Prime Minister Tony Abbott says it is "almost inconceivable" the government's commission of audit will recommend tax increases.
The audit, announced by Treasurer Joe Hockey on Tuesday, will look for ways the government can save money, remove duplication and raise extra revenue to balance the books.
But Mr Abbott dismissed suggestions the review - to be headed by Business Council of Australia president Tony Shepherd - would recommend tax increases.
"I think it is almost inconceivable that the commission of audit will be going down that path," he told Fairfax Radio on Wednesday.
The commission's mandate was to go through government "branch by branch, division by division, agency by agency".
Everyone wanted to see a government which was as efficient and as effective as possible and deliver the best possible value for taxpayers, Mr Abbott said.
The prime minister did foreshadow cuts to the public service - promised before the September election - saying there were 20,000 more workers employed by the commonwealth than at the end of the Howard government in late 2007.
Asked if there would be cuts to services, Mr Abbott said: "There may well be some services that can be better delivered".
He pointed to the transfer of job services from the old Commonwealth Employment Service to the Job Network of government and non-government providers, which he oversaw as employment minister in the Howard government.
"If we can do things like that - I'm not assuming that we can - but if we can do things like that, why shouldn't we?"
Mr Abbott says he doesn't expect everything his government does over the next three years is going to be rapturously received, saying the important thing was to get the best possible services for the lowest possible cost to taxpayers.
"And that is what we are exploring right now."
Questioned if his government would expect the public to carry some of the load for the country's fiscal recovery, Mr Abbott said: "If we are going to get debt under control, if we're going to get the budget back in the black, yes, inevitably things will have to change".
"There will be some things that people don't like, but I think the public understand that government has been living beyond its means," he said.
The prime minister defended the decision to lift the debt ceiling from $300 billion to $500 billion, despite railing against government debt while in opposition.
"There is a world of difference between the limit and what you actually borrow," he said.
"Our job is to get debt down, and we will."
The prime minister also talked down suggestions premiums would increase following the government's proposed sale of Medibank Private.
"Don't forget that there is some regulation of private health insurance premiums - there is an annual premium round, and the minister for health has to approve premium increases.
"We've got to be confident that they're necessary, and not just a bit of commercial gouging."
Selling off Medibank Private was the only privatisation the government was investigating, he said.
"We're going to do no more and no less than we promised people at the election."
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