Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 and Related Bills


25 OCTOBER 2017

By leave—I move amendments (1) to (4), as circulated in the name of the member for McMahon, together:


(1) Schedule 1, page 3 (after line 7), after item 2, insert:

2A After section 7


8 Levy in cases of incomes not exceeding $87,000 (other than small incomes)

Where the taxable income of a person:

(a) is not income of an amount mentioned in subsection 7(1) or (2); and

(b) does not exceed $87,000;

the rate of levy payable by that person upon that taxable income (but for sections 8 and 9) is 2%.

(2) Schedule 1, item 3, page 3 (lines 9 to 10), omit "2.5", substitute "x".

(3) Schedule 1, item 3, page 3 (lines 9 to 10), omit "0.075", substitute "y".

(4) Schedule 1, page 3 (after line 10), after item 3, insert:

3A At the end of subsection 8(2)



x means:

(a) if the family income threshold does not exceed $87,000—2; and

(b) otherwise—2.5.

y means:

(a) if the family income threshold does not exceed $87,000—0.08; and

(b) otherwise—0.075.

The NDIS was fully funded by Labor. Those who doubt this need only look to the DisabilityCare Australia document in the 2013-14 budget, page 4, which sets out the impact of private health insurance reforms, changes to tobacco excise and changes to import processing fees, among others. The question before the House is whether or not the exercise of budget repair should be done by slugging low- and middle-income earners or by reinstating the budget repair levy. As the Leader of the Opposition noted in the budget reply, Labor won't be supporting an increase in the Medicare levy for those with taxable incomes below $87,000. But, by reinstating the budget repair levy, our position leaves the budget more than $4 billion better off over the medium term.

The Treasurer asks: why is more revenue required? Anyone who did their tax return early will know the answer to that because they would have seen on their tax receipt that gross debt has now crashed through the half-trillion-dollar mark. The question is whether we tackle the challenge of debt in Australia by slugging the middle or by raising taxes on the top. The Treasurer said in July that inequality has 'actually gotten better'. But as the late professor-turned-politician Daniel Patrick Moynihan said, 'You are entitled to your own opinion, but you are not entitled to your own facts.'

Let's just run through a few facts on inequality. Since 1975, real wages have grown 72 per cent for the top 10th and 23 per cent for the bottom 10th, meaning that the top 10th of earners earned twice as much as the bottom 10th in 1975 and nearly three times as much in 2014. The labour income share in the economy has fallen from 75 per cent in 1975 to 60 per cent today. The Treasurer said his preferred measure of inequality is the Gini coefficient. According to the Australian National University's Peter Whiteford, the Gini in 1981-82 was 0.27 and by 2013-14 was either 0.30 or 0.33. My own work on pre-tax male Gini coefficients again suggests a significant rise from 1942 to 2010. The top one per cent share of national income has almost doubled since 1980. The top 10 per cent income share has increased by a quarter. Wealth inequality has risen significantly over the course of the last generation. There has been an unambiguous rise in Australian inequality. As Roger Wilkins of the Melbourne Institute summed it up to me recently, 'Inequality is currently high by modern Australian historical standards.'

We see now from the coalition a plan to increase taxes so that a worker on $55,000 would pay $275 extra a year in tax while somebody on $80,000 would face an extra $400 in tax—effectively, a tax rise that would wipe out the benefit of last year's sandwich-and-milkshake tax cut for a worker earning $85,000 a year. Parliamentary Budget Office analysis shows that the average tax rate for individuals in every quintile will increase from 2017-18 to 2020-21, but the largest increase in average tax rates is for people in the middle income quintile under the changes proposed by this government. The Parliamentary Budget Office specifically states:

… average tax rates are projected to increase due to policy changes, most notably the policy decision to increase the Medicare levy from 2019/20.

This statement clearly disproves the Treasurer's claim that he is reducing taxes.

At a time when we have earnings inequality up, when the labour's share is the lowest in a generation, when income inequality by the Gini coefficient has risen and when wealth inequality is up, we have a government that wants to increase average taxes for those in the middle income quintile by 3.2 percentage points, significantly higher than the two-percentage-point increase for people in the top quintile. That would increase average tax rates on middle-income earners to 20-plus-year highs, according to the Parliamentary Budget Office. Labor's plan raises more for the budget over the medium term—an excess of $4 billion more. Most importantly, it tackles the challenge of rising inequality. It just isn't fair, with inequality as high as it's been in three-quarters of a century, to be slugging the middle and letting the top off scot free.

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.