Federal Treasurer Joe Hockey has warned Australia will run out of money to pay for Medicare and its welfare and education systems unless the government takes a hard look at the costs.
Mr Hockey is "ringing an early warning bell" about the sustainability of federal funding for vital programs, saying hard work will be needed in the future just to maintain the quality of life expected by most Australians.
"The starting point is if our health and welfare and education systems stay exactly the same, Australia is going to run out of money to pay for them," Mr Hockey told the Seven Network on Friday.
"If nothing happens, we will never get back into surplus, we'll never pay off debt.
"We'll either have to have a massive increase in taxes, and that means fewer jobs at the end of the day, or we're going to have to look at ways we can restructure the system to make it sustainable."
There's speculation the government could be paving the way for the introduction of a GP fee, although Prime Minister Tony Abbott has said he wants to be the "best friend" Medicare's ever had.
Co-payments of up to $6 to visit the doctor have been flagged as one way to tackle spiralling health spending, as the commission of audit investigates ways to rein in the budget deficit.
Medicare is forecast to increase from $65 billion in this year's budget to $75 billion within just three years, Mr Hockey said.
The treasurer flagged that other programs, including the aged pension for people over 65, were also overdue for review and would have to be examined.
The pension was introduced in the 1950s when life expectancy was 55, but Mr Hockey said costs had ballooned with the average life span stretching today to 85.
