Joe Hockey
Joe Hockey Lauren Reed

Joe Hockey signals cuts to pensions, upfront GP payments

CUTS to the aged pension will likely to form the centrepiece of the Commission of Audit's 86 recommendations, when Treasurer Joe Hockey releases the delayed audit report next week.

But while the audit's 86 recommendations will be heeded, Mr Hockey said on Wednesday night the Abbott Government will not "automatically accept all of its recommendations".

The report has focused on the 15 largest government programs.

The age pension tops the list with a cost this financial year of $39.5 billion.

While the Treasurer's speech was the latest attempt to prepare voters for a tough May budget, election promises from Prime Minister Tony Abbott ruling out cuts across a range of spending areas have hampered the potential impact of Mr Hockey's first budget.

Rather, the May budget is more likely to set the scene for further medium-term spending cuts and restraint across government spending, with a gradual tightening over coming years.

In his speech to a Spectator Magazine function in Sydney, Mr Hockey said the audit highlighted that the government's "biggest costs are also our fastest growing", recommending vast changes to the Commonwealth budget.

"The problem we have is that the volume of demand for these programs is outstripping the capacity of taxpayers to fund them," he said,

"Between 2010 and 2050 the percentage of people of working age supporting those over the age of 65 in Australia will almost halve.

"So the policies must be changed, either now or more dramatically in the future." 

Is Australia's welfare system overly generous?

This poll ended on 30 April 2014.

Current Results

Yes. There are too many relying on the government for a handout


No. We should cut other areas first like defence spending


Yes. But we should leave aged pensioners alone


No. We pay high taxes so we can help the needy


This is not a scientific poll. The results reflect only the opinions of those who chose to participate.

While the budget's lack of sustainability is well-known, Mr Hockey said the audit confirmed the budget would remain in deficit for at least decade under a "business as usual" situation.

"It is a recipe for disaster to never even get to surplus despite having a foundation of 32 years of continuous economic growth," he said.

While he did not release the specific recommendations of the audit, he intimated health, education, welfare and defence were the top of its agenda.

Mr Hockey also effectively confirmed the expected co-payment for GP visits; saying co-payments and increased use of means-testing on government payments, such as family tax benefits, would be needed.

"Nothing is free. Someone always pays," he said.

Opposition leader Bill Shorten says the government should scrap its paid parental leave, rather than targeting pensioners.

The scheme is set to begin in 2015 at a cost of  $5.5 billion a year. Part of the costs will be covered by a levy on big business.