Budget optimistic on productivity: KPMG

Government debt will continue to rise, budget deficits will widen and standards of living will suffer unless productivity improves, global advisory firm KPMG warns.

Its national managing partner John Somerville says a new KPMG Economics report shows the recent federal budget assumes future productivity growth will match its performance over the past 30 years, which includes the "golden years of the 1990s".

"Our modelling shows that if, instead, growth in multifactor productivity is more like its recent performance then the budget deficit will be greater and living standards will be lower than the budget suggests," Mr Somerville said on Monday.