Under-Treasurer Megan Smithies will relinquish the key role as Ms Gallagher merges two ACT government departments and creates a new one.

Ms Gallagher announced yesterday that the Treasury and Chief Minister and Cabinet directorates will be merged, although the two functions will remain in different ministerial portfolios.

The new directorate, Commerce and Works, will absorb other shared elements of the territory's bureaucracy including shared services, capital works, the ACT Revenue Office and ACT Insurance Authority.

Ms Smithies, who became the most senior woman in ACT public service history when she was named head of the territory's Treasury in 2007, will lead the new Commerce and Works Directorate, retaining her status as a director-general.

She joined Treasury straight from university in 1989 and more recently was a key architect of the government's tax reform that was bitterly contested leading up to last month's territory election.

Neither Ms Gallagher's office nor the public service would say whether Ms Smithies had asked for the new job or it was forced on her and there was no response to requests to speak to the Under-Treasurer.

The Chief Minister said there would be a recruitment process to find a new Under-Treasurer.

''Megan Smithies will be taking over the new Commerce and Works Directorate and obviously there will be a vacancy for the chief executive of Treasury but that will be filled in the short term and there will be a recruitment process,'' Ms Gallagher said yesterday.

It is unclear if the changes, the biggest shake up of the ACT public service since the Hawke review was implemented last year, would involve job losses, but Ms Gallagher said she could not rule out redundancies.

''This hasn't been arranged with any plans to cut jobs, it's more about better utilising the staff we have now,'' the Chief Minister said.

''In Treasury and Chief Minister's right now we have two areas that look at the Commonwealth-state financial relations and the COAG agenda, they're split across two units and we'll now have them working in just one unit.''

But the Chief Minister has stopped short of bringing responsibility for all the government's building jobs under the control of a single department.

''We need to think about that because we need to improve our capital works delivery, there's no secret there,'' she said.

''At the moment, the new commerce and works will do some work and report to me about how that can be improved. But we have big projects under way like in health that has its own structure in place and it would be difficult to remove that out of the Health Directorate.''