In a speech to policymakers in London, opposition treasury spokesman Joe Hockey said the age of entitlement in western countries was over and Australia should pare back welfare spending.
Ms Gillard says Mr Hockey has family payments, pensions and Medicare in his sights.
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"Mr Hockey was saying to Australian families if you feel entitled to family payments, entitled to family support, and entitled to medicare - well you shouldn't be," said Ms Gillard.
"Mr Hockey thinks there should be widesrpead cuts to those payments families rely on."
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