The national capital needs a boost in confidence to encourage consumer spending, rather than more job cuts and a slump in trade that will hurt our valuable small businesses. Unfortunately, the reality for the territory's short to medium term prospects is less than rosy.

On the brighter side, the ACT's trend unemployment rate is the lowest in the nation, at 4.3 per cent. As well, the latest report card shows the territory's economy is the third best performing in the nation. The CommSec State of the States report, published by Fairfax Media on Monday, says stronger housing activity and the strength in business investment will support the ACT's job market and retail spending over 2016.

The ACT Government has been working to offset the deleterious effects of cuts to the federal public service, releasing land for new homes and pushing ahead on the light rail project. The National Capital Authority has given the green light to the city to Gungahlin tram line and major construction for the tram is to begin in October, coinciding with the ACT election.

This project is needed to maintain momentum in the construction industry, following the successful completion of the Majura Parkway. It was the largest road project since self-government and drew swarms of skilled workers.

Treasurer Scott Morrison must realise by now how important skilled and experienced public servants are to the good running of government. However, he has put Canberra on notice for another tough budget, which is reportedly about to take up to $1.2 billion more from public service departmental budgets. It appears he is set on ignoring last year's pledge to ease back on the "efficiency dividend" that has been eroding Commonwealth spending since being introduced by the Rudd government.

The federal public service is also facing the end of the idea of "jobs for life", which will probably be welcomed outside Canberra, despite the public service union saying the blueprint for reform is ideologically driven and will hurt female public servants more than their male colleagues.

ACT Liberal senator Zed Seselja is playing down the prospect of further public service cuts, following losses of about 18,000 jobs from the public sector. However, some national cultural institutions say they will have to reduce staff as they face a $20 million funding cut from the "efficiency dividend".

The funds squeeze is forcing the National Gallery to withdraw its works on the lakeside contemporary art hub which is owned by the NCA, less than two years after it was opened. However, the federal government can find $95 million to pump into the second stage of the Gold Coast tram, to have the extension ready for the 2018 Commonwealth Games, as well as mind-boggling sums of money to save Liberal-held electorates in South Australia.

All this suggests the budget will be mixed bag for the ACT. Is it too much to hope Mr Morrison is gift wrapping a surprise package for Canberra?