The state's peak social service body says 35,000 Tasmanians will return to living below the poverty line because of a reduction in JobSeeker payments.
Meanwhile, with the reduction in the JobKeeper subsidy from Monday, the state's peak business body has called for COVID restrictions on businesses to be relaxed.
JobSeeker fortnightly payments for unemployed Tasmanians were reduced by $300 last week.
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The government's JobKeeper subsidy was reduced from $1500 a fortnight to $1200 a fortnight for full-time workers.
Finance Minister Michael Ferguson said the subsidy had been a lifeline for the state's businesses, but there needed to be a tapering arrangment for exiting the program as it relied on borrowed money.
"Meanwhile, the Tasmanian Government has got the most generous support arrangements for Tasmanian businesses in the country," he said.
"We will always be concerned about any businesses that continue to struggle."
Tasmanian Chamber of Commerce chief executive Michael Bailey said one of the best things that could be done for businesses now was to reduce restrictions, cut payroll tax, and restore links to COVID-safe jurisdictions.
"We simply cannot live in an economic bubble forever, because when you live in a bubble, eventually you run out of oxygen," he said.
Labor leader Rebecca White said a cut to the JobKeeper program could see thousands more jobs lost statewide.
"With 15,000 Tasmanian businesses in receipt of JobKeeper, tens of thousands of workers are now getting hit with a significant pay cut," she said.
Greens leader Cassy O'Connor said the winding back of both JobKeeper and JobSeeker came amid forecasts that showed unemployment would continue to rise.
"It'll be young people, women and the long-term unemployment who pay the highest price," she said.
TasCOSS chief executive Adrienne Picone described the reduction of the JobSeeker payment during the worst economic recession since the 1980s was a callous move.
"The federal government has made the decision to plunge 35,000 of our fellow Tasmanians, our neighbours, family and friends into life below the poverty line by removing $300 per fortnight from the job seeker support system," she said.
"Living below the poverty line in Tasmania looks like cooking your tea before 6pm during the winter months to avoid turning on the lights and keep power costs down.
"It looks like moving your bed into the lounge room to save on heating more than one part of your house.
"It is knowing to the kilometre how far a litre of petrol will get you."
A state government spokesperson said Treasury had taken into consideration a range of factors, including the potential impact of changes to JobKeeper on revenue and economic forecasts, in formulating the state budget.
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