citizens encouraged to stay at home, the poll suggested the economy contracted 2.3% last quarter. Now that lockdowns are being loosened, it was expected to grow 3.5% this quarter and 3.0% next.
“There are mounting signs that the effects on the economy from the third COVID-19 lockdown have started to thaw,” said Paul Dales at Capital Economics.
“We are sticking to our relatively optimistic view that the reopening of the economy and the vaccine program will allow GDP to regain its pre-pandemic level early next year.”
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But asked when the British economy would be back to its pre-pandemic size the majority of respondents to an additional question thought it would take a bit longer, with 10 expecting it to be a quarter or two later.
Finance Minister Rishi Sunak said last month he expected the economy would return to its pre-pandemic size in mid-2022. Six respondents in the poll said it would take longer and five said it would be sooner.
Britain’s job market has been protected by a huge government furlough scheme which is due to run until end-September, keeping unemployment levels relatively low. It was 5.0% in the three months to January.
The median response to a question asking where it would peak was 6.2%, most likely towards the end of this year when the furlough scheme finishes.
“Some rise in unemployment is probable once furlough ends. But the evidence from around the world is that labor markets can recover quickly and if scarring is contained, jobs growth can recover through 2022,” said Brian Martin at ANZ.
Like many of its global counterparts, during the height of the pandemic the Bank of England slashed borrowing costs to a record low and restarted its asset purchase program to try and support the economy.
None of the 60 economists polled expected Bank Rate to move from 0.1% when the Monetary Policy Committee meets on May 6 and medians in the survey suggest it won’t increase until 2023. The earliest anyone had a hike penciled in was for Q3 next year.
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Inflation has held well below the Bank’s 2.0% target, allowing it to remain accommodative with policy.
The poll showed inflation would not reach that goal until towards the end of this year although an overwhelming majority of respondents to an additional question, 15 of 17, said the risks to their forecasts were skewed more to the upside.
“Higher inflationary pressures are still evident – with shipping costs, input costs indices and commodity prices still up,” said James Pomeroy at HSBC.
(For other stories from the Reuters global long-term economic outlook polls package:)
(Reporting by Jonathan Cable; polling by Manjul Paul and Hari Kishan; Editing by Toby Chopra)
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The Morrison government looks set to revisit in the looming May budget a key underlying assumption from last year’s mid-year economic forecast that a population-wide Covid-19 vaccination program would be fully in place by late 2021.
But the treasurer, Josh Frydenberg, has declared the delay of the vaccination rollout “is not expected to derail momentum in our economic recovery”.
Scott Morrison late on Sunday admitted that all Australians may not be vaccinated by year’s end. The prime minister said in a statement uploaded to Facebook there would be no new timetable to replace the previous October target.
With the government taking heavy political fire for bungling the critical vaccine rollout, Morrison took to Facebook once again late on Monday to try and reassure the public.
In a Facebook live session, Morrison said frontline health workers and the elderly would be inoculated under current arrangements as winter closed in, and the vaccination program would ramp up for the “balance of the population” later in the year.
“I’ve been asked a bit about what our targets are,” Morrison said.
“One of the things about Covid is it writes its own rules. You don’t get to set the agenda – you have to be able to respond quickly when things change. Rather than set targets that can get knocked about by every to and fro – international supply chains and other disruptions that have occurred – we are just getting on with it.”
Labor said on Monday the government would need to revisit the Myefo assumption on 11 May. The shadow treasurer, Jim Chalmers, declared it would stretch credibility for the government “to now pretend their vaccine debacle won’t impact the budget or the economy”.
The mid-year economic forecast last December assumed that a Covid-19 vaccine would be available in Australia by March 2021, with a population-wide vaccination program fully in place by late 2021.
That forecast assumed there would be no state border restrictions in place throughout 2021, and that temporary and permanent migration would return gradually from late 2021.
Morrison said on Monday evening the international border would remain closed because “around the world Covid-19 is still rife”.
“We will keep moving quickly to vaccinate our most vulnerable population and we’ll keep those borders closed for as long as we have to, but only as long as we have to,” the prime minister said.
The government will update its economic forecasts on 11 May, when it hands down the budget. As well as attempting to reassure the public on Monday night, Morrison flagged more stimulatory measures in the budget “that build on the work that was done by jobkeeper and jobseeker to ensure the Australian economy keeps leading the world out of the recession that was caused by Covid-19”.
Morrison reconfigured the vaccination timetable due to blood clot warnings applied to the AstraZeneca vaccination. With concerns rising about vaccine hesitancy in the wake of the revised timetable, the prime minister said on Monday night the vaccine was safe for people over 50 according to the “very strong” medical advice.
In terms of the impact of the delay on the economy and the budget, it is possible the current strength of the economic recovery will ultimately net out the impact of a delayed vaccination rollout, assuming that Australia can get through another winter without sustained lockdowns.
Frydenberg said in a statement to Guardian Australia on Monday the Australian economy outperformed every major advanced economy in 2020 and “with the successful suppression of the virus and substantial reopening of the economy, both household and business confidence are now higher than before the pandemic”.
“While the continued vaccine rollout is an important step in protecting Australians against the threat of the virus, the timing of the rollout is not expected to derail momentum in our economic recovery,” the treasurer said.
The latest Deloitte Access Economics business outlook, released on Monday, found that living standards in Australia increased during 2020 at a faster rate than the average over the past decade despite the country enduring the first recession in three decades because of the shock caused by the pandemic.
The fillip was attributable to surging commodity prices and rock-bottom interest rates.
But the Deloitte assessment assumed virus numbers would stay suppressed in Australia, with herd immunity achieved by late 2021 or early 2022 – a timetable now in doubt due to the revamp of the vaccine rollout.
Labor says the botched vaccination rollout is a public policy debacle that imperils Australia’s continuing economic recovery.
“We can’t have a first-rate economic recovery with Scott Morrison’s third-rate vaccine rollout,” Chalmers said on Monday.
“It stretches credibility for the government to now pretend their vaccine debacle won’t impact the budget or the economy. The government’s failures on jabs will have consequences for jobs because delay after delay risks more lockdowns.”
Figures released on Sunday show 1.16m vaccinations have now been dispensed, with about half delivered by the commonwealth through the GP network and in aged and disability care, and the other half delivered through state vaccination hubs.
The New South Wales premier, Gladys Berejiklian, said the Morrison government needed to maintain a sense of urgency with the program and the public should not be lulled by any false sense of security.
“I know that some people don’t think there is a sense of urgency because we’re doing so well, but things can change very quickly and I don’t want to see our citizens left behind because the rest of the world starts trading with each other, starts travelling,” the premier said.
“I do have a sense of urgency about it”.
Epidemiologist Prof Mary-Louise McLaws, who advises the World Health Organization, said on Monday it would take “a couple of years” to fully vaccinate the Australian population if the rollout continued at the current rate. She told the ABC ramping up the number of vaccinations to between 100,000 and 120,000 per day would require “a lot of logistics” and for state governments to create mass vaccination sites.
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Right now the economy is not operating as it should. The government wants things to be normal, and so jobmaker is gone and the jobseeker bonus as well, and yet the economy is still dealing with the shock to its system that is the pandemic.
Now sure, on the surface things look fine … ish.
The IMF this week announced that it had revised up the estimate for Australia’s GDP growth for 2021 from 3.5% to 4.5%.
Yes, it revised down its projection for next year’s growth from 2.9% to 2.8%, and it does not expect the economy to grow faster than that out to 2026, which is another period of very middling growth. But hey, let’s focus on the positives!
This good news came on the back of the latest job vacancy report released by the bureau of statistics that showed the number of vacancies in February was some 26% above that in February last year.
That growth is stronger than any seen since the end of the GFC.
It also means that the number of unemployed per vacancy is well down – just 2.8 people per vacancy – lower than was the case before the pandemic hit.
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And yet, all this great news of vacancies and improved economic growth is actually more of a sign that we are still within the great flux of the pandemic.
The economy, for all its moving parts and complexity, often works in pretty predictable ways.
For the past 25 years, there has been a pretty solid relationship between job vacancies and unemployment. But that has ended in a dramatic fashion with the pandemic.
Over the past quarter of a century when the job vacancy rate was around 1.8%, as it was last November, you would expect the unemployment rate to be around 4%. Instead, it was 6.8%. Similarly, when in February we had a job vacancy rate of 2.1% (the highest ever recorded) you would expect unemployment to be at record lows. Instead, it was at 5.8%.
There are jobs available, but they are not being taken up.
Now you might think this is because “people are lazy” or that the jobseeker bonus meant they didn’t want to work because the payment was higher. But the actual explanation is there are a lot of vacancies for jobs that most people are not seeking.
In February last year, 43% of job vacancies were for managers and professionals, and yet those two occupations only account for 23% of the growth of vacancies over the past 12 months.
ICT, and business, finance and HR professionals usually account for around 39% of all vacancies for all professionals, and yet they made up just 6% of the increase in vacancies over the past year.
Conversely, there has been a big surge in vacancies for labourers, machinery operators, technicians and trade workers, and for community and personal service workers.
So yes, lots of new jobs, but an unemployed accountant is hardly about to start applying for a job operating machinery. And saying “everyone should go pick fruit” sounds easy in a press release, but it’s not a realistic prospect if you have family commitments a long distance from a fruit orchard.
This is no one’s fault – it is what happens when an economy suffers a massive shock.
But these figures come from a time when the safety nets of jobkeeper and jobseeker bonus were still in place.
The treasurer’s department now anticipates up to 100,000 extra unemployed due to the end of jobkeeper. It is likely to see a rise in the unemployment rate even as job vacancies also rise.
The economy still has a long way to get to a point where the supply of workers starts to match the demand for labour.
As we begin the run to the budget, the temptation for the government will be to cherry-pick the good news and focus on restoring the budget to balance and claiming some sort of victory.
In truth, the economy remains in shock and in dire need of care.
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In some good news, the latest payroll job numbers released on Tuesday showed that the number of jobs is back to where it was last year just before the impact of the pandemic shutdown hit in the middle of March.
But nothing is ever simple in the economy, and a closer look reveals that the growth has come from only a small number of industries – especially public administration:
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Scott Morrison likes to say governments don’t create jobs, but were it not for the public service, and the overwhelmingly public sector heath care industry, the overall picture would be much worse.
While total numbers look fine, there remains a lot of weakness in the economy.
Where there is some clear cause for concern is in the construction sector.
Work in construction always drops over Christmas, but this year it has failed to recover, and the number of jobs in the industry is some 3.8% below what it was a year ago:
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That’s not great given the government has been crowing about the success of its homebuilder program. But it just highlights that while home construction and renovations are important, so too is non-dwelling construction:
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And of course the public sector is also a great creator of construction work via infrastructure programs.
What construction workers, and the economy as a whole needs, is investment. But the latest finance and wealth data from the bureau of statistics revealed that 2020 was the worst year for investment in over 30 years:
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And we truly see the impact of that in the latest engineering construction figures released yesterday.
In the final three months of last year, engineering construction work – which includes a raft of aspects such as road, rail, bridges, telecommunication and sewerage – fell for both private and public sectors:
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The 1.8% fall for work done by the private sector for the private sector (as opposed to contracts for governments) means that for nine out of the past 12 quarters, private sector work has fallen.
It is a nice reminder that even before the pandemic, things were not going swimmingly.
Unfortunately we are not seeing the public sector take up the slack:
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The sudden drop-off in the last three months of last year might be somewhat due to shutdowns, but there was no real sign of any explosion of work before then.
In December the real value of infrastructure work done for the public sector was the lowest for five years – a big part of which was a drop in the amount of work done building roads and on the NBN:
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And given construction jobs remain well down on what they were a year ago, there does not appear to be much reason to believe there has been a strong pick up in infrastructure work in the first three months of this year.
That is a concern because while private investment remains down, the public sector needs to fill the hole, and right now, aside from the homebuilder program, there is little sign of that occurring:
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The return of the total job numbers to pre-pandemic levels is obviously good. But it should not be taken as sign that things are back to normal – or that the economy is as it was prior to the pandemic.
Firstly, prior to the pandemic the economy was not all that healthy, and secondly, the job numbers are very much driven by a minority of industries, while others remain very much in need of public investment and new infrastructure programs.
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Sky News host Paul Murray says because of seven COVID-19 cases in Queensland, “someone whose wage is guaranteed” in Brisbane is trying to scare a politician into “destroying her own economy and scaring the public”.
“After they passed how many laws through the parliament to give ultimate power to a person who never has to go to an election,” Mr Murray said.
“They promised ‘no lockdown’ multiple times; not true. They promised a contact-tracing system that would be able to keep on top of it; not true. You are wearing a mask right now in Mt Isa, and here in Cairns, because they aren’t up to it.”
“This is the very time when we’re supposed to be vaccinating the population and we’re supposed to have one of the best contact-tracing systems in the world.”
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Opinion: This year will be the Air Force’s turn to display their aerobatic prowess as the F-16 Thunderbirds operate from Long Island MacArthur Airport.
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3:48 pm Tue, March 30, 2021 Long Island Business News
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