Liberal's first budget 'brings no surprises'

Bank of America Merrill Lynch chief economist Saul Eslake said the government's budget savings measures were ''reasonably bold'', with a net impact of $635 million over four years.

Will Hodgman.

Will Hodgman.

''That compares with $455 million of net savings in the one tough budget the previous government delivered in 2012,'' Mr Eslake said.

Government agencies have been asked to save more than half a billion dollars over the forward estimates through identifying efficiencies. 

The pay pause on public servants is an essential feature of the saving strategy, and combined with the shedding of 700 public sector positions, the saving hits $370 million.

''It's certainly a bolder effort than the one time the Labor government tried,'' Mr Eslake said.

State owned businesses will be asked to pay higher dividends to save the government almost $250 million.

''As the owner of the businesses it can determine their dividend pay outs,'' Mr Eslake said.

''Any sensible government would make those decisions having regard to the viability of that business, and the government has said they'll do that,'' Mr Eslake said.

Mr Eslake said the Liberal's debut budget brought no surprises.

''It more or less lived up or down, depending on your perspective, to the expectation the government had created in the week or so leading up to the budget,'' Mr Eslake said.

''They've delivered on their promises, they haven't slashed and burned at a rate that would damage the recovery, nor however, have they finished the job,'' he said.

He said if the government sticks to the budget over the forward estimates, spending would rise at an average rate of 1.5 per cent per year, compared to other state and territories which rise at about  3 per cent.

''If the government maintains the discipline over spending that is set out in budget papers then they will have certainly made significant progress to putting the state finances on a more sustainable position,'' he said.

Despite all of this, Mr Eslake said any change to the GST carve up among states could ''easily deteriorate and wipe out what the government is trying to do''.

Mr Eslake said the savings demanded of government agencies was used by other state governments, but he still had reservations about the tactic.

''It means the decisions are made by departments, often lower levels of management,'' he said.

''There is a risk the decision could be implemented in ways that either cause embarrassment to the government or detract from front line services,'' he said.

''It's not a good substitute for hard decisions about whether to close entire programs,'' he said.

While an extra 200 public servants will go over the next four years, Mr Eslake said the argument for it was ''quite sound''. 

''I think there are better ways of reaching the target number of job reductions than percentage point across the board savings, but the government had a promise of no forced redundancies and they've stuck to it,'' he said.

Mr Eslake said the new government had made ''significant progress'' to restoring the state's troubled finances.

''But as the budget papers explicitly knowledge, there's more to do,'' he said.


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