Pain lingers in Tasmanian Budget Tasmanian Premier Lara Giddings. Source: The Mercury THE first cut has proved the deepest for Tasmanian Premier and Treasurer Lara Giddings, but the pain will linger after tax rises and more cuts to the public service were announced in the State's Budget. Ms Giddings says she has produced a responsible Budget with "heart," quarantining health, education and police after $1.4 billion was cut from her first Budget last year. Householders will receive relief from power price increases to the tune of $300 million over the next four years, while some of the proceeds of the recent sale of the state's TOTE will be used to help the needy. Other government departments, however, will be forced to find $68 million in savings over the next four years, while state taxes will go up by $39 million as Tasmania deals with falling GST revenue in conditions Ms Giddings is calling the worst since the 1930s. "While we cannot afford to abandon fiscal discipline, this Budget also has a heart," Ms Giddings said. The Premier faced a furious backlash over last year's cuts and Senior Minister David O'Byrne was forced to rule out a leadership challenge in December. But Ms Giddings said her approach this time was about balance and not a response to those pressures. "I believe Tasmanians think we've gone hard enough when they look at their hospital system, when they look at the pressures in education and across police," she said. Or we could have gone softer ... which would plunge us deeper into a problem that would take longer to get out of. As flagged in her mid-year financial report in February, the state's deficit is more than double the forecast in last year's budget at $289 million, while in 2012/13 it is predicted to be $283 million. A $114 million drop in GST receipts was the main culprit, Ms Giddings said. Net debt is forecast to peak at $134 million in 2012/13 but will be eliminated by 2014/15, she said. The Budget is forecast to return to a surplus of about $50 million in 2013/14 on the back of growth in revenue from the GST and carbon tax benefits from Tasmania's large renewable energy sector. Raising eyebrows is $110 million over four years to prop up the ailing Forestry Tasmania. The agency's role and structure are being reviewed amid poor market conditions for forest products and continuing negotiations about conservation areas. "To try to ignore what's happening in the forest industry today is a problem for not just those businesses but also government and that's reflected in this Budget," Ms Giddings said. Opposition Leader Will Hodgman said the Premier had caved in to power-sharing partners the Greens. "It's clearly a Green-Labor Budget," he told ABC Radio. It's taking the state into net debt which is something the Premier promised would never happen under her. Greens Leader Nick McKim said his Budget would have looked different but praised the balance in Ms Giddings' Budget. "This Budget does seek to look after those doing it tough, and implement progressive policy reforms, while still continuing with the necessary financial structural reform," he said.