Mount Isa City Council said it has cancelled the Great Australian Bites Australia Day Event for January 26.
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The event was due to be held in the evening at the Civic Centre featuring tasting plates prepared by local restaurant pop-up stalls, food vendors and entertainment.
However Mount Isa City Council said it made "the difficult decision" based on the forecasted peaking of the current Queensland COVID cases due, that week in late January and Council's commitment to slow the spread of the virus on State Government directions.
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Council said it would work with the Queensland Government to use the funds for a community event in their near future.
Council said the Australia Day awards and Citizenship Ceremony will go ahead as planned on Wednesday morning with a COVID Safe Event Plan on an invitation only basis.
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