CONSUMERS face a hike in the price of medicines and the loss of some bulk-billing for pathology and other diagnostic services as part of a tough May Budget.
Some small-scale climate change programs are expected to be pruned and welfare measures tightened amid reports the Government is searching for across-the-board savings of up to $20 billion, the Herald Sun reported.
Australia's frontline medical researchers also face a battle to retain current funding levels with the Budget razor gang targeting big-spending programs.
Senior government sources have told the Herald Sun the May Budget - to be delivered by Treasurer Wayne Swan - is shaping as the toughest since the Coalition slashed industry funding and the public service in 1996.
"This is bigger and nastier than anything Howard ever did," one government source said.
But the Government has stomped on suggestions that cigarettes will rise, after ex-Social Justice Commissioner Tom Calma yesterday suggested another rise in tobacco excise was being considered.
Mr Swan and other members of Cabinet's Expenditure Review Committee met in Canberra yesterday to sift through scores of savings measures. The next few months are expected to be brutal, with spending Ministers told to bring back additional savings as the Government moves to rein in spending and return the Budget to surplus.
Among a raft of options, the Government is considering an increase in the $33.30 Medicare "co-payment" - the maximum amount paid for a raft of subsidised medicines.
The co-payment savings measure will be considered by the razor gang as part of a suite of Budget measures, amid reports senior ministers are keen to extract big savings from the health portfolio.
However, lifting the co-payment will be politically sensitive and leave the Government open to criticism that it is putting further pressure on living costs.
Australia's pathology services are also being asked to tighten their belts. But many pathology practices offer bulk-billing services to build up their volumes and industry experts believe any savings could be passed on in the form of consumer fees.
While defence spending will be quarantined from major Budget cuts, the Government is expected to "pocket" a heap of money from defence programs that have been under-spent.
Mr Swan concedes the Queensland floods will cut economic growth and take a "heavy toll" on his fourth Budget, due on May 10
