Workers and businesses will have lockdown support payments wound back once key vaccination coverage milestones are reached.
Treasurer Josh Frydenberg on Wednesday outlined a plan to phase out billions of dollars in federal cash assistance once 70 and 80 per cent of over-16s are immunised.
The COVID disaster payment provides $750 a week for people who have lost more than 20 hours of work and $450 for those under that threshold.
People on income support who lose eight hours can access $200 a week.
But once a state reaches 70 per cent two-dose vaccination coverage, workers will have to reapply each week for the payments to prove they are eligible.
At 80 per cent, there will be a two-week transition to support being cut off.
More than 1.5 million Australians living under lockdowns in NSW, Victoria and the ACT are receiving the payments.
Mr Frydenberg said restriction-ending road maps showed people would be back at work and businesses reopened.
"These COVID disaster payments, these business support payments have been emergency payments and we can't continue them forever," he said.
"Nor can we continue lockdowns forever. If you look abroad, the United Kingdom, Canada, the United States - countries are starting to live with COVID."
Australian Council of Social Service chief executive Cassandra Goldie said there was a gaping hole in income support payments for people hardest hit by the pandemic.
"It's unconscionable to be cutting off payments to people on low payments when the government is not ensuring safe vaccination rates," she told AAP.
Co-funded federal business support payments will also taper off under agreements to be worked out with states and territories.
In the first week after a state of territory hits 80 per cent vaccination coverage, people who have lost more than eight hours work will receive a $450 payment.
Those on income support will have their assistance halved to $100.
In week two, the payment will mirror JobSeeker at $320 and be ended for income support recipients.
The pandemic leave disaster payment for workers forced to isolate or care for someone with coronavirus will remain until the end of June next year.
Shadow treasurer Jim Chalmers said some people would continue to do it tough after the 80 per cent mark was reached.
"The problem here is we have a government quick to withdraw support, slow to roll out vaccines and quarantine, and too keen to pick a fight with the states," he told reporters in Darwin.
Dr Chalmers said Labor did not want support to go on forever but favoured assistance tailored to economic conditions.
"The federal government is responsible for this economic carnage. The least they can do is support people through it and help them get to the other side," he said.
The treasurer said separate economic support for sectors with ongoing struggles like hospitality and tourism would be considered.
More than $9 billion has flowed to locked-down workers since COVID disaster payments started in June.
Australia has fully vaccinated more than 52.5 per cent of its population aged 16 and above.
Australian Associated Press
