Prime Minister Julia Gillard announced plans today to increase the Medicare levy by 0.5% in order to fund the new National Disability Insurance Scheme.
The tax, which brings the Medicare levy to 2%, is expected to generate an additional $3.2 billion in revenue per year. All revenue raised by the levy will be placed in a special fund created specifically for purpose of paying for the national disability insurance scheme. One quarter of the amount raised by the levy will be provided to the states to assist them with funding the NDIS. Legislation to create the levy and the new fund will likely not be introduced until after the next election.
Ms Gillard had previously ruled out a levy to fund the NDIS, but says she was swayed by three factors.
“First it is clear from what I said to the nation on Monday that amount of tax money coming to the government is not what we expected,” she said.
“Second … it has become clearer to me the dimensions of the fiscal ask we are putting on the states and territories and that we will be able to see the national rollout of DisabilityCare occur more easily if there is some more support for the states and territories to get it done.
“And third, I have heard loud and clear the calls from disability advocates, from the disability sector, from people with disabilities themselves, from their family members, their friends and carers, to make sure there is peace of mind and security around funding arrangements for DisabilityCare.”
However, the proposed levy will only generate half the money required to fully fund the NDIS. Opposition leader Tony Abbot was critical of that fact, as well as Ms Gillard’s decision not to take the proposal to the current parliament.
“The other thing that disappoints me and I’m sure will disappoint people who want the most vulnerable in our community to get better services, is that the Prime Minister is not proposing to legislate the scheme,” Mr Abbott said.
“Now, if she’s fair dinkum, why not do it in this Parliament? We’ve got a month of Parliament left after Budget week, why not get the legislation into the Parliament, deal with it in this Parliament, so then we can get on with the job of building the kind of national disability insurance scheme that all Australians would like to see?”
What will the new levy cost you?
The cost of a 0.5% increase to the NDIS depending on your income:
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Disability advocate and NDIS supporter Stella Young outlined a number of reasons she believes we should pay the extra levy in her opinion piece yesterday.
What are your thoughts?