But Mr Barr was buoyed by an assurance from Prime Minister Tony Abbott at the Council of Australian Governments meeting that the worst of the Commonwealth Public Service job cuts were over.

"This should give confidence to Canberra businesses that we have been through the worst and we can continue to build and diversify our economy," Mr Barr said, also welcoming Mr Abbott's agreement to work with the states and territories on long-term funding plans for schools and hospitals.

Mr Barr is already set to deliver by far the worst deficit the territory has seen this financial year, at a forecast $770 million. He had hoped to claw that back to a $250 million deficit in 2015-16, and a $23 million deficit in the 2016-17 budget, the final one he delivers before the next election.

But the loss of $130 million in GST revenue will hit the bottom line in 2015-16, making for a tougher road back to a balanced budget. The extent of the damage will become more clear when Mr Barr delivers his budget at the beginning of June.

Mr Barr has already foreshadowed the need to pull back the growth in health spending and is reviewing concessions and discounts paid to seniors and others. He is also reviewing ACTION buses, determined to rein in costs.

But despite the difficult picture, Mr Barr has promised no "radical decisions" and "no change in fiscal policy settings".