Downer EDI (ASX:DOW) said it expects government spending in Victoria to stay "subdued" through at least the first half of the fiscal year, according to a Wednesday filing with both the Australian and New Zealand bourse.

Due to the low spending levels in Victoria, the infrastructure service provider has scaled down costs, the filing said.

"We do not currently see signs of improvement," the company said.

The company's activity levels in New Zealand is also being impacted by softer economic conditions, particularly in the power, water, and telecommunications sectors.

Downer EDI is mitigating the impact by reducing its costs and improving productivity in its Australian operations, the filing added.