Treasurer Joe Hockey says more government spending cuts need to be made, but if reductions are made too quickly it will cause the community pain.
His comments came after a stark warning by former Treasury secretary Martin Parkinson that Australia will be "sleepwalking into a mess" unless fiscal and productivity reform are dealt with in tandem.
Dr Parkinson, who stood down as one of the nation's most powerful public servants late last year, told an economic reform summit on Wednesday that the growth of living standards could fall by half of what has been the norm over the past 50 years if nothing is done.
But Mr Hockey says the government has already reduced spending as a percentage of GDP by cuts worth $50 billion.
"There is more to be done, there is no argument about that, but if we move faster there is no doubt it we will cause pain in the Australian community," Mr Hockey told Sky news on Thursday.
The treasurer said earlier this week that the budget is in a better position than it was under Labor, so much so that the government can afford personal income tax cuts.
This would counter bracket creep, which will force thousands of average earners into higher tax brackets over the next couple of year just through wage inflation if nothing is done.
Such tax cuts will be taken to next year's election.
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