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City on the brink: Cairns 'facing depression' without help, say experts

Statewide

Cairns was on the brink of an economic depression if the JobKeeper subsidy was not replaced, a prominent economist has warned.

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The comments came as Queensland Deputy Premier Steven Miles said Cairns would “fall off an economic cliff” and tourism would take years to rebuild unless there was something to replace Jobkeeper, which ends later this month.

Miles said 16 per cent of the pre-pandemic workforce in Cairns remained on JobKeeper.

“There are business owners who  are lying awake right now, wondering what will happen at the end of the month,” Miles said.

Adept Economics’ Gene Tunny said the Federal Government was under pressure to replace the JobKeeper subsidy for the tourism sector, particularly in areas that have relied on international tourism.

“Which it absolutely needs to do, unless it wants to send Cairns into an economic depression and risk the recovery of many other tourism-dependent regions in Australia,” Tunny said.

Tunny said the Federal Government was likely to target industries rather than regions and support could come in the form of HECS-styled loans for business or a scaled down JobKeeper.

“There’s no doubt it’s serious, they have to do something,” Tunny said.

Treasurer Cameron Dick said ending JobKeeper early would be a tough blow to tourism regions like Cairns.

“That’s why our government is urging the Prime Minister and federal Treasurer to extend JobKeeper and save Queensland jobs,” he said.

“If David Crisafulli and other Queensland LNP members want a call to action, they should take note of Gene Tunny’s warning and join us in calling on Scott Morrison to keep JobKeeper going.”

The Treasurer was referring to the LNP’s call to action in the city to help business.

Federal Treasury has revealed it was preparing assistance for the sector with a package expected within a week.

Treasury first assistant secretary Matthew Brine said the sector would take “several years” to recover to pre-COVID levels, when aviation directly contributed $20 billion a year to the economy and employed 90,000.

Treasurer Josh Frydenberg was now looking at “targeted” support,”  Brine said.

“The earlier a decision can be made, the better for confidence.”

While Cairns has relatively low unemployment of 5.4 per cent, its real problems were being masked by the fact that people had abandoned the workforce.

A recent analysis by Conus Consultancy’s Pete Faulkner showed the size of the labour force had shrunk by more than 8000 and the median time to find a job was 35 weeks.

“The recovery in employment that we are seeing elsewhere across Queensland, where employment growth stands at +1.2 per cent for the year, is not being reflected in Cairns where employment is now down 6.8 per cent for the year,” Faulkner said.

A parliamentary inquiry has also been told the next four to eight weeks were “critical” for the airline sector.

Qantas is lobbying for a skills package to support pilots and engineers to get back up to speed, along with the extension of all aviation support packages at least until international borders reopen.

“It’s the volatility and never knowing,” transport department deputy secretary Christine Dacey said on Thursday at a Senate hearing into the future of Australia’s aviation sector post-COVID-19.

“Until we get an enduring domestic bubble I think this sector is in real strife.”

Qantas told the two-day hearing on Wednesday that it was in daily contact with the government, as airlines eye the end of generous aviation support and no more JobKeeper payments from March 28.

Dacey said “conversations remain ongoing” on funding but the government wanted to avoid market distortion.

The Morrison government this week extended the international travel ban by another three months to June 17, which restricts airlines, cruise ships and airport retailers as well as travellers..

The LNP has started to ramp up the pressure on the Palaszcuk Government as its support measures, such as payroll tax relief, come to an end.

The LNP leadership was in Cairns today claiming local businesses were in a precarious position, Opposition leader David Crisafulli said.

“With no international tourists for months, north Queensland’s small businesses have been doing it incredibly tough,” he said.

“Now, with the State Government’s COVID payroll tax relief about to end and the future of JobKeeper uncertain, many businesses are worried they won’t survive.

“Their future is critical to Queensland’s economy and we need to ensure that they are not forgotten. ”

Additional reporting AAP

 

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