Second Reading Speechby the Minister Assisting the Treasurer, the Hon. Eric Robinson, M.P.
This Bill, together with another that I shall introduce shortly, seeks Parliament's agreement to some changes in the health insurance levy arrangements that were approved earlier this year.
The essential features of the arrangements are being retained but some desirable reforms are proposed.
There is to be a limit - or as it has come to be called, a ceiling - on the amount of levy payable.
This will replace the earlier arrangement under which people had to pay a premium to Medibank if they wished to set a limit on their contributions towards standard Medibank benefits.
The Bill will also provide an authority to make regulations to confer exemptions from the levy.
This authority will be exercised to exempt pensioners who are entitled to pensioner health benefits.
Such people will thus be given an exemption comparable to that provided for repatriation beneficiaries and members of the Defence Forces.
It is also proposed by the Bill to remove the requirement under the earlier arrangements for private insurance funds to give their contributors end-of-year certificates for lodgment with income tax returns.
As Honourable Members know, the levy is to be imposed at a basic rate of 2.5 per cent of taxable income.
For this year - 1976-77 - the levy will apply only for the last 9 months of the year, so that the effective rate will be 1.875 per cent instead of 2.5 per cent.
It follows that the maximum amounts of levy payable will be reduced by 1/4 for 1976-77.
We have set the maximum amount - the ceiling - on a full year basis at $300 for a taxpayer with dependants and $150 for a person who has no dependants.
These amounts will be reduced for 1976-77 to $225 and $112.50 respectively.
Under the original arrangements, anyone who wished to pay no more than this towards standard Medibank benefits had to pay a premium to Medibank.
If the premium was paid the person was exempt from the levy.
On re-examination, this arrangement was found not to be the best available.
For example, under it people had to commit themselves at the beginning of a year, and before they knew what their income for the year would be, whether to pay the premium or stay subject to the levy.
By providing a ceiling on the levy itself, the amount of anyone's levy liability is fixed by what his or her income for the year turns out to be.
Where a husband and wife are both taxpayers, it is proposed that their individual levy liabilities are not, in total, to exceed the family ceiling of $300.
The husband will be assessed to levy on the basis of his own taxable income, but subject to the ceiling of $300.
The levy on the wife's separate taxable income will be reduced, or eliminated, so far as necessary to ensure that her liability does not take the total liability of the couple above $300.
The levy ceilings will be appropriately reduced for Defence personnel and repatriation beneficiaries who have dependants who are not entitled under defence or repatriation arrangements to free medical treatment.
Thus - to conclude my introductory references to the ceiling arrangements - a serviceman with a family will pay no more levy than $150.
In introducing the levy we have been anxious to protect the position of low income earners.
We have freed from levy - or have given a reduction in levy - to people whose taxable incomes are below the points where, ordinarily, income tax becomes payable.
For example, people whose only income is the age pension are not called on to pay levy.
As already indicated, however, levy relief for pensioners is to go further than that.
Pensioners who have an entitlement to pensioner health benefits will, like people covered by repatriation and defence force arrangements, be freed from the levy.
Age pensioners entitled to pensioner fringe benefits, as well as repatriation beneficiaries and service personnel, will thus continue to receive the special consideration that has long been extended to them in the field of health care.
In deciding to dispense with the requirement that private insurance funds issue levy relief certificates we accepted their point about the cost burden that this would put on some funds and, indirectly, their contributors.
People who have opted for private insurance will instead make a claim to that effect on their annual tax returns.
The private funds will be expected to provide the Taxation Office with information to check such claims, and the bills make that quite clear.
There will be sanctions against people who falsely claim to be privately insured.
Other parts of this Bill will result in de facto spouses being treated in the same way for levy purposes as legally married spouses.
This is, of course, the case for certain income tax purposes.
These are the main features of the Bills, the ceiling arrangements being dealt with in the Bill I am about to introduce and the other matters being the subject of this Bill.
The Bill also makes changes of a more technical kind, which I do not think I need discuss in this introductory speech.
A memorandum explaining the Bill in detail is being circulated to Honourable Members.
I commend the Bill to the House.