Treasurer Joe Hockey has warned Australians he may be forced to take "emergency action" and deliver Queensland-style austerity if structural budget reforms are not made.
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And Mr Hockey has also suggested the proposed increase in fuel excise will not affect the less well off as much as high and middle income earners because "the poorest people either don't have cars or actually don't drive very far in many cases”.
And despite criticism over the government’s proposed changes over the pension, the Treasurer has also suggested "in net terms out of the budget, it is strongly arguable that pensioners are going to be better off" because the inflation rate is higher than average male weekly earnings at present.
The comments came after a meeting the Treasurer had with Palmer United Party leader Clive Palmer on Tuesday night to discuss the budget.
Following the meeting, Mr Hockey has also given the clearest signal yet that he is personally willing to compromise with the Senate crossbench on some of the budget's most contentious measures such as the $7 GP fee.
After criss-crossing the country for the past two weeks to meet the Senate crossbench, Mr Hockey pressed his case for structural reform in an interview on ABC local radio in Brisbane and said "everyone is being slugged" in the budget.
"What we are now at is the point where we are building the structural changes in the budget such as the copayment in Medicare, such as the higher education changes and some of the welfare changes,'' he said.
"Those structural reforms ensure that we have a trajectory on debt that is $300 billion less than what it would be if we went about business as usual.
"Either we make the decisions now or you end up doing what [Premier] Campbell Newman and [Treasurer] Tim Nicholls have had to do in Queensland, and that is take emergency action in order to address the problem you inherit.
''I am warning the people of Australia that if we do not take action now we are going to end up paying up $3 billion a month in interest alone."
Mr Hockey said the government was asking ''everyone to contribute, including higher income people'', citing the increase to the fuel excise as an example.
''The people that actually pay the most [if fuel excise was increased] are higher income people . . . yet, the Labor Party and the Greens are opposing it. They say you've got to have wealthier people or middle-income people pay more.
''Well, change to the fuel excise does exactly that; the poorest people either don't have cars or actually don't drive very far in many cases.''
Labor leader Bill Shorten said Mr Hockey's comments showed the Treasurer “didn’t realise how rotten his budget is”.
“Are you serious, Joe Hockey? Are you really the cigar chomping, Foghorn Leghorn of Australian politics where you're saying that poor people don't drive cars?’’ he said.
“Joe Hockey says [poorer Australians] don't drive cars yet they don't give them another alternative. It is almost as if the Treasurer believes that poor people should be sleeping in their cars, not driving their cars.”
Mr Hockey's warning of an even tougher budget comes just weeks after a new biography revealed the federal budget was not as tough as the Treasurer wanted.
Mr Newman and Mr Nicholls' budget slashed 14,000 public service jobs, cut spending by billions and delayed capital expenditure after 15 years of a state Labor government.
Queensland, unlike the federal government, had lost its triple A credit rating at the time of the Newman budget in September 2012.
Mr Hockey said the Coalition had presented what it believed to be the best policy solutions to tackle debt in the budget and added "we are not so precious as to say there is no alternative, but we also want to ensure we get to the end game, which is to stop the blood flow of debt".
Asked if the GP fee was set in stone, Mr Hockey said it was necessary to ensure that Medicare, which is growing at 7 per cent annually, remained sustainable.
"We are asking Australians to contribute in order to build a stronger Medicare system and if we don't build a stronger system, over time the cost will become unsustainable,'' he said.
"It's $70 a year to have 10 visits to the doctor, that's what it is."
The Treasurer said the government was prepared to discuss a possible exemption for pensioners, echoing comments from Health Minister Peter Dutton on Tuesday.
On Wednesday, Mr Palmer tempered his to-date strident criticism of the budget and said he had not ruled out supporting a watered down GP fee, pointing out that a wealthy person could afford the fee but that it would hit the poor and pensioners hard.
Labor Treasury spokesman Chris Bowen said three months after the budget had been handed down, ministers were expressing "thought bubbles about their policies and whether they'll compromise or not".
"Three months later, the Treasurer is still struggling with his first budget. His first budget was a fundamental failure. Unfair, bad for the economy and the Treasurer should realise this today, that three months later he has failed comprehensively to sell his budget,'' he said.
