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Health insurance provider Medibank Private could help plug deficit

30 September 2011 - 5:24pm

The sale of health insurance provider Medibank Private could offer the federal government a helping hand as it seeks to return Australia to a budget surplus.

Treasurer Wayne Swan announced this morning that the public finances were running a $47.7 billion cash deficit.

He blamed the global financial crisis (GFC), natural disasters such as the Queensland floods and the historically strong dollar, which have made Australian exports less competitive.

The GFC, Mr Swan said, had shaved $130 billion off government revenues, as economic activity slowed and the tax influx contracted.

Mr Swan asserted: "Despite this, Australia's budget position remains one of the strongest in the world, in large part due to the decisive actions taken to avoid recession and the strict fiscal discipline delivered by the government," he said in his final budget statement.

"As a result Australia is expected to return to surplus well ahead of its peers and has a net debt level less than a tenth of the level across major advanced economies."

One option for the federal government is the proposed sale of Medibank, which is Australia's largest health insurance fund.

It is understood that a sale would raise in the region of $4.5 billion. Opposition MPs and some independents have backed the move, both as a means of cutting the budget deficit and to drive innovation.