AAP

Prime Minister Julia Gillard says families should be deeply concerned about spending cuts under a coalition government, after opposition treasury spokesman Joe Hockey warned Australia needed to keep an eye on its welfare payouts.

Mr Hockey used a speech in London overnight on Wednesday to criticise the "age of entitlement" in regard to social payments in western nations and urge development countries, including Australia, to mean test them.

However, welfare groups say the $122 billion Australia spends each year on social security and other payments - equating to about 8.5 per cent of gross domestic product, is modest and should be boosted.

In European countries, the figure is three or four times higher, but many Asian nations offer little or no social welfare support to their populations.

Mr Hockey warned that as welfare bills grow, future government budgets will be under pressure unless such spending was reined in.

"We need to compare ourselves with our Asian neighbours, where the entitlements programs of the state are far less than they are in Australia," he said.

Ms Gillard said Mr Hockey's remarks made for "pretty grim reading" and tried to link them to future coalition policy under a Tony Abbott-led government, as government ministers lined up to defend Australia's social security system.

"Our message to Australian families is we want the economy to work for you and we want to be working with you to get the services you need," she told reporters in Perth.

"Unfortunately, Mr Hockey and Mr Abbott's message to those families is you are in for cutbacks and if you can't cope then try fending for yourself and if you can't fend for yourself well unfortunately that's too bad."

Opposition Leader Mr Abbott said Mr Hockey was simply making the point that governments need to live within their means.

"The way this (Labor) government has been spending over the last few years, there is a danger that we ourselves could ultimately go down an unsustainable path," he told reporters on the Gold Coast.

Opposition finance spokesman Andrew Robb told AAP: "There is no new coalition policy review of welfare payments."

Mr Robb said the coalition's plan to commission an audit into commonwealth public service operations when it won government would address government spending and costs.

"We have an obligation to taxpayers to do what we can to ensure they receive value for money outcomes," he said.

Assistant Treasurer David Bradbury challenged the coalition to spell out which government programs could be cut, given Mr Hockey's remarks.

"This seems very much to me to be a race to the bottom when it comes to cutting away and stripping away some of the basic support structures we have in the Australian social safety net," he said.

Australians should not have to give up social security payments, Finance Minister Penny Wong added.

Australian Greens leader Christine Milne said Mr Hockey's vision raised the prospect of a dog-eat-dog world where profits were more important than people.

"The logical conclusion of what Mr Hockey is saying is no universal health care, no universal access to public education," she said in a statement.

"It's a Thatcherite, every man, woman and child for themselves world, where people who are struggling are told it's their fault for not working hard enough."

Australian Council of Social Service chief Cassandra Goldie said the nation should be proud of its social security system.

"We need to now build on that system, and address urgent gaps, such as the National Disability Insurance Scheme, dental health and increasing the unemployment payment," Dr Goldie said.

The debate should instead focus on tackling tax loopholes for the rich, means-testing of entitlements and better targeting spending, she added.