Treasurer Joe Hockey has stepped up warnings of a tough federal budget as the federal government seeks to reduce spending growth to less than 2 per cent each year.
The government will receive the final version of its Commission of Audit report on Monday, but Mr Hockey gave no indication of when the findings of the spending review would be publicly released.
Speaking to reporters in Sydney, Mr Hockey said the federal budget had reached a point where current levels of expenditure could not be maintained and flagged possible cuts to welfare to curb spending levels.
The Treasurer said there would be “hard decisions, unquestionably, but everyone has to help do the heavy lifting here”.
“I'm dealing with the reality here,” Mr Hockey said.
“The reality is that if we do not make the decisions that are necessary in the May budget and if we allow the budget to continue running deficits and increasing debt, Australia will have a lower quality of life, a lower standard of living than that which we've had in the past.”
Mr Hockey struck out at his Labor predecessors, accusing them of massive increases in spending.
He said expenditure was currently growing at more than 3.5 per cent per year in real terms.
“And in the year that was never published of the budget, the fifth year, there are massive increases in expenditure,” he said.
“In fact, a 6 per cent increase in expenditure in that one year alone as a result of initiatives taken by the previous government.”
Mr Hockey warned that some parts of the welfare budget had grown to “well beyond the norm”.
“The fact is sooner or later governments run out of money and are unable to maintain current expenditure,” he said.
“We've reached that point where we cannot maintain current levels of expenditure and importantly we can't maintain current growth in levels of expenditure that were left behind by Labor.”
Prime Minister Tony Abbott said on Monday afternoon he had not yet had a chance to look at the Commission of Audit’s final report, but was familiar with the Commission's interim recommendations.
‘‘There are some recommendations that we will accept, and you will see them incorporated in the budget. There will be other recommendations that we will continue to work on... and there will be other recommendations which may well have intellectual merit, but which for all sorts of reasons the government is not proposing to proceed further with,’’ he told reporters in Perth.
With Dan Harrison