Australia Post has emerged as a front-runner in the bidding to provide Medicare and PBS payments.

It is possible the Federal Government could make wholesale cuts to the May budget, if Australia Post was successful in a near $30 billion bid to take over Medicare and the Pharmaceutical Benefits Scheme claims and payment systems.

Australia Post CEO Ahmed Fahour says his company will join the group of big names looking to take on the huge government deal, after expressions of interest were canvassed last week.

Mr Fahoud says Australia Post is in a uniquely advantageous position, as he believes it has a level of trust, experience, and physical and digital presence to take on the multi-billion-dollar services.

He says that Australia Post already offers expanded government services including passport applications, tax file numbers, travel services, and administration of self-managed super funds.

The post offices are in the running against Australia’s big four banks, after Health Minister Peter Dutton announced the systems would be outsourced because they are “outdated and in need of a substantial upgrade”.

The medical payments are the second biggest task that the Department of Human Services performs, after welfare payments.

It is understood that the outsourcing of the system will allow the Federal Government to reduce staff numbers by thousands, bringing significant savings.

The size of the job and the need for physical shopfronts nationwide limits the bidding pool to essentially only the post office and banks.

NAB has indicated it is looking at the proposal’s merits, but the other three big banks have declined to make any comment.