Lambie suggests change to childcare subsidies to cut spending

Senator Jacqui Lambie suggests the government consider means testing existing subsidies, including child care and for electronic vehicles, as it looks for cuts ahead of December's budget update.

She says it should also have the "courage" to look at a new tax on gas exports as a way to raise billions of dollars in revenue.

The government will face a political battle this week to pass its gas reservation bill, which currently does not have the support of the Greens or Coalition.

Independent senator Jacqui Lambie says the government should means test several subsidies, including child care, as it looks at ways to tighten its budget.

Treasurer Jim Chalmers is facing growing pressure to rein in government expenditure ahead of December's budget update due to cost-of-living pressures including persistent inflation and a fifth interest rate hike this year.

The Tasmanian senator has suggested one possible lever for the government is to better target assistance at those who need it most.

"We've got to target better in this country," she told Insiders on Sunday.

She proposed different levels of subsidy for child care depending on income, using a couple with $500,000 income between them as an example.

"Why aren't we means testing you? Why aren't we doing what we used to do and say, you can have 10 per cent rebate. Not this much rebate," she said.

Asked whether that principle would apply to other subsidies like those on electric vehicles, Senator Lambie said, "Means test it all, why not? That's where you'll get some money from."

Senator Lambie stressed that she had not seen her constituents under such financial strain since the COVID-19 pandemic, with some turning to putting meat "down their pants and walking out" of supermarkets to feed their children.

"I don't see this financial situation turning around overnight. And I think we've got a couple of more years of it," she said, pointing to uncertainty across several issues like the war in the Middle East.

As politicians return for the final sitting fortnight of the year, the government hopes that it can pass its nationwide gas reservation scheme which it says will put downward pressure on prices.

The scheme would force liquefied natural gas exporters to keep up to 20 per cent of their product for Australia's domestic market and address consistent threats of shortfalls on the east coast.

Senator Lambie says she will support the legislation when it is debated in the Senate but has called on the government to have "enough courage" to put a 20 per cent tax on export gas.

"Start taking our resources back into our own hands, but we're actually making money off out of them," she said.

The idea is supported by members of the crossbench including the Greens and independent senator David Pocock, who state a 25 per cent tax on gas exports could raise billions of dollars in annual revenue.

The proposal has been repeatedly rejected by the government who argue it needs to protect trade relationships with Asian partners and points to the existing petroleum resources rent tax, which has upwards revisions in forecast revenue.

Shadow Minister for Defence James Paterson said the opposition was concerned about the future of gas investment in Australia as it works constructively with the government, not revealing where it has landed on the gas reservation bill.

"We do want to have more gas here for Australians to access, particularly for industry whose prices have been driven through the roof on Labor's watch," he told Sunday Agenda.

"And we want to see more gas extracted here in Australia. But the government has not done anything to make that easier."