FORMER premier Lara Giddings reappointed two senior state bureaucrats on five-year contracts in January, despite warnings from then-opposition leader Will Hodgman their departments would be merged if the Liberals won the state election.
Premier Will Hodgman has given Infrastructure, Energy and Resources Department secretary Norm McIlfatrick and Economic Development, Tourism and Arts secretary Mark Kelleher their marching orders.
Both men left the state service at the close of business yesterday.
Their departments will be merged to make way for the new Department of State Growth.
Mr McIlfatrick and Mr Kelleher will each be paid out one year's salary under the terms of their contracts - an arrangement expected to cost taxpayers more than $843,000.
It is unclear whether the government was obliged to include the exit-clause in their renewed contracts.
Senior public servant Kim Evans has been appointed as acting secretary of the two departments and will oversee the merger.
A Labor Party spokesman said the contracts needed to be signed off before the government entered caretaker mode. The spokesman said this was done to avoid breaching the government's undertakings to heads of agency if the election result took some time to be resolved.
"No other heads of agency contracts were signed in the period leading up to the election campaign," the spokesman said.
Mr Hodgman said he raised concerns with Ms Giddings in December about her plans to sign the contracts so close to the election.
"Ms Giddings responded by saying the Liberal policy of merging the two departments was `irrelevant to government decision making'," Mr Hodgman said.
"As a result of what Ms Giddings called `irrelevant' facts, the taxpayers of Tasmania now face a $843,685 bill," he said.
The new state government also announced yesterday that Department of Premier and Cabinet secretary Rhys Edwards had been replaced by deputy secretary Greg Johannes.
Mr Edwards held senior government roles throughout Labor's 16-year reign and is expected to stay on until July 1 to assist in establishing the Department of State Growth.
Costs associated with paying out his contract, which is understood to have been renewed in the past two years, remain unclear.