THE state government has been urged to consider making public servants forcibly redundant, after the full impact of Commonwealth budget cuts on the state was revealed yesterday.
Treasurer Peter Gutwein told Parliament the state would cop a $2.1 billion hit over the next decade from the federal government's decision to abandon funding agreements, according to ``conservative'' Treasury estimates.
The health system will bear the brunt of the Commonwealth's decision to shift the cost burden to the states, copping a $1.7 billion cut.
The remaining $400 million will come out of the public education system and funding for concessions for pensioners.
The Liberals are negotiating with their counterparts in Canberra to soften the blow and are yet to outline how the state will deal with the cuts.
``This makes a difficult situation worse,'' Mr Gutwein said yesterday.
``We obviously do not agree with the cuts that have been inflicted on Tasmania and we will do our very best to ensure that we mitigate those cuts.''
Mr Gutwein promised to hand down a ``reforming budget'' on August 28 that would require ``tough decisions''.
The Liberals plan to shed 500 public service positions through natural attrition and yesterday reaffirmed their commitment not to use forced redundancies.
Public sector unions fear the government will have to get rid of far more public servants as a result of the deep federal cuts, compounded by the Liberals' ``reckless'' spending promises.
The Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey urged the government to approach the decision in a business-like manner and use targeted redundancies to properly shape the public service.
``With natural attrition, you lose your good people,'' Mr Bailey said.
Community and Public Sector Union secretary Tom Lynch said the Premier and Treasurer must honour their promise ruling out forced redundancies.
``If you're making people forcibly redundant, we can't work with that, we have to oppose it,'' Mr Lynch said.
``It's not a threat, it's a reality.''
Mr Lynch suggested the government should work with the private sector to enable public servants to find other jobs.