The Tasmanian Government should aim higher than "minding the store" and set a bolder direction for a second term, leading economist Saul Eslake has urged.

Key points: Tasmanian Government should 'do something bolder'

Tasmanian Government should 'do something bolder' Consider asset sales including electricity retail

Consider asset sales including electricity retail Also, pursue school and council mergers

In an address to Tasmanian business and political leaders in Hobart, Mr Eslake encouraged the State Government to use its third budget to lay the groundwork for a broader mandate for a second term.

Mr Eslake said the priority in a Government's first term was to keep election promises, building political capital, and now was the time to think about the next term.

"You use that trust to argue a sensible, plausible and attractive case for doing something bolder in the second term," Mr Eslake said.

He believed asset sales and a more aggressive push for council and school amalgamations should be central to the platform the Liberals take to the next state election in 2018.

He named the electricity retail, poles and wires, transmission and distribution businesses as state-owned assets that could be sold off to fund infrastructure projects to stimulate the economy.

"That could be road and rail, it could certainly be water, it could be the construction of new school facilities. All of those would create jobs in the short term would of course improve the business environment and the quality of people's lives," Mr Eslake said

He also advocated for broadening and lowering the base of payroll tax and replacing stamp duties with land tax.

The New South Wales Government took the sale of state assets to an election last year, but the divisive political measure was part of the downfall of the Queensland state government in 2015.

The Tasmanian Government has repeatedly ruled out asset sales, except if there was interest in Aurora Energy's customer base, which previously failed to sell.

The state budget is due to be handed down May 26.

Tasmanian Premier Will Hodgman again ruled out privatising assets and vowed to use the budget to build on the state's strengths.

"We'll also announce in this year's state budget, within as we've said very difficult circumstances, financially that is, what we believe we can do to further stimulate growth across the state," he said.

Treasurer Peter Gutwein has ruled out a "cash splash" budget, with the state the hit by a $520 million write-down in GST receipts and disappearing Hydro Tasmania dividends due to the energy crisis.