Treasurer Josh Frydenberg announced that once a state reaches 70 per cent COVID-19 fully vaccinated, workers who receive the support payment will have to reapply each week, while at 80 per cent there will be a two-week transition period before their payments end.

The COVID-disaster payment provides $750 a week for people who have lost more than 20 hours of work, $450 for those under that threshold, and $200 for those on income support who have lost eight hours.

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Modelling shows that NSW is expected to hit the 70 per cent full vaccination mark next week and 80 per cent a couple of weeks after that.

Mrs Phillips is worried those who have lost their jobs due to the pandemic, and business owners in the Gilmore electorate who can't reopen quickly, will be left behind.

"People will fall through the cracks of the system if it's just turned off too soon, as the government is proposing," said Ms Phillips.

"The issue with turning it off so soon after we hit 80 per cent is many of our local businesses won't be able to ramp up and return to normal straight away," she said.

"The government needs to have some flexibility to make sure that workers and sole traders aren't left without an income."

But Mr Frydenberg said the payments were emergency payments and "we can't continue them forever".

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Ms Phillips said the key difference between the disaster payments and the JobKeeper payments in place during the pandemic last year, is that JobKeeper allowed businesses to keep their employees.

"It's a failing of the COVID-disaster payment that it didn't maintain the employment relationship like JobKeeper. And that's been part of the problem," said Ms Phillips.

"A lot of employers are obviously desperately trying to hold on to their staff, other employees may have gone somewhere else out of necessity.

"It's going to be hard for employers to ramp back up in terms of employing staff. The transition isn't going to be as smooth as the government wants."

Ms Phillips said the extended lockdowns were "a result of a failure of public administration to ensure that is enough vaccine".

She added that high vaccination rates are key to reopening the state safely.

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