Business groups welcomed plans by the debt-laden Allan government to cut 3000 taxpayer funded jobs in Victoria to save billions of dollars, but warned it should be just one step toward reining in runaway public spending.

Premier Jacinta Allan and Treasurer Jaclyn Symes on Thursday announced former Department of Premier and Cabinet secretary Helen Silver would head a review that would slash up to 6 per cent of the headcount of the state’s 55,000-strong public service.