The ACT economy faces serious structural damage from recommendations by the Abbott government's National Commission of Audit, Chief Minister Katy Gallagher said on Thursday.
Warning of an unfair targeting of Canberra's public servants, Ms Gallagher cast doubt on the effectiveness of proposed measures whereby welfare recipients would be forced to move from their home cities and patients would be charged medical co-payments in doctor's surgeries and emergency rooms.
She said Canberra faced a nervous wait until budget night to see which of the 64 recommendations were adopted.
"There's nothing that stands out and says this is a good pathway forward for Canberra or for Australia in terms of a fair go for all," Ms Gallagher said.
"It puts us on a path to fundamentally changing the way the Australian system of government and social security works, this notion of a fair go for all that we are proud of."
While the total number of job losses from the proposed reorganisation of nearly 100 government entities is still unclear, Ms Gallagher said the effect could be wide and long lasting for the ACT.
She questioned the rationale of further cuts to the public service.
"I am sick to death of public servants being portrayed as people less worthy of a job than anyone else. It is such an unfair characterisation of the work they do,'' she said.
''All of a sudden public servants have to shoulder something for the rest of us like they’re not Australians? It's petty politics and it plays into a myth about fat cats sitting around doing nothing.''
Ahead of Friday's Council of Australian Governments meeting with Prime Minister Tony Abbott, Ms Gallagher said she would resist any changes to the distribution of Commonwealth funding to the states and territories.
Commonwealth funding remains the largest share of the territory's revenue.
"[The commission of audit] has accepted the big states' argument of moving to per capita distribution of GST, as opposed to the view that it should be matched on your ability to provide services.
"Anything that moves us out of the system now which is locked in and puts our funding at the discretion of Commonwealth grants weakens our current position and would be negative for the ACT," Ms Gallagher said.
Shadow treasurer Brendan Smyth said the government had been too slow to diversify the ACT economy and was now seeking to blame the Abbott government.
"We remain vulnerable, and will always be vulnerable, to the ups and downs of the federal budget cycle until we diversify the economy," he said.
"The government has been saying the greatest risk to the ACT is a downturn. You can't point the finger at the federal Liberal government when you recognise there is a problem and don't do anything about it."
Mr Smyth declined to specifically endorse individual recommendations of the commission of audit's report but said the Canberra Liberals had stood up for public service jobs.
Ms Gallagher was critical of recommendations for the Commonwealth to push states to introduce co-payments for visits to emergency wards for non-urgent medical complaints, saying they would not raise significant revenue or benefit health outcomes.
She raised concerns about a proposal calling for increased government oversight of the CSIRO's independent research activities.
"The Prime Minister has repeatedly told me he is not setting out to do economic harm to Canberra,'' she said.
"I take this man at his word, and I have – up until seeing this report and the budget will be the ultimate measure – no real reason to disbelieve him, but if all of these changes were to be adopted they would cause significant economic harm to Canberra.''