"People were saying, 'I don't think this is going to affect me right now, but I don't feel comfortable about how it will affect the vulnerable. Are we setting ourselves up for a new era of inequality?'"

The report, How Australians are feeling about the economy and the future post budget, is likely to steel the resolve of Senate crossbenchers to block Coalition measures, from the deregulation of university fees to the $7 Medicare co-payment.

It is based on 12 group discussions with Australian men and women across all age groups in Sydney, Melbourne, the Gold Coast and Bendigo in the first week of this month and reveals deep confusion about how serious Australia's economic situation is, with some voters supporting the government's view that debt is out of control and others dismissing claims of a ''budget crisis'' as mere spin.

People expressed apprehension about the country's economic direction and the decline of the manufacturing industry. "Participants saw signs of economic decline all around them," the report says.

A strong sentiment that the budget "targeted the young, the older and the more vulnerable in our society" was evident, and so was "unambiguous concern" about changes to higher education funding, with voters fearing the young will be hit by higher fees, more difficulty getting a job and a tougher housing market.