Australia plans £70bn assets sale
Published 13/02/2014 | 03:12
Australia plans to raise up to £70.5 billion by selling state assets as the government tries to bridge a gaping budget deficit.
The announcement came after the International Monetary Fund highlighted the challenge Australia faces to return its budget to surplus in the aftermath of the global financial crisis. The task has been made harder by tax revenue falling short of expectations as a mining boom cooled.
Australia's budget is heading for a £25.3 billion deficit in the current fiscal year that ends on June 30. Gross debt will peak at 667 billion Australian dollars (£358bn), according to the latest government projections.
Finance minister Mathias Cormann was not specific on what assets were being considered for sale, aside from his government's plan to sell health insurer Medibank Private, which is estimated to be worth up to £2.1 billion.
Treasurer Joe Hockey, who chairs a meeting of the G20 finance ministers in Sydney this month, is expected to reveal more of his privatisation plans when he delivers his conservative coalition government's first annual budget to parliament on May 13. He is developing the asset sale plans in conjunction with state governments.
The conservative coalition took office after winning elections last September after five years in opposition.
"There is opportunity for both the federal government and state and territory governments to recycle capital by selling infrastructure which appropriately can be sold and then reinvest the capital," Mr Cormann told Australian Broadcasting Corporation radio. He said assets sales would boost economic growth and create jobs.
Mr Cormann said 130 billion dollars (£70bn) "is the potential" amount of money that could be raised.
The IMF warned the Australian government that it would have to make "sizeable cuts" in projected spending if it was to return the budget to an enduring surplus.
"We are very conscious of the challenge in front of us. The treasurer and I are very focused on turning the situation around that we've inherited," Mr Cormann said.