From Monday, JobKeeper will be cut from $1500 a fortnight to $1200 for full-time workers and $750 for part-timers.

Young People's Theatre currently has 12 out of its 32 staff on JobKeeper, and finance manager Mark Heath said if it weren't for the initiative, the not-for-profit charity would be "six figures in the red".

"I'm not sure we would have survived without it," Mr Heath said.

"A third of our business revenue comes from productions - we haven't done one since January.

"The other two thirds is from classes. Term 2 we had to shut. We're back open now but the restrictions mean we're quite limited in the amount we can have per class.

"We can have up to 20 per class, but with our room size we max out at a dozen so we've had to rent rooms from Hunter School of Performing Arts, which costs thousands of dollars per term."

Mr Heath said JobKeeper had helped keep everyone employed, but the changes mean most staff won't be eligible for the full-time amount and so the charity would need to fork out the difference between the $750 and the total amount of hours they worked.

"A lot of them work about 20 hours per week but all of their other work has dried up as they can't perform. It's going to be really tough for them," Mr Heath said.

But what he's also fearful of is the effect it will have on the students' families.

"A lot of them are on JobKeeper at the moment," he said. "We have already had a 25 per cent drop in enrolment due to COVID.

"We had 400 kids which went to 300. All bar six of them were long standing students who said they would be back, but just couldn't afford it.

"2021 enrolments start just after the school holidays. I'm really nervous a lot of people won't be able to come back.

"When we shut in term 2, some people said keep my money, we'll come back next term. I'm concerned this time people will be asking for refunds.

"We've tightened our belts but we've got no more notches to tighten."

The theatre has been operating for about 50 years, but Mr Heath fears that proud tradition may come to an end if they continue to lose money. They've even had to start a donation campaign to continue their scholarship program.

"No one wants to see it go," he said. "It means so much to so many people. Many kids who are a bit left of centre find this is a safe place. We're a family.

"It's not just us. Everywhere you look, it doesn't look good. Businesses you wouldn't even fathom have been affected."

Labor estimated based on Treasury data that the changes would cut $19.8 million from Newcastle each fortnight and create a more than $15.2 million loss in the Shortland electorate every two weeks.

Federal member for Newcastle Sharon Claydon said the changes would not only impact household incomes, but she believed they would also deepen the recession.

"From next week, as many as 22,000 Novocastrians will have their JobKeeper payments slashed by between $300 and $750 a fortnight," Ms Claydon said.

"It's absolute madness for the government to be slashing household incomes in the midst of the deepest recession we've faced in a century.

"The government should focus on driving economic activity and creating jobs in regional communities, not pulling the rug out from underneath us."

Shortland MP Pat Conroy held similar concerns. He said it made no sense for the government to withdraw support without a comprehensive jobs plan to replace it.

"Scott Morrison should reconsider his cuts to JobKeeper which are coming at the worst possible time for many workers, businesses and communities who are relying on it," Mr Conroy said.

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