AAP

Government spending rose sharply in the December quarter, Australian Bureau of Statistics (ABS) figures show.

The figure was boosted by the transfer of projects completed by the private sector to state and local governments.

Total government spending, including consumption and capital formation (investment), was up by 4.9 per cent in seasonally-adjusted chain-volume (inflation-adjusted) terms in the quarter, according to the ABS data released on Tuesday.

Public sector spending makes up about a quarter of gross domestic product (GDP).

So, this rise will add about 1.2 percentage points to the quarter’s GDP growth.

The December quarter estimates for government spending will be included in the national accounts, due for release on Wednesday.

Within the total, general government final consumption spending fell by 0.2 per cent in the December quarter, the ABS said.

General government gross fixed capital formation – investment in productive capacity – rose by 2.2 per cent, while investment by public corporations jumped by a whopping 69 per cent.

In current dollar terms, that 69 per cent rise – mostly in state and local government-owned corporations – amounted to $3.7 billion.

Total public sector investment (general government and public corporations combined) was up by 25 per cent in real terms in the quarter.

Other ABS data released on Tuesday showed exports grew faster than imports in real terms and will add 0.6 percentage points to growth.

Although there may be some offsetting weakness in private sector investment and a slow trend in consumer spending over the quarter, Tuesday’s data suggest a strong result is likely for GDP when the figures are released on Wednesday.