The new year looks set to bring with it major change for Tasmania, a year bound to test the Labor-Green minority government.

If the parties hold to their promise to see out their full term, it will be the last full year they govern together before the next state poll.

The impending election, which must be held no later than May 24 in 2014, will no doubt play a pivotal role in the year's political machinations, decisions and theatrics.

The Government will spend a large part of 2013 attempting to cut cost of living pressures, through its overhaul of the state's electricity and water and sewerage sectors.

If all goes to plan, by early 2014 Tasmanians will for the first time have a choice of power provider - a move predicted to lead to a 5 to 10 per cent drop in electricity bills.

It's a huge process.

As well as regulating Hydro Tasmania, Aurora Energy will be carved up and disappear; the state-owned company's transmission business will be absorbed into Transend; and its retail arm sold to private companies.

The process will take extra care from the overworked Energy Minister Bryan Green, who juggles five huge portfolios including the politically hot forestry and mining issues.

If he pulls it off, it will benefit the low-polling Government.

There's still work to be done on the bid to limit future water and sewage price hikes.

Tasmania's three water corporations will merge into one by July; a move predicted to save taxpayers at least $5 million a year.

But the current chairman of the water corporations has warned more will need to be done.

Miles Hampton says bills will jump by up to 400 per cent if councils continue to demand dividends and $1 billion of capital upgrades over the next decade.

Mr Hampton says local and state governments must urgently engage to reduce costs.

"It would be an incongruous situation for Tasmania, with 12 per cent of Australia's water resources and only 2 per cent of Australia's population, with no fear of water shortages, to end up with amongst the most expensive water in Australia," Mr Hampton said.

The public would no doubt agree, with cost of living issues already shaping as a key election battleground.

Tasmania's education system will also undergo a significant restructure in 2013.

The Polytechnic and Skills Institutes will combine in July to become TasTAFE, just four years after their creation.

The merger should cost $1.4 million but of more political interest is the total cost of the failed Tasmania Tomorrow education changes.

At the same time, the forestry debate will continue to demand attention.

Expect the Opposition to take every opportunity to use this classic wedge issue to attempt to split Cabinet.

If the impending Legislative Council inquiry into the forestry peace deal pushes for major changes to the agreement between environmentalists and industry, insiders say it'll kill the deal, along with millions of dollars in much needed Commonwealth stimulus funding.

It's a huge amount of money in the context of Tasmania's fiscal and economic rut.

The unhappiest man with a broken deal would be Economic Development Minister David O'Byrne, who requires Federal input to support the state's Economic Development Plan.

The Government says there's no more it can do if the MLCs kill the deal.

It's a confusing political message to the electorate at a time of great change, particularly when previous Labor Governments have been seen as champions of the forestry industry backing special projects like the Tamar Valley pulp mill.

The Government's fight to keep the peace deal alive could come down to the number of perceived votes that will come with it.

The impact of the impending election on the next state budget remains unclear although the early indication is that the Government's ready to relax its hardline austerity measures.

Despite previous tough talk and budgets to match, the Government will slip further into the red to pay for a $25 million jobs creation package announced in December.

Also handed out was $50 million in extra recurrent funding as the latest budget update warned that several Government agencies are facing "budget risks".

Unhelpful to Labor and the Greens election campaigns will be the need to renegotiate the pay rate of Tasmania's more than 20,000 public servants.

A potential dogfight with Labor's traditional allies in the union movement could be a great challenge for the Premier and her team as Lara Giddings attempts to rally support from the Labor heartland in the run up to the polls.

 

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