The Tasmanian Hospitality Association is urging the state government to allow for dancing and drinking while standing in venues before Tasmania's borders reopen to the mainland.
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The THA was also concerned about employment in the sector under the reduced JobKeeper rate, with a "straw poll" of its members finding just 10 out of 60 Tasmanian venues were still eligible for the payment.
THA chief executive officer Steve Old said restrictions on venues in Tasmania were stricter than on the mainland, and easing them would allow businesses to "trade their way out" of the crisis.
"If restrictions aren't eased on hospitality venues then the government has to provide stimulus to them. You can't keep saying to venues that you can have 50 per cent capacity but you can have 100 per cent of your bills. That just doesn't work," he said.
"You would hope that if the government open the borders earlier and we are going to welcome visitors from states like South Australia and Western Australia, where you are allowed to dance and allowed to stand and drink, then you'd hope they look at changing those rule in Tasmania.
"We could get to the situation in a few weeks where borders are open and interstate visitors think they can dance or stand up and drink and again staff having to tell them they can't. The message that sends to tourists and travellers to our state is pretty poor."
In August, director of public health Mark Veitch said it could be 12 months before dancing in venues would be allowed again.
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His comments drew concern from venues across Launceston - including Bakers Lane and Lonnies - which feared it would be difficult to continue as nightclubs without additional support.
Tasmania's live music and events industry also feared it would struggle to survive, particularly given the cancellation of summer events across the board.
Mr Old said it was clear that more support was needed for the hospitality industry.
"A lot of our businesses that are now ineligible for JobKeeper now so we fear that venues, especially restaurants, cafes and pubs in regional areas, are going to be in real trouble moving forward," he said.
"If there's not some form of stimulus from government or changes to the JobKeeper program we're going to see more hospitality businesses go under and staff lose their hours or employment."
Government: restrictions pose a challenge, but are necessary
A spokesperson for the government said restrictions on hospitality venues were "reviewed regularly", based on public health advice and the need to avoid a second wave of coronavirus infections.
"We understand that distancing and capacity rules pose challenges to both businesses and their patrons, but these measures are extremely important in limiting the spread of coronavirus should it occur in our community," he said.
"Everyone must take responsibility, patrons and business owners alike, to ensure we have adequate social distancing across our community.
"At the moment, Tasmania has some of the most relaxed internal restrictions in the country and it is important we maintain those restrictions to prevent a second wave which we have seen in other jurisdictions."