More than 1000 jobs will go following an independent review of Victoria's public service, led by banking executive and former bureaucrat Helen Silver.
Of those, 332 senior executive and technical specialist roles will be cut as 29 government entities and boards are merged or abolished.
Treasury estimates the sweeping bureaucratic shake-up will save Victoria's strained budget more than $4 billion across the next four years.
When announcing the review in February, Treasurer Jaclyn Symes said it would aim at job losses of between 2000 and 3000 - about five to six per cent of the public service workforce.
Ms Silver's review recommended reductions of 2068 jobs, 78 entities and up to 90 advisory bodies for estimated savings of almost $5 billion.
She found Victoria's public service workforce had grown 16 per cent since 2019, with executive positions up 52 per cent.
Premier Jacinta Allan acknowledged the state public service was "top-heavy" but justified not cutting as deeply as recommended to preserve frontline services.
"These are savings that mean that we can continue to deliver those frontline services that matter most to Victorian people," she told reporters on Thursday.
In question time, shadow attorney-general James Newbury accused the Allan government of behaving like a "Christmas grinch" with its timing.
The treasurer said she was "absolutely conscious" news of pending job cuts was landing 21 days before Christmas but insisted it wasn't a "termination notification".
"Many of these positions will be removed and altered and changed by attrition," Ms Symes said.
"That is what has been baked into the $4 billion in savings. We would lose a lot of those savings if we were to pay out redundancies tomorrow."
Victoria's Community and Public Sector Union claimed victory over the smaller job cut number and said most of the pain was behind the 57,000-strong workforce.
Assistant branch secretary Mitch Vandewerdt-Holman said 619 of the 1055 jobs to go had already been cut.
"We've been fighting every single one of those cuts," the union official said.
The Public Health Association has launched a campaign to stop VicHealth from being absorbed by the Department of Health, dubbing the plan a "disaster".
VicHealth was the world's first health promotion foundation when it was established in 1987 using cigarette taxes.
The premier's decision would "inevitably shrink" initiatives to stop Victorians getting sick, the association's chief executive Terry Slevin said.
But the business community is on board with the changes, with the Victorian Chamber of Commerce and Industry declaring there was sense in a "pragmatic alignment".
"No one welcomes job losses ... but the pressures on the Victorian budget are significant," the chamber's boss Sally Curtain said.
Opposition Leader Jess Wilson wasn't offering the government a pat on the back, arguing the savings were a "drop in the ocean" and an "admission of failure".
"This report has been sitting on the treasurer's desk since June, gathering dust," the state Liberal leader said.
"Over that time ... we have seen net debt growing in this state by $7.2 billion."
While describing the public service as "bloated", Ms Wilson would not pledge to cut deeper to improve Victoria's budget bottom line.
In the May state budget, Victoria's public sector wage bill was forecast to rise from $38 billion in 2024/25 to $42.4 billion in 2028/29.
Net debt was on track to reach $194 billion by mid-2029, sending interest repayments soaring close to $29 million a day.
Victoria's financial projections will be refreshed on Friday when the mid-year budget update is released.
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