A CRACKDOWN on federal government waste and unfair tax breaks is needed to help fund vital social and economic reforms without derailing the promised budget surplus, a new analysis says.

The Australian Council of Social Service has called for the abolition of some tax breaks for older Australians, which it says are based on age rather than ability to pay and discriminate against younger people. As well, it has called for reform of private trusts to stem their use for tax avoidance, a practice it says costs the budget $1 billion a year.

Australians were not overtaxed but taxed unfairly and inefficiently.

In its submission to the 2012 budget process released yesterday, the welfare lobby group says its proposed measures would help resolve the tension between the government's commitment to restore the budget to surplus from 2012-13 and the urgency of unmet social needs.

''The solution to the tension between resources and need is not to retreat from reform but to pursue it more comprehensively with a sustained attack on wasteful expenditure and tax breaks,'' says the acting chief executive of ACOSS, Tessa Boyd-Caine.