Treasurer Andrew Barr said the ACT Treasury staff was crunching numbers on the likely hit to the local economy if a Tony Abbott-led government goes ahead with its policy to slash 12,000 public service jobs. ''It's going to be difficult,'' Mr Barr said.

The news comes as a key economic indicator for the ACT, state final demand, was down 1.1 per cent in the June quarter, joining strugglers South Australia and Tasmania as the only economies to record negative growth during the quarter.

Three years ago, the territory was the nation's strongest economy with state final demand growing by 11.3 per cent.

Meanwhile, the federal Labor government also revealed potential pain for the capital on Wednesday when Treasurer Chris Bowen said his government would demand government departments find $1.6 billion from their existing resources to help pay for its election commitments.

Budget documents show Labor has counted on $1.6 billion in ''redirections'' for its initiatives. This includes $278 million from the the Department of Regional Australia, Local Government, Arts and Sport, $275 million from the Department of Health and Ageing, $253 million from the Department of Education, Employment and Workplace Relations and $200 million from Treasury.

Mr Barr said the situation would remain uncertain until after Saturday's vote, but his department's initial estimates of the Coalition's public service cuts - if the full brunt was borne in Canberra - suggest three years of employment growth would be wiped and the economy would suffer a $600 million hit.

It is the latest piece of bad news for the territory after Chamber of Commerce and Industry research, revealed by The Canberra Times on Tuesday, showed local business confidence in free fall and thinktank The Australia Institute produced economic modelling at the weekend showing up to 5500 jobs in the broader economy under threat from the proposed public service cuts.

Mr Barr said the worst-case scenario of 12,000 local jobs lost would set employment growth back for years. ''The job cuts alone are basically the equivalent of 3½ years of employment growth,'' he told The Canberra Times.

''The ACT has roughly 211,000 in employment right now and the time

it has taken to grow from 199,000 to 211,00 is 3½ years.

''The broader impact on gross state product is in the vicinity of $600 million inside the territory, a significant spill-over into the surrounding district, so it's not just the ACT economy that will feel the impact.''

Reacting to the reduction in state final demand, Mr Barr said both the Commonwealth and the ACT government had continued to consume during the June quarter but private sector investment slumped.

''The decline in private investment is, in fact, totally responsible for the decrease in state final demand in the June quarter. So we came off 2.2 percentage points and we have a positive contribution to growth from public investment.

''But the confidence issues are certainly hitting the private sector.''

The Treasurer said key aspects of the economy, such as the land release program, would be subject to massive revision in a much reduced Canberra jobs market.

''We would be making adjustments to our own strategy and policies in response to the changing circumstances, pending the election result and positions that are taken in subsequent Commonwealth economic statements, if there's mini-budget or whatever early in the term of the new government,'' he said.

''We would need to look at our land release program, we'd need to make an assessment of the impacts on what has been well above national average population growth.

''I don't want to contribute to talking the economy into a funk, but there's only so much the territory government can do and there's only so much that private sector can, although both can make a contribution.'' Mr Barr said the government needed to maintain a flexible posture. ''What I've learnt in this role is that there is often a difference in what the Commonwealth say they are going to do and what actually occurs,'' he said. with Dan Harrison