The Federal Government has thrown a life preserver to people in extended COVID-19 lockdowns.

Prime Minister Scott Morrison says a “temporary COVID disaster payment” will be offered on a week-by-week basis, providing successful applicants over the age of 17 who usually work more than 20 hours a week up to $500 a fortnight, or $325 if they work fewer hours than that.

The payments will be available in other states if they are declared a Commonwealth hotspot and a lockdown is imposed for over than a week.

Eligible applicants must declare that they would have worked had a lockdown not been imposed, and would lose income because of it. They must also use up all of their pandemic sick leave or other leave if their employer offers it, and have less than $10,000 in “liquid assets” to receive the payments.

The payments are not accessible to people on other kinds of support payments from the Commonwealth, like JobSeeker.

The Prime Minister says the payments are for those “who would normally be in an economic situation where every dollar counts”.

A National Cabinet meeting on Friday should be used to work out how the payments will be funded.

The Federal Government has proposed splitting the bill 50-50 with affected states. It cannot tell how much the demand-driven scheme will cost. There are about half a million casuals in the metropolitan Melbourne area. 

The Commonwealth has been criticised for not offering help sooner, with the opposition saying it had to be “dragged kicking and screaming” to make the announcement. 

The Business Council of Australia (BCA) urged the Morrison government to be more proactive and respond to risks that they know are coming. 

“New outbreaks shouldn't be a surprise to any state or territory,” BCA chief Jennifer Westacott said.

“Victorians are right to ask why their state continues to bear the brunt of the COVID-19 pandemic while the rest of the country gets on with it.

“We know the risks and vulnerabilities, so why haven't we got our systems right yet?”