At the same time however, Commonwealth spending, which currently exceeds income, will be dramatically wound back mainly through tightening welfare expenditure. "They should work for as long as they can": Joe Hockey. Credit:AFR That will take outlays from a current rate of 25.9 per cent of GDP - or $409 billion out of a total nominal GDP of $1,577 billion in 2013-14 - to just above 24 per cent in 2023-24. The analysis points to a steepening set of annual spending cuts beginning slowly in order to protect jobs and confidence, but steadily ratcheting up to be $47 billion, $56 billion and $64 billion respectively in the three final years to 2023-24. Cumulatively, the savings come to a total of $310 billion - albeit measured in future dollars.

Mr Hockey will table his first budget on May 13. In a series of media interviews on Thursday, he declined to go into specifics but continued to hint strongly that many of the savings will be made in a raft of social security programs, from the pension, to aged care, and the burgeoning cost of the Pharmaceutical Benefits Scheme. With the government ruling out any change to force retirees to sell the family home in order to qualify for the pension, a lower wealth threshold remains one option for reducing costs. Illustration: Ron Tandberg.

Access to the seniors health card is another area being discussed which could see the imposition of a new eligibility limit on superannuation income where currently there is none. Outlining the scale of the fiscal challenge, Mr Hockey said retirement income support needed to be addressed to cut costs and to ensure people worked for as long as they reasonably could. “We should celebrate the fact that effectively one in every three children born today are going to live to 100,” he told ABC radio. “We should also not see someone's life ending when they turn 65 or 70. “They should work for as long as they can.”

But he said, there was an "inevitability that at some point we have to increase the age pension age". The previous Labor government began the process of incrementally shifting the pension eligibility age upwards from its current threshold of 65 years, to age 67 in 2023, for an expected saving of $6 billion a year. The government had promised to make no change to the pension this term, but appears set to take changes to the pension's parameters to the next election, giving voters the chance to cast judgment. Similarly, there could also be changes proposed to rules governing superannuation affecting the so-called preservation age - the point at which members can retire to access their accounts - and the concessional tax rate, which dramatically advantages the wealthiest income earners. Other cuts, however, are likely to come before the next election with a medical GP co-payment slated as "in the mix".

“The fact is that Medicare is growing at twice the speed of the economy,” Mr Hockey said. “We all have to make contributions because nothing is for free. Nothing can remain for free.” He cited the example of his affluent North Sydney electorate, which has one of the highest rates of bulk billing in the country. Loading The government's Commission of Audit report - which contains 86 savings recommendations - will be released next Thursday. Follow us on Twitter