Australia's upcoming Budget austerity measures have already set off a backlash

Treasurer Joe Hockey is preparing to don his economic hairshirt to cut deeply into the Australian Government's spending and services, promising that next month's Budget is only the beginning.

Hockey warns that new austerity measures will affect every Australian, from families to corporations, encased in a barebones policy that "will do for people what they cannot do for themselves, but no more".

He has also clearly signalled that as well as tightening access to federal assistance and charging fees for previously free services, he expects Australians to labour well into their old age, telling ABC radio they "should work as long as they can".

But it is a strategy fraught with political risks.


Prime Minister Tony Abbott has tried to soften the expected blows by insisting the Government will keep its key election promises, which included no change to age pensions and the retention of a range of initiatives introduced by the former Labor Administration.

Abbott's assurances have done little to settle an increasingly sceptical nation. The foreshadowed cuts in the coming Budget are widely seen as targeting the poor and the vulnerable, a perception encouraged by Labor as it draws its battle lines.

"I think that the only case for change which the Abbott Government is going to make for the Budget is the case to break their promises and their twisted priorities," Opposition leader Bill Shorten said.

Opinion polling is also sounding warnings. The latest Morgan poll this week echoed earlier Nielsen findings: Labor is leading the Government by 52-48 per cent in the two-party preferred vote that decides Australian elections.

Hockey is unrepentant. His rhetoric is one of crisis and a coming economic Armageddon that can only be averted by scorched earth financial management, much of which will be outlined in the Commission of Audit to be released next Thursday.

Hockey plans to slash annual spending growth from a long-term 4 per cent above inflation to just 1.75 per cent by hacking into spending.

While he insists the pain will be felt everywhere - "households, corporates and the public sector alike" - his clear targets are welfare and social programmes.

Hockey gave detailed arguments for likely measures in this area, but no specific measures against corporate welfare.

At the top of the immediate hitlist are aged pensions which, at A$40 billion ($43 billion) a year, absorb 10 per cent of all federal spending.

Hockey said this would grow as the population aged: "The volume of demand for these programmes is outstripping the capacity of taxpayers to fund them."

Hockey is expected to increase the pension age to 70 over time, and could also tighten eligibility for part-pensions and health concession cards. Further likely targets include charges for services, including at-present free GP visits, and the shifting of disability pensioners to much lower dole payments.

The backlash is already starting, led by Labor and health and welfare groups.

A new Essential research poll showed more than 70 per cent of respondents opposed raising the pension age and suggestions that the value of the family home could be included in asset tests to determine eligibility.

"Australians see the age pension and provision of health and aged care as core business of government and took the Government at its word at the last election," said Ian Yates, chief executive of seniors advocate COTA Australia.

The Australian Council of Social Service said low-income Australians and the nation's most vulnerable appeared likely to bear the brunt of Budget austerity.

"Despite the rhetoric that the Government would prioritise spending for those who need assistance, measures proposed to date will disproportionately target those with the least in our community," chief executive Cassandra Goldie said.