The Tasmanian Opposition is proposing to axe hundreds of public service jobs, increase fines and merge two government departments.

Liberal Leader Will Hodgman has outlined the plan in his alternative budget in State Parliament.

It aims for $465 million worth of cuts over four years.

It would see the number of government departments slashed to eight, by merging the current Infrastructure and Economic Development Departments.

A new Department of State Growth would be created, saving $12 million over four years.

The Liberals plan would see a further 650 public servants axed, saving $162 million over four years.

But Shadow Treasurer, Peter Gutwein, says the Health, Police and Education Departments would be protected from further jobs cuts.

"Across the remainder of the public sector, 250 job (cuts) next year...we expect that probably around 90 of those jobs will come from the merger of the two departments."

"At the moment the two of those departments have around 900 people in them and we expect that will create efficiencies," he said.

The Opposition would not set aside $110 million to bailout ailing state-owned business Forestry Tasmania.

It would also restore TAFE and get rid of the State Service Commission and disband the Climate Action Council.

Fines would be increased, raising an extra $12 million over four years and court fees would be raised for criminals.

The Opposition would use the savings to reverse the State Government's elective surgery cuts, costing $76 million over four years.

"By taking such action, and providing responsible financial management we can invest in the essentials of Government, such as our health system," Mr Hodgman said.

Tourism marketing would be allocated $16 million and there would be $3.5 million in first-home builders grants.

It would scrap the Government's planned hikes to the motor tax and motor vehicle duty, ripping $71.6 million from its alternative budget.

The Opposition would also disregard the carbon tax windfall.

The Opposition would post a deficit of $268.5 million, $14.51 million less than the Government's bottom line.