The glow of attention and applause abroad has failed to impress Australians as Prime Minister Tony Abbott returns home to plunging popularity and growing opposition to policies.

Following the Government's earlier plans to slash welfare, shift disability pensioners to much lower dole payments and other measures largely targeting low-income families, it is now preparing the nation for big changes to age pensions.

Treasurer Joe Hockey has raised the prospect of lifting the eligibility age to 70, changing indexation to a lower level and tightening asset rules.

The pension age is already set to rise to 67 in 2026 under changes introduced by the previous Labor Government.


"Obviously we've got to have a sustainable welfare system and there is a serious question as to whether our current welfare system, which was designed in the 20th Century, is sustainable in the 21st Century when we have significant demographic challenges," Hockey said.

The proposal comes ahead of next month's federal budget which is expected to hew into spending and cut a swathe through existing programmes.

Adding to the nation's pre-budget nerves, the Government has come under such heavy fire over its plans to water down the protections of the Racial Discrimination Act that it may be forced to surrender.

A Nielsen poll in Fairfax newspapers yesterday said 88 per cent of respondents rejected changes to the act proposed by Attorney-General George Brandis, who said Australians had the right to be bigots.

Abbott also raised hackles with his autocratic decision to reintroduce knights and dames, which the poll said was supported by only one-third of the nation.

Also in the background are the corruption hearings in Sydney into a company of which Abbott's former Assistant Treasurer, Arthur Sinodinos, was a director. The scandal involving the company, linked to notorious former Labor powerbroker Eddie Obeid, also embroiled other prominent New South Wales Liberals.

The poll followed Abbott's successful, high-profile visit to Asia where he signed free trade deals with Japan and South Korea and appeared likely to sign another with China by the end of the year.

Australian voters had only recently restored the Government to a lead over Labor, which it had lost late last year, but the Nielsen poll showed they were not impressed by success abroad.

Instead, the poll showed the Government trailing Labor 48-52 per cent in the two-party preferred vote that decides Australian elections. Much of the Government's loss came in regional areas that have suffered heavily from a slowing economy.

But the poll also pointed to a volatile electorate tired of both major parties. While the primary votes of Coalition and Labor suffered, support for the Greens soared to 17 per cent, its highest share ever and almost double its backing in last September's federal election.

For Abbott, the budget looms large. He has indicated it will be tough, especially on welfare, in line with policies driven as much by ideology as by pragmatism and reflecting the Government's assertion that "the age of entitlement is over".

Hockey has made it clear this now includes the nation's age pensioners, who receive A$842 ($914) a fortnight for singles and A$635 for each member of a couple. Payments are reduced progressively for income earned above the maximum pension, which is indexed to movements in male total average weekly earnings.

In addition to lifting the eligibility age to 70, Hockey has floated proposals to tighten access and income rules and to link pension increases to inflation, which would mean smaller rises.

Labor is already hammering Abbott for breaking election promises. Said Shadow Finance Minister Tony Burke: "The promise was no changes. Full stop. No qualification."

Greens Leader Christine Milne said many people, especially those in physically demanding jobs, would not be able to continue working until age 70 and would be forced on to the NewStart dole payment, at present about A$510 a fortnight.

Seniors groups also said employers remained reluctant to hire older workers and that by forcing people to work longer younger Australians would be kept out of jobs. The youth jobless rate is more than double the national figure, with long-term unemployment rising.