Opposition leader Sussan Ley says welfare should be targeted “to those who truly need it”, and people should be helped “off welfare and into self-reliance”.

In her first major economic speech as leader, Ley on Wednesday will lay down some policy markers to contain spending and the size of government, with more people looking after their own needs rather than expecting government to do so.

Welfare benefits should not be paid to wealthier households, Ley says in her speech, titled “From Dependency to Empowerment: Restoring Responsibility to the Budget”. To be given to CEDA in Melbourne, it has been released ahead of delivery.

“We must move from a time of dependency to empowerment,” she says.

“By ‘dependency’, I mean the growing expectation that government will provide for every need and solve every problem by spending more.

"This mindset, supercharged in recent years, weakens both our finances and our national character.

"My message is that we must put guard rails around government spending, not as an end in itself, but so that we can strengthen our economy, preserve our capacity to help those truly in need, and ensure the next generation inherits opportunity, not debt.

"Because debt is an issue of intergenerational fairness.”

Ley says that moving to empowerment is about getting the balance right between what people do for themselves and the taxpayer-funded safety net.

“It’s about reaffirming that government can do a lot of good but it cannot and should not do everything.”

There is general agreement about the importance of a safety net, Ley says, “but true compassion is sustainable compassion.

"A welfare system that attempts to be all things to all people will eventually collapse under its own weight, and that outcome would hurt the most vulnerable most of all.

"If we want to keep the safety net strong, we have to ensure it is financially sustainable and targeted to genuine need.

"Unfortunately, in the past few years, the pendulum has swung too far toward dependency.

"It has become almost taboo in politics to suggest that not everyone is entitled to every government benefit. But I ask: is it fair to pile up debts that our children will have to pay off?”

Ley’s speech will win support from those who believe more discipline should be imposed on government spending and on the reach of government, and those who want the Coalition to differentiate itself from Labor. But her pitch is also risky, because opponents will fan fears of some people losing benefits under the Liberals.

In 2012, then shadow treasurer Joe Hockey stirred criticism with a speech on “The End of the Age of Entitlement”. Treasurer in the Abbott government, Hockey’s first budget, incorporating much of his approach, triggered a massive backlash.

Ley points to research from the Centre for Independent Studies that said more than half of adults relied on government for most of their income, and 10% of taxpayers paid two thirds of all income tax.

“The time of reflexively looking to Canberra to solve every problem with a blank cheque, must give way to a time of empowerment, personal responsibility, and fiscal commonsense.”

Ley says the Albanese govenrment has “normalised and extended the era of big government,” rather than shifting back to normalcy after the big COVID spending.

“Rather than using the recovery to pare back spending, the current government has layered on even more permanent programs and higher baseline spending. The mindset of "government will take care of everything” has been actively encouraged.

“If we keep spending at pandemic-emergency levels during ordinary years, we will inevitably lose our AAA credit rating.”

Ley says this year government spending will reach 27% of GDP. This is the highest (outside recession) since 1986, and up from 24% since the government came in.

“We are essentially running a peacetime economy on emergency fiscal settings. That is obviously not sustainable.”

The first step in moving to “empowerment” and responsible budget management must be to re-establish “some fundamental principkle in our public discourse,” Ley says.

“Principles that used to be broadly accepted across politics, but which have been allowed to erode.” The default position should be balancing the budget over the economic cycle, with surpluses in prosperous times to pay down debt. Spending growth had to be restrained, and over-reliance on volatile revenue booms had to be avoided.

Policies were needed to incentivise people.

“This means winding back disincentives to work and save.

"It means targeting welfare to those who truly need it, while encouraging those who are able to work or study to do so.

"Our goal should be to help people off welfare and into self-reliance , not to add more people onto government support unnecessarily.

"As a government , we cannot, and should not, shield everyone from every cost of living pressure by writing a cheque.

"Ultimately, the best form if welfare is a job and a thriving private economy.

"Universal free everything might sound nice, but in reality it drains resources from those who need help most.

"We believe government support should be a safety net, not a blanket.

"That means, for example, we should not be paying welfare benefits to high-income households.”

The Liberals would be “unrelenting” in pursuing efficiencies, and eliminating duplicative or low-value programs.

“We are at a crossroads. Down one path is a continuation of the status quo. Bigger government, higher spending, higher debts and eventually higher taxes to pay for it, and a people increasingly reliant on Canberra’s largesse.

"Down the other path is a course correction restoring sustainability and unleashing the power of our people and businesses to drive progress.

"The first path may feel comfortable for a time, until it hits the wall of economic reality. The second path may require some hard work and adjustment now, but it will lead to far greater rewards in the future.”