Public sector spending dropped steeply in the March quarter, Australian Bureau of Statistics (ABS) figures show.

The fall came after a sharp rise in the December quarter thanks to the transfer of projects completed by the private sector, notably a desalination plant in Victoria, to state and local governments.

Total government spending, including consumption and capital formation (investment), was down by 3.3 per cent after adjusting for inflation and seasonal variations in the quarter, according to the ABS data released on Tuesday.

Public sector spending makes up about a quarter of gross domestic product, so the fall will cut about 0.8 percentage points from growth in GDP for the quarter.

The March 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 rose by 0.5 per cent in the March quarter, the ABS said.

General government gross fixed capital formation – investment in productive capacity (including desalination plants) – rose by 3.9 per cent, while investment by public corporations fell back by 39 per cent after a 59 per cent rise in the previous quarter.

Other ABS data released on Tuesday showed exports grew by one per cent while imports fell by three per cent after adjusting for price changes.

That improvement in the real-terms trade balance will add about one percentage point to quarterly GDP growth.

So the government spending and real-terms trade figures roughly offset each other as far as GDP growth in the March quarter is concerned.