The Turnbull government has abandoned a plan to increase the Medicare levy by 0.5 percent to pay for the National Disability Insurance Scheme, saying improvements in the Australian economy mean the measure is no longer necessary.
The increase in the levy – which is paid by most Australian taxpayers – was designed to raise $8 billion over the first four years.
It was among the government’s signature policies in the 2017 Budget, with treasurer Scott Morrison saying the increase was required to guarantee the NDIS was fully funded and sustainable into the future.
But with the 2018 Budget around the corner, Mr Morrison said the increase – which never passed the parliament, thanks to Labor’s opposition – would be dropped.
“The win is today is families and people suffering with disabilities,” the treasurer told Channel Seven on Thursday morning.
“They are fully funded for the NDIS. We don’t have to do that any longer by increasing the Medicare levy so that’s a win for taxpayers, and it’s a win for the Budget as well because we remain absolutely on track to bring that Budget back into balance.”
Mr Morrison said a “stronger economy” had delivered stronger revenue flows from existing taxes.
Chris Richardson, from Deloitte Access Economics, said global and local economies were “raining revenue”.
Some in the disability sector have voiced ongoing concern over exactly how the NDIS will be funded. There will likely be updates in the upcoming 2018 Budget, released on May 8.
"The government must spell out how the NDIS will be funded and reiterate its guarantee to the disability community that it will be funded and fully funded," Dr Ken Baker, CEO of National Disability Services, said.
“The government must go as far as they possibly can to removing any uncertainty about the security of this funding for this very important reform."
Labor drops its own hike for high-income earners
Labor opposed the increase in the levy, although agreed to support it if it only applied to those earning more than $87,000.
Labor’s shadow treasurer Chris Bowen said Labor would now scrap its plan to increase the levy for those earning more than $87,000, and said the government's backflip proved the opposition was right to oppose the measure.
"They've now dropped the entire policy so obviously the effort to compromise is now null and void as well," Mr Bowen told reporters in Sydney.
“If we’d voted for this it would have been the law of the land,” he told ABC Radio earlier in the day.
In his own speech later today, Mr Morrison will blame Labor for leaving a $57 billion gap in NDIS funding when it left office.
Mr Morrison's speech points to tax receipts up until February running $4.8 billion higher than estimated in December, thanks to company profits, a temporary commodities boost and a jobs boom.
"This decision will withdraw the Medicare levy increase and associated revenue from the forward estimates and ensure that all Australians who pay the Medicare levy will now not have to pay more," his speech states.
Mr Morrison said the government had banked on the generosity of Australian to help fund the NDIS when it put forward the proposal.
"We did not put forward this proposal in last year's budget lightly, as we knew it would cost Australians more, but we had faith in the big-heartedness of Australians. It was about helping your mates," he will say.
Share
