Families face losing welfare
Warning: Tony Abbott. Picture: AP

Tony Abbott has warned families on combined incomes of more than $100,000 face losing welfare payments in next month's Budget and instead dangled the prospect of tax cuts in four to five years.

The Prime Minister last night appeared to be drawing a new, lower delineation as to who should get government assistance, despite acknowledging families on six-figure incomes were not automatically "rich".

"A teacher married to a part-time shop assistant with children to feed, clothe and educate is certainly not rich, especially paying a capital city mortgage," Mr Abbott told the Sydney Institute.

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"But the best way to help families on $100,000 a year is long-term tax relief and more business and job opportunities, not social security handouts."

In Opposition, Mr Abbott heavily criticised Labor's attempts to withdraw welfare from families with combined incomes of more than $150,000.

In his speech, Mr Abbott confirmed the cost of the age pension would be trimmed by adopting lower indexation and lowering the eligibility threshold.

But any change to the pension will be put off until after the next election in a bid to defuse claims of a broken election promise.

However, Mr Abbott signalled payments for carers and disability support pensioners would be squeezed almost immediately.

"There are other social security benefits where indexation arrangements and eligibility thresholds should be adjusted now so our social safety net is more sustainable for the long-term," he said.

"Such benefits won't be less tomorrow than they are today but the rate of increase will be slower if a comprehensive social safety net is to be preserved for everyone's future."

It is understood welfare payments will be detached from the male total average weekly earnings indexation rate and linked to CPI. Mr Abbott's speech did nothing to dispel the suggestion the Government planned a deficit levy on all middle and high-income earners from July 1 in keeping with a Commission of Audit recommendation.

He also appeared to confirm the Government would implement a $6 co-payment on bulk-billed GP services, saying more "price signals" were planned because "free" services were not free to taxpayers.

"The Budget pain will be temporary but the economic improvement will be permanent," he said.

The West Australian

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