A Canberra-based think-tank is recommending the Federal and Tasmanian Governments stop subsidising the state's native forestry sector.

In a report obtained by the ABC set to be published this week, the Australia Institute has criticised successive governments for pouring hundreds of millions of dollars into the industry.

It also attacks the forest peace deal, saying it has cost taxpayers roughly $420 million since 2011.

Much of the money meant to go to help diversify Tasmania's economy, it says, has instead gone to propping up industry players.

It also finds that every $1 million created by the forestry sector accounts for only about four jobs.

It contrasts that figure with about 20 jobs created for the same amount of expenditure in the private education sector.

The report also finds dramatic gaps between how Tasmanians think of forestry, and the available data about the sector's size.

Forestry and logging directly employ just 0.4 per cent of Tasmania's workforce, although 543 Tasmanians surveyed thought the figure was about 19 per cent.

Tasmanians also thought forestry accounted for roughly 30 per cent gross state product. The actual figure is reportedly 0.5 per cent.

It identifies a "resource curse" in Tasmania which has seen undue emphasis placed on primary industries such as forestry.

The report recommends that the governments slowly withdraw subsidies for native forest logging and invest instead in services.

It suggests money be redirected into the tourism and food industries.

Forestry focus to blame for economic woes

Lead author Dr Andrew Macintosh from Canberra's Australian National University also blames the political focus on forestry for Tasmania's poor economic performance.

"ABS data makes clear that even in the unlikely event that attempts to support the forestry industry were to succeed, they would create far fewer jobs than if the same effort was put into expanding other industries," he writes.

"Despite the fact that forestry employs a trivial proportion of the Tasmanian workforce, state policymakers seem convinced that the success of the forestry industry is essential to addressing the low rates of growth, employment and output per worker which have seen the Tasmanian economy slip even further behind the economies of the mainland states.

"If Tasmanian policymakers continue to place the interests of the dwindling forestry industry at the heart of their plans for Tasmania's economy, then the gap between the Tasmanian economy and the mainland economy will only continue to grow."

The Premier, Lara Giddings, believes Tasmanians are happy to foot the bill for supporting the industry.

"It is critical government steps in and supports these industries through these tough economic times, and forestry deserves it as much as the car industry, or any other industry," Ms Giddings said.

Liberal leader Will Hodgman is pledging even more attention for the industry if his party wins government.

"[It's] an industry that deserves government support, which creates thousands of jobs, generates potentially millions of dollars of economic activity to Tasmania."