Second Reading Speech
Mr Morrison (Treasurer)I move:
That this bill be now read a second time.
This bill, that is, the Treasury Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2017, provides certainty that low-income earners will continue to receive relief from the Medicare levy through the low-income thresholds for singles, families, seniors and pensioners.
Australians place great faith in a government's range of essential services.
Our essential services give Australians the security and confidence they need to seize opportunities when they arise-to understand that the Commonwealth government has their backs when it comes to important essential services that they rely on.
In this year's budget the government is protecting the essential services that Australians rely on, especially our most vulnerable Australians. We are fully funding those services.
We are guaranteeing Medicare so that all Australians can be assured Medicare is not only here to stay, but will be strengthened into the future.
By law, as I announced on budget night, we will establish a Medicare Guarantee Fund from 1 July this year to pay for all expenses on the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme. Proceeds from the Medicare Levy will be paid into that fund.
An additional contribution from income tax revenue will also be paid into the fund to make up the difference. This will provide transparency about the costs of Medicare and a clear guarantee on how we pay for it.
We are also closing the funding gap, once and for all, for our National Disability Insurance Scheme.
The Turnbull government will fully fund the National Disability Insurance Scheme by increasing the Medicare levy by half a percentage point from 1 July 2019.
Every single cent of the additional money raised from the increase in the Medicare levy will go to fully funding the National Disability Insurance Scheme and provide all of those families, all of those Australians, all of their friends, all of their carers and all of their communities right around the country the assurance-the guarantee-that the National Disability Insurance Scheme is fully funded, once and for all.
We are facing a $55.7 billion gap in the funding of the National Disability Insurance Scheme over the medium term, and that hole needs to be filled. The increase in the levy that we are putting forward two years from now does not occur until the extra national disability insurance bills start coming in in 2019-20. The levy does not increase until the extra bills start coming in.
We all have a responsibility to do our bit when it comes to fully funding the National Disability Insurance Scheme, according to our means. If you are on a higher income, under the Turnbull government's plan you will pay more. If you are on a lower income, you will pay less.
Someone earning $80,000 a year currently pays $1,699 a year in the Medicare levy. From 1 July 2019 their contribution will increase by $400 a year-around just over a dollar a day to ensure the Commonwealth's share of the National Disability Insurance Scheme is fully funded.
Those on higher incomes will pay more. Someone who is on $250,000 a year pays $4,800 in the Medicare levy each year, and they will contribute an extra $1200 a year to secure funding of the NDIS-some three times what those on the lower income I have just mentioned would pay.
Appropriately, those on lower incomes will pay even less. A single mother on $37,000 a year pays no Medicare levy at all and a pensioner on $34,000 pays no Medicare levy. This is fair. These have been the arrangements for some time, with indexation. And the government is ensuring that this fairness remains central to the Medicare levy.
But all of us will share in the responsibility of helping our mates who are living with a disability and giving an assurance to them that this vital service in the National Disability Insurance Scheme will be there for them into the future-and not just for them but, through any great misfortune in the future, for those Australians who will be forced to live with a disability; they will have the support and certainty of that scheme as well.
So I do implore the opposition to come to the middle when it comes to supporting the government to fully fund the National Disability Insurance Scheme. There is no need to increase the Medicare levy for any other purpose than to fully fund the National Disability Insurance Scheme. We are aware that the opposition is proposing to increase the Medicare levy, but, as their shadow Treasurer and their assistant minister have confirmed, that increase in the Medicare levy is not to fund the National Disability Insurance Scheme. Not one cent of the proposed increase in the Medicare levy by the opposition is intended to support funding the National Disability Insurance Scheme. Their purposes in raising that levy are unclear. Our purpose is very clear. It has only one purpose-that is, to give families dealing with disabilities and their carers and all others-
I note the interjections coming from the opposition, which are disappointing and unfortunate, but the truth is there to see-that is, we as a government will fully fund the National Disability Insurance Scheme, because those opposite left a gaping funding hole for that service. It is one thing to promise something; it is another thing to deliver it, and that is what the Turnbull government is doing. We implore the opposition to put aside the politics, meet us in the middle, as we did when the Medicare levy was first increased to support the National Disability Insurance Scheme, and follow through. From the interjections opposite, including from the member for Lindsay, I am disappointed that they are showing a continued lack of support for this initiative.
But all of us know this is a shared responsibility, and we do implore the country, as indeed those before us, in the previous government, implored the country to support what is a fair measure. We all feel passionately about this-as indeed the member for Lindsay does, as indeed the member for Hughes does, in particular, as I mentioned in this House yesterday. But our focus must be to get the job done and that is what the government is proposing to do, and we invite the opposition to meet us in the middle.
Let me turn to the detail of this bill.
This bill amends the Medicare Levy Act 1986 and A New Tax System (Medicare Levy Surcharge-Fringe Benefits) Act 1999 to increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners, in line with increases in the consumer price index.
These changes will ensure that low-income households who did not pay the Medicare levy in the 2015-16 income year will generally continue to be exempt in the 2016-17 income year if their incomes have risen in line with, or by less than, the consumer price index.
In addition to providing a concession to low-income households, the Medicare levy low-income thresholds ensure that people who pay no personal income tax due to their eligibility for structural offsets, such as the low-income tax offset or the seniors and pensioners tax offset, do not incur the Medicare levy.
Increasing the low-income thresholds in line with the consumer price index ensures that the thresholds keep pace with growth in consumer prices.
The Medicare levy phases in at 10 cents for each dollar in excess of the relevant low-income thresholds, until it is paid in full.
The changes to the thresholds mean that no Medicare levy will be payable for individual taxpayers with income under $21,655 in 2016-17-increased from $21,335.
For single individuals with no dependents, the full Medicare levy rate would apply if their income is above $27,068-increased from $26,668.
Couples and families will not be liable to pay the Medicare levy if their combined income is less than $36,541-increased from $36,001.
Couples and families who are eligible for the seniors and pensioners tax offset will not be liable to pay the Medicare levy if their combined income is less than $47,670-increased from $46,966.
The thresholds for couples and families go up by $3,356 for each dependent child-increased from $3,306.
For example, if a couple has three children and is not eligible for the seniors and pensioners tax offset, they would not need to pay any Medicare levy if their combined income is less than $46,609.
Around an estimated one million individuals will benefit from this bill from the increase in the low-income thresholds, including individuals who receive a concession as part of a family.
The increase in the low-income thresholds means that some low-income individuals will be relieved from paying the Medicare levy. Other low-income individuals will also now pay less Medicare levy than they would if the thresholds were not increased.
In 2016-17, around 10 million individuals are estimated to pay some Medicare levy after accounting for the increase in the thresholds. This means that just over one in every two adults are contributing to Medicare and the National Disability Insurance Scheme through the Medicare levy. This is a fair and reasonable arrangement. It recognises that these levies act as a proxy insurance scheme for both Medicare and the National Disability Insurance Scheme, for which all Australians are covered.
This measure is estimated to have a cost to revenue of $180 million over the forward estimates. The increase in Medicare levy low-income thresholds will apply to the 2016-17 income year.
Existing exemptions from the Medicare levy also remain in place, including for blind pensioners and sickness allowance recipients.
Full details of the measure in this bill are contained in the explanatory memorandum. What the bill demonstrates is that the Medicare levy is already designed to ensure that vulnerable people in our community-elderly people, single parents, those with larger families, all people in those situations-are in a position to receive relief from how the Medicare levy is imposed in this country. That is why an across-the-board increase of half a per cent two years from now, to ensure the full funding of the National Disability Insurance Scheme-this is the fairest way to do it. This is the way to do it to ensure that we all make a contribution in accordance with our means. Those in this country who are very restricted in their means are provided exemptions as this bill today once again demonstrates. This is a fair way to give the guarantee on Medicare. This is a fair way to give the guarantee of fully funding the National Disability Insurance Scheme.
Australians are watching this parliament and they are hoping that the parliament will live up to this test of fairness the government has set before this parliament to ensure that the National Disability Insurance Scheme is fully funded once and for all. I sincerely hope that the parliament will respond positively to the question put to it by the government in supporting not only this measure which totally preserves the exemptions and extends those for those who are most vulnerable but the subsequent bill that will come to ensure that families living with disabilities can have the certainty and peace of mind that the National Disability Insurance Scheme is fully funded.
Debate adjourned