ACT Liberal senator Gary Humphries said it was ''unmistakably clear'' Labor intended to cut jobs in Canberra after Finance Minister Lindsay Tanner ruled out increasing taxes to fund its $41.5billion plan to kick-start the economy.

But the Government said yesterday its ''razor gang'' would slash waste, not jobs.

Mr Tanner said at the weekend the Government would impose tight controls to help return the budget to surplus.

Labor would allow the budget to grow by only 2 per cent each year, after inflation, until the economy picked up.

But once economic growth returned to 3 per cent, every new spending proposal would ''have to be offset by savings or by other kinds of offsets in the overall budget'', he said.

The Government's stimulus package, which includes $12.7billion in one-off handouts, will reduce Treasury's cash reserves this financial year from $5.4billion to a debt of $22.5billion.

By 2009-10, the debt will reach $35.5billion.

The Opposition voted against the spending stimulus, saying it would burden future generations with debt of up to $200billion.

Senator Humphries said yesterday job losses were inevitable now the Government had ruled out tax increases.

''It's just inconceivable that they'd leave the public service alone in those circumstances.'' He warned that sacking public servants was the worst way to cope with harsh economic times.

''Australia needs to be imaginative and creative to be able to sidestep the effects of this [financial] crisis,'' he said.

Removing the bureaucracy's's ''top policy minds'' ''and they're the ones who'll be targeted by further cuts'' would be a false economy, he said.

''When you're facing a gigantic battle, you don't cull your shock troops.'' But Mr Tanner said his razor gang ''is not, and has never been about slashing and burning the public service'', adding Labor would rely on prudent management to help the budget recover.

''The previous government wasted millions on short-term, election-driven spending,'' he said yesterday.

''We committed to stopping that wasteful practice and invest for the long term, as evidenced by our first budget.''

Mr Tanner said Labor had three strategies to return the budget to surplus: its 2 per cent cap on new spending, allowing tax revenue to grow as the economy recovered, and its plan to offset all new spending with budget cuts.