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.…
