Government in talks with Greens to remove debt ceiling

THE Abbott Government has less than two weeks to strike a deal with The Greens to get rid of the debt ceiling.

A deal between the Coalition and the minor party was expected to be reached this week, with Greens Leader Senator Christine Milne saying they were in talks.

Senator Milne has hit out at the debt ceiling, created by Labor in 2008, as a political construct which bears no relation to the government's actual fiscal position.

Her position has been backed by financial and economic commentators, who fear the existence of a debt ceiling in Australia may only lead to situations similar to the recent United States government shutdown.

Treasurer Joe Hockey has been trying to pass a rise in the debt ceiling from $300 billion to $500 billion in recent parliamentary sittings.

Forecasts have the government's current position likely to breach the $300 billion ceiling before the deadline for a new ceiling is reached on December 12.

While the Opposition wanted to keep the debt ceiling, but was open to lifting it to $400 billion, The Greens are happy to ditch it in return for more transparency on the government's budget.

Greens Deputy Leader Adam Bandt said on Monday the minor party has proposed a return to approving the level of government debt at each annual budget.

It is understood there is a lot of horse-trading now happening in terms of what The Greens will demand from the government in return for abolishing the ceiling.