NSW feels the deepest jobs cut

MORE than 17,000 NSW workers left or lost their jobs last month in the worst labour market reading in years, fuelling fears the state will suffer the brunt of the coming economic slowdown.

Across the country the number of people in work fell for the first time since 2006, a government report published yesterday showed. Most of the job losses were in NSW.

Economists say that employment remains strong, but more people will soon be out of work as businesses buckle under the weight of interest rates, fuel prices and the credit crunch, and start laying off workers or postpone hiring new staff.

The NSW economy is dominated by sectors vulnerable to interest-rate pressures and the global credit crunch, such as finance, property and retail sales. The state unemployment rate has already jumped from 4.2 per cent to 4.7 per cent this year, the highest rise in the country except for South Australia.

"I would assume the weakness would be concentrated in retail and construction, but we don't have the industry split," the chief economist of ABN Amro, Kieran Davies, said of the state's job losses.

Employers shed 19,700 jobs nationally last month, surprising market economists who had on average punted on a 13,500 gain.

The unemployment rate remained at 4.3 per cent, because the number of people actively looking for work also fell.

Businesses are typically reluctant to lay off staff, which means rising unemployment is usually one of the last signs that the economy is changing direction.

Mr Davies said he was increasingly of the view the labour market had started to turn down, and predicted unemployment would rise to 5 per cent this year.

If the unemployment rate had climbed to 5 per cent last month about 90,000 extra workers would have lost their jobs.

A speech today by the Reserve Bank governor, Glenn Stevens, on economic conditions could provide some hints on the outlook for interest rates. The chief economist at Lehman Brothers, Stephen Roberts, said the job losses "added materially" to the reasons why the Reserve would keep rates on hold.

The unemployment rate for men remained at 4 per cent but the rate for women inched a tenth of a percentage point higher to 4.6 per cent. The acting Prime Minister, Julia Gillard, said the fall in employment was a "sober reminder of the consequence of eight interest rate rises in a little over three years and slower global economic growth".

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People are still angry when they lose their houses, but he notices that "people nowadays seem to think, when they take a loan, that it's a risk and that if they take the loan they might end up losing their house".

Coalition's Senate blockade

LABOR'S legislative agenda is in jeopardy, with the Coalition to use its Senate majority to either defeat or delay 10 key measures beyond July 1, some of them worth billions in federal revenue.

The Coalition claimed the bills needed proper scrutiny, prompting Labor to cry hypocrisy, citing the speed with which the Coalition passed measures after it took control of the Senate in July 2005.

The Democrats senator Andrew Murray, who witnessed that stampeding of the Senate, said he found the Coalition's newfound concern for scrutiny "repulsive".

"It reminds people not to trust politicians. If you can't be consistent, you can't be believed," he said.

In 2005 the Coalition government rammed through with little or no debate many bills including WorkChoices, the sale of Telstra and anti-terrorism laws.

The Opposition Leader, Brendan Nelson, said yesterday many of Labor's measures were not urgent.

"For goodness sake, we live in a democracy. Every man, every woman that comes into this Parliament … has a right to express a view on behalf of his or her constituents," he said.

As the Reserve Bank kept interest rates on hold, the Prime Minister, Kevin Rudd, cautioned that high inflation remained a problem and the Coalition would be to blame for future rises.

"The cornerstone of the Government's fight thus far has been our $22 billion budget surplus," he said.

If the Coalition voted down Labor's agenda the "consequences will be to put upward pressure on inflation and upward pressure on interest rates".

The Coalition agreed yesterday to oppose or delay by sending to committee nine of the 22 bills the Government wants passed by July 1.

In addition, the Coalition has previously announced it will block the $3.1 billion tax increase for pre-mixed drinks. It is also hostile to a $555 million increase to the so-called luxury car tax.

The Opposition's manager of business, Joe Hockey, said it was "simply unprofessional the way bills are being rammed through this chamber".

He said Labor did not have a mandate for all its proposals, such as the increase to the Medicare levy surcharge threshold, which the Coalition will both defeat and send to a committee.

He also said the delays were payback for Labor doing the same when it was in Opposition.

The Leader of the House, Anthony Albanese, said "we will not be lectured about putting too much legislation through the house by an opposition that guillotined some 36 bills during their last term in office".

Dr Nelson also wants the Government to give pensioners the windfall it is reaping in increased petrol resource rent tax from high oil prices.

But the Coalition will delay a three-decade exemption in crude oil tax for Woodside Petroleum which will cost the budget $2.5 billion over four years.

Changes under threat

* Removal of Woodside Petroleum tax exemption on condensate (worth $2.5 billion in revenue over four years)

* Increase in the luxury car tax ($555 million)

* Tightening of fringe benefits tax exemptions ($1.2 billion)

* Increase in departure tax by $9 ($459 million)

* Increase in Medicare levy surcharge thresholds ($300 million)

* FuelWatch

* Introduction of a means test on the baby bonus and family tax benefit B