Trades unions have criticized the decision to send thousands of workers back to work following a national cabinet meeting on Thursday afternoon.
Speaking after the meeting, Prime Minister Scott Morrison announced close contact isolation exemptions will be extended to a range of industries.
All transport, freight and logistics workers, emergency services personnel, teachers, those working in the energy, resources, water and waste management sectors will not be required to isolate if they are close contacts, as long they return a negative rapid antigen test result.
The Prime Minister stressed the importance of balancing hospitalisations and the stretched health system with nationwide supply shortages.
"This is a constantly moving target," he said.
"It is a daily process of balancing the need to protect hospitals and ensure our critical workforce are available."
Regional areas were hoping that the new extension of isolation exemptions will mean supermarket shelves will be restocked and fuel the looming fuel crisis will be solved.
However, the transport workers union (TWU) have slammed the federal government's decision.
TWU national secretary Michael Kaine said sickness will bring down supply chains already buckling under worker shortages.
"National Cabinet has cut the last thread of hope the transport industry had of recovering from chronic worker shortages," he said.
"Distribution centres will become virus hotbeds sending more essential workers to their sick beds, infecting their families along the way.
"These are the workers who've kept us going throughout the pandemic, now given no choice but to risk their own health and that of their families."
The TWU also said it warned the federal government of impending supply chain issues in late 2021.
"(They) failed to set aside free and abundant supplies of rapid antigen tests," said Mr Kaine.
Mr Morrison also did not procure a national consensus on school re-openings, announcing that all states - bar Queensland and South Australia - will be returning to face to face learning as planned on January 31.
"It is absolutely essential for schools to go back safely and remain safely open if we are not going to see any further exacerbation of the workforce challenges we are currently facing," Mr Morrison said.
The Prime Minister noted both South Australia and Queensland have delayed their school year start to "await their peak" of the Omicron outbreak.
Director of the Australian Education Union (AEU) Corena Haythorpe said teachers, parents and education staff were expecting a national plan from the meeting and have been left empty handed.
"After flagging a national plan last week, today all the Prime Minister provided was an announcement that there would be another announcement," Ms Haythorpe said.
"The extension of the close contact isolation exemptions to include the education workforce will exacerbate the health and safety concerns that are already being expressed by our members."
Ms Haythorpe said the move was offensive to the thousands of staff who have provided high-quality education during the unpredictable learning environment of the last two years.
The Prime Minister did not make any announcements on the state of Novak Djokovic's visa - which still remains to the discretion of Immigration Minister Alex Hawke.
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