The end of the coronavirus supplement for JobSeeker recipients disproportionately impacted Tasmanians and plunged 7000 more into poverty, according to analysis by the Australia Institute.
Regional areas were also more likely to have more people falling back into poverty after the rate was effectively reduced by $100 a fortnight from April 1, leaving it $50 a fortnight above the pre-COVID level when it was known as the Newstart Allowance.
The initial increase of $275 per week in March last year lifted 18,000 Tasmanians out of poverty, but as the level was gradually reduced, a total of 73,000 were in poverty by the start of 2021.
The figures were calculated using Community in Numbers to cross-reference Australian Bureau of Statistics household data with the relevant welfare rate, and compared with the Henderson poverty line.
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Australia Institute senior economist Matt Grudnoff said the full coronavirus supplement of $550 a week would cost $20 billion a year, but he said this was a better investment than the government's final stage tax cuts which disproportionately favoured Australians earning over $200,000 a year.
Mr Grudnoff said it was all about "priorities".
"As far as the best trade-off to fund this, I don't know how you can trade-off poverty," he said.
"I also looked at unemployment benefits in other developed countries and found that the more generous the unemployment payment, the lower the unemployment rate - the exact opposite of what our government says would happen.
"It means we're pushing hundreds of thousands of people into poverty solely on this idea that just isn't true."
Bass Liberal MHR Bridget Archer has long advocated for reform to Australia's unemployment system, and described the April 1 JobSeeker level as a "modest increase" from the base rate.
"There is still more work to do to address structural disadvantage and growing inequity in Australia," she said.
"I would really like to see some alternative thinking and solutions. Seems an overdue opportunity for reform to me."
Ms Archer suggested greater rental, transport, healthcare, childcare, mental health and trauma support was needed.
Premier Peter Gutwein had previously suggested that the increased level of JobSeeker had been a deterrent to Tasmanians attempting to find jobs. Infrastructure Minister Michael Ferguson said the JobSeeker rate was widely known to only be "temporary".
"Coming out of the pandemic, particularly as we've seen the unemployment rate going down - which is the right direction - it does seem correct that we're able to step out of that now and try to return to some normality, however with a more generous JobSeeker payment," he said.
Greens candidate for Bass Jack Davenport said the reduction in JobSeeker was hurting Tasmanians, in combination with ongoing issues in the housing and health systems.
"Instead of supporting those in need, Liberal governments at both a state and federal level are making it harder," he said.
"Their refusal to take any meaningful action to address poverty is causing terrible harm."