The push for welfare savings is at the centre of Ms Ley's first major economic speech, which she will deliver in Melbourne on Wednesday.
The opposition leader sidesteps the issue dividing her caucus, climate policy, in favour of an attack on Labor's increased government spending.
At the Committee for Economic Development of Australia, Ms Ley will say the right balance will need to be restored between what citizens provide for themselves and what taxpayers provide through a safety net.
"Unfortunately, in the past few years, the pendulum has swung too far toward dependency," she will say.
"It has become almost taboo in politics to suggest that not everyone is entitled to every government benefit."
Ms Ley argues that Labor is locking the nation into "permanent" dependency on government, sending debt soaring to $1.2 trillion and leaving future generations to foot the bill.
In its first term, Labor produced two budget surpluses before a $42 billion deficit in March this year, just prior to the election.
Fuelled by increased spending, including in health and disability services, there is no return to surplus in the forward estimates.
In Melbourne, the opposition leader will warn if government spending remains at pandemic or emergency levels during normal periods, Australia will inevitably lose its AAA credit rating.
She will say government spending this year will reach 27 per cent of gross domestic product, the highest level outside of recession since 1986 and up from 24 per cent since Labor came to office.
"We are essentially running a peacetime economy on emergency fiscal settings," she says.
"That is obviously not sustainable."
The opposition leader will say Australia must have a fair social safety net and as a "compassionate nation" those who fall on hard times and the vulnerable will always be supported.
"But true compassion is sustainable compassion," she will say.
"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."
The speech comes as Ms Ley tackles a coalition divided over climate policy as members debate whether to back the government's emissions reduction target, expected to be revealed on Thursday.
Opposition home affairs spokesman Andrew Hastie, who has confirmed his own leadership ambitions, has threatened to quit the coalition frontbench if it remains committed to net zero emissions by 2050.
The coalition is conducting a wide-ranging review into the coalition's disastrous defeat at the federal election in May, including its energy policy.
The National party is also reviewing its position on net zero, with a number of senior MPs - led by Barnaby Joyce - declaring their opposition.
Cabinet and shadow cabinet ministers are bound by solidarity and must adhere to the party line or be forced to give up their positions.
Last week, Ms Ley sacked Jacinta Nampijinpa Price from the her shadow ministry for another breach of party rules: failing to support her leadership.
8°C