Carol Brown (Tasmania, Australian Labor Party) Share this | Hansard source

The incorporated speech read as follows—

I rise to speak on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008 the bill tasked with the responsibility of increasing the Medicare surcharge levy threshold from $50,000 to $100,000 for singles and  from $100,000 to $150,000 for families.

It is important to correct the record on this issue and to respond to claims made by Senator Barnett, last week in his contribution to this debate

Senator Barnett seems to have suffered from a convenient lapse of memory.

He admirably claims to have taken up the cause on behalf the Tasmanian people, whose interests he represents, using his speech to point the finger at both the state and federal Labor Government’s for not doing enough to improve the public health system in Tasmania.

I agree with Senator Barnett that the health system in Tasmania is in need of attention – but need I remind him of how it got in such a dire state?

Of course what Senator Barnett failed to say in his contribution, was that, he was happy to stand back and watch as the Howard Government effectively short changed Tasmanian public hospital system by $70 million every year.

That’s right - how things can change in 9 months Senator Barnett! 9 months ago you were happy to stand back and let your government short change the Tasmanian health system to the tune of $70 million – and now you claim that the state and Federal Labor Government are to blame—Shame on you!

Truth be told, both the Federal and State Labor Governments have acted in the last 10 months since the Federal Labor Government has been in power.

The Federal Government has provided the Tasmanian Government with an extra $50 million in this year’s May Budget to improve health services in the state, and $8.1 million in additional funding to cut elective surgery waiting lists.

Further Senator Barnett’s claims, that the Tasmanian Health Minister, Lara Giddings

“…. refused to even acknowledge an invitation to appear before the Senate Standing Committee on Economic inquiry into the Medicare levy threshold.”

are completely false and misleading. It is my understanding that Minister Giddings, was never invited to make a submission or appear before the committee and Senator Barnett knows this!

When his colleague Senator Bushby was paddling this tall tale—Minister Giddings put out a statement refuting Senator Busby’s claims stating, I quote:

“I have never seen a letter inviting me to make any such submission, and I have never seen an invitation to any hearing on this issue”

In fact the letter Senator Bushby sent to Minister Giddings makes no reference at all to a meeting.  No reference at all!

Senator Barnett also knows full well the impact Minister Giddings believes the Medicare Levy Surcharge Threshold will have on Tasmanians.

In a statement she put out in response to Senator David Bushby’s, Minister Giddings said:

“Compared with major factors such as growing chronic disease and the ageing population, the changes to the income threshold for the Medicare levy surcharge are not material.”

“The Opposition has been stretching the truth on this issue for a while but Senator Bushby’s latest effort is pure fiction”

I also feel it necessary to respond to Senator Barnett’s ridiculous swipe at the Member for Bass Jodie Campbell.

Since elected the member for Bass has been working extremely hard for the people of Bass, delivering a number of big ticket election commitments including $ 15 million for an integrated care centre at the Launceston General Hospital.

It is time for Senator Barnett stopped playing this political charade and worked a little more constructively for the people of Tasmania.

The Medicare levy surcharge imposes a one per cent increase in Medicare levy liability on certain individuals who do not have private patient hospital cover.  For the 2008-09 income year individuals with taxable income over $50,000 and couples with a combined income of over $100,000 may be liable for the surcharge.

This increase was one of a range of measures announced as part of the Government’s economically responsible budget, aimed squarely at helping to reduce the cost of living pressures faced by average income earners in Australia.

Indeed initiatives such as those contained in this bill reflect an acknowledgement by the Government that many Australian workers and their families are under financial strain, and the Government, where it can, should be trying to ease that strain.

It is expected that the passage of this bill alone could potentially result in savings of up to $1,000 for individuals and $1,500 for families.

In effect it will free up an additional 400,000 Australian taxpayers from the burden of liability for the surcharge in the forthcoming financial year.

While the aim of this measure was and remains relatively simple, it seems to have been somewhat buried under the weight of the debate which has arisen since it was first announced by the Treasurer in May.

The aim of this measure was quite simply to provide average income earners in Australia with some long overdue relief by returning the threshold levels to the approximate position of where it was intended when it was first introduced in 1997.

However, what appeared to have been a relatively straight forward proposition, has been severely compromised by the Opposition—who have made it their job to partake in a number of acts of budget vandalism, by  blocking the passage of this, and several other key budget measures.

By initially blocking this bill and continuing to steadfastly refuse to support it, those opposite, have and continue to deny thousands of Australians of the obvious financial relief that will result from its passage.

Indeed the Prime Minister, speaking in Tasmania recently, noted that the proposed changes contained in this bill could result in a potential saving of more than $1,000 a year for a working family of a couple with incomes of 60,000 respectively.

That $1,000 extra to put toward the mortgage, and children’s education.

However sadly, in the same week as the reserve bank delivered an interest rate cut, the equivalent of which is estimated at saving $600 a year for a person with an average mortgage- those opposite have threatened to all but cancel this out by not supporting the potential more than $1,000 tax relief measures contained in this bill.

The actions of those opposite amount to nothing more than opposition for opposition sake—all at the expense of the Australian people.

Thousands of average income Australian families, when the measures were first announced by the Treasurer in May inadvertently assumed that their passage would be a given—that they would no longer have to pay the levy—only to find out that the measure had not yet passed.

Now those same families are looking down the barrel of another period of uncertainty—as those opposite, who blocked the measure when it was first introduced, continue to refuse to support its passage.

When combined with the financial implications stemming from the other budget measures, they are refusing to support, the opposition threatens not only to deny Australians the benefit of budget measures, such as those contained in this bill, but also the flow on benefits that come with a strong budget surplus.

They refuse to support this measure, which will put more money in the pockets of thousands of Australian families.

They refuse to support the Government’s proposed Fuel Watch scheme—which will give the same families a healthy degree of informed choice when it comes to how much they pay at the bowser.

One would be forgiven for thinking that those opposite don’t believe Australian families deserve a break when it comes to managing the family budget.

One would be forgiven for believing that those opposite are in fact pursuing an agenda, which has their interests first and the interests of Australian workers and their families last.

Those opposite are simply desperate to cling to some degree of power and are playing politics by refusing to support several of the Government’s key budget measures.

Now, one would also be forgiven for dismissing such tactics as harmless—if it wasn’t for the fact that the interests of thousands of Australians were on the line.

Indeed, the political games being played by those opposite can only mean more pain for working families.

On the other hand, the measures contained in this bill promise to provide some real and welcome relief to average income earners in Australia.

Indeed, when combined with the numerous other measures contained in this year’s budget, aimed at helping Australian families, such as:

• the $46.7 billion in tax cuts for low to middle income earners;
• the introduction of the education tax refund; and,
• the lifting of the childcare tax rebate from 30% to 50%.

This bill reflects a genuine commitment by this Government to do the right thing by Australian’s and provide them relief.

Indeed, the figures show that this measure is long overdue.

The Standing Committee on Economics handed down its report on the bill on the 27th August.

The Committee recommended that the bill be passed noting that the “overriding consideration is the danger of forcing an ever large number of low-income people to pay the Medicare Levy Surcharge (MLS) or to buy low value fund policies for which they have little use.”

Indeed, the report notes the key argument put forward by the Treasurer in support of this bill has been the MLS threshold levels have not been changed in a decade since its introduction and therefore it should be increased to restore the proportion of the population who are liable, for the surcharge, to 1997 levels.

In fact, this is the key objective of the measures contained in this bill—to restore the application of the MLS to the levels which it was first intended.

That is, to do what the previous Government failed to do- and increase the surcharge threshold.

In their dissenting report, those opposite have engaged in scaremongering to justify their opposition to the bill.

In their report those opposite accuse the Government of:

“…not properly thought through the flow-on implications of this measure.”

And continue by making the outlandish suggestion that:

“If this measure passes, there is a clear and imminent danger that the gains made over the past decade in securing a better balance in the Australian health system could be wiped away.”

Such accusations seem some what hypocritical considering the authors of the dissenting report where directly responsible for continuously under funding the Australian health system.

Senator Colbeck during his contribution warns of the eminent impact that this measure could have on the take up of private health insurance and public hospital waiting lists.

While such concerns are welcome, the simple truth is that Senator Colbeck and the authors of the dissenting report appear to be clutching at straws, in their desperate bid to justify their opposition to this bill, and the savings it will result in for Australian families.

In was reported in the Age, late last month that Private Hospital Operator Ramsay, said that changes to the Medicare levy would not—as it has been suggested by those opposite—“.. bring the industry to its knees” and the fundamentals for the provision of private health insurance given factors such as our ageing population, remain strong.

Their concerns relating to elective surgery waiting lists also appear to be largely unwarranted given the Government has committed to investing an additional $600 million—over four years—to dramatically reduce waiting times for elective surgery in Australia’s public hospitals.

The truth be told, this is just one of a raft of other budget measures being used to commit budget vandalism by those opposite.

When it was first introduced by the previous Government in 1997, the current Medicare levy surcharge was, according to the then Minister for Health, Dr Wooldridge, aimed at

“high income earners… the people who could afford to pay for private health insurance”

However, under the Howard Government’s neglectful, watch, the levy income threshold has remained static for over 10 years, while the average weekly earnings have increased by nearly 50%.

The previous Government’s refusal to increase the levy threshold meant that an increasing number of average-earning Australians were being slugged with the tax despite the fact that it was intended for ‘high income earners’.

Illustrative of this, in 1997 only 8% of tax payers incurred the surcharge, by the 2008-09 budget cycle this had blown out too with about 36% of single taxpayers being forced to pay the surcharge. If this measure is not passed it is estimated that this figure will jump up to 45% of single taxpayers by 2011-12.

Despite what those opposite might say—there is no good justification for why average earning Australian families should be forced to pay the surcharge.

The situation that was allowed to occur under the former Government was the exact opposite of what was intended.

There is no escaping this reality and those opposite should feel uncomfortable, you should be looking elsewhere and hanging your heads in shame—because you allowed this to continue.

In his Budget in reply address, Dr Nelson railed against what he labelled as tax bracket creep.

He said, and I quote Mr President:

“We know that, as incomes rise over time, and workers move into higher tax brackets, the value of income tax cuts will be eroded in the future. Economists call this “bracket creep”. We call it tax increases on the sly”.

However what the honourable Leader of the Opposition has ignored is that more and more people on average wages have been required to pay this tax, the Medicare levy surcharge.

So such claims are hypocritical when applied in retrospect, considering that the now Opposition did nothing—I repeat nothing—for 10 years—and in doing so effectively imposed “tax increases on the sly” on average working families in Australia by simply not increasing the Medicare surcharge threshold.

The former Government was a Government of inaction and their refusal to increase the Medicare levy threshold was effectively a tax, by inaction.

As I mentioned previously, it is estimated that the measures contained in this bill, could potentially result in $1,000 savings for individuals and $1,500 savings for families—which I am sure will come as a welcome relief for working families, but which are, as I said, long overdue.

The measures contained in this bill will increase the threshold for the Medicare levy surcharge from $50,000 for individuals to $100,000, and from $100,000 to $150,000 for families.

This has the real potential to provide genuine tax relief for ordinary working Australians, and—most importantly—this measure would return the thresholds to an income level around which they originally applied in 1997.

The proposed increase to the threshold contained in the bill will, if passed, bring the figure back to around 8%—where it was intended.

This increase will have the effect of freeing an additional 400,000 individual taxpayers from the liability of the surcharge in the forthcoming financial year.

The increase also has another important factor attached—which is to re-introduce the concept of choice into the health system when it comes to private health insurance.

While the Labor Government has and continues to support the private health system, for far too long the Australian people where held at ransom by the former Howard Government, to purchase private health insurance,  because of their failure to lift the Medicare levy threshold.

When combined with the former Howard Government’s persistent under funding of the public health system, this had the effect of creating a “user pays” system, where there was no choice and where quality universal health care was no longer easily available to all Australians.

The reality of the Howard Government’s under funding of the public health system is no where better reflected than in my home state of Tasmania, where the impact of chronic under funding continues to plague our public health system.

According to the Health Expenditure Report, produced last year by the Australian Institute of Health and Welfare, the former Government’s share of the public hospital bill decreased by more than 5% in the four years to June 2006.

This effectively meant the Howard Government were short changing the Tasmanian public hospital system by $70 million each year.

That’s $70 million less to spend on extra nurses, beds and on cutting waiting lists.

That’s $70 million less to spend on saving Tasmanian lives.

Labor has long advocated for the provision of quality health care and services for all Australians—regardless of their income.

The increase to the Medicare levy threshold is line with such a concept. It protects average income earners from being placed in the conundrum of being slugged with the levy—it gives them the freedom, and most importantly, it gives them choice.

However, lets make it clear—this bill is about providing average earning Australians with long overdue financial relief—and not, regardless of what those opposite might suggest—to remove the incentive for private health insurance. 

The provision of private health insurance provides Australians with a valuable choice when it comes to health care. It allows individuals to elect to invest privately in their, as well as their families, future, long term health needs—whatever they may be.

Regardless, the Government believes that access to quality health services, should be available to all Australians—whether they can afford to invest in private health cover or not.

This is why, the Rudd Government elected to use its first ever budget to deliver a $3.2 Billion Health and Hospitals Reform Plan aimed at building a  stronger public health system for all Australians.

The $3.2 Billion National Health and Hospitals Plan will ensure Australian families have access to affordable health care by working with the States and Territory Governments for the first time in 12 years.

This significant long-term commitment to health includes:

• $600 million to help reduce elective surgery waiting lists;
• $290 million to help state and territory Governments reduce public dental waiting lists;
• $275 million to establish 31 GP Super Clinics around the country. Which will improve access to health services and improve chronic disease management.

In addition, the Government established the Health and Hospitals Fund, with an initial allocation of $10 billion, to cater for the long term funding for hospitals, medical technology and major research facilities and projects.

Needless to say the Rudd Government, after inheriting a chronically under funded public health system, has made revitalising the public health system a national priority.

And as I pointed out earlier, Labor has also made easing the financial burden on low to middle income earners in Australia, a national priority.

For far too long the former Government neglected the needs of average, hard working Australians. As this long overdue increase to the Medicare levy threshold proves, the former Government simply turned a blind eye to the impact such things were having on average earners in Australia. 

Eleven years in power and the Howard Government and those opposite, effectively removed itself from the reality of the financial struggles faced by Australians.

It not only neglected to re-assess the real impact of measures such as the Medicare threshold on the family budget, it also ignored the real impact of other pressures such as rising interest rates and petrol prices.

We are now dealing with the stark reality of these years of neglect now.

This neglect by the former Government meant that when the Rudd Government took office it inherited an economy crippled by inflation, which was running at its highest level in 16 years and with interest rates at the second highest amongst advanced economies.

You would have been forgiven for thinking that after last year’s election, that those opposite would have learnt to pay attention to the needs of all Australians a little more carefully.

However, indications that they intend to vote against this important piece of legislation suggests otherwise.

It suggests that those opposite would still rather play party politics, than act in the best interests of the Australian people.

I thought that we had seen the end of such cheap political tactics, but it appears, even under the new leadership of Dr Nelson—this kind of game playing is set to continue.

It is time for Dr Nelson to show some real leadership and stop trying to score cheap political points by opposing measures such as these.

Australians deserve more from the opposition. They deserve to be granted the relief of measures such as these, after ten years of inaction, by Dr Nelson and his senate colleagues.

Australians deserve not to be used as a political basketball—to be thrown around, just to score political points for those opposite. Families at home know, as I do, there is simply too much at stake.

The Rudd Government is committed to providing quality health care in this country. The Rudd Government has no intention of turning a blind eye to the reality of the financial pressures faced by Australian families.

As I mentioned earlier, the measures contained in this bill, have the potential to free an additional 400,000 individual tax payers from the burden of paying the Medicare levy.

It also has the potential to result in up to $1,000 saving for individuals and $1,500 saving for families—which will also go a long way to helping get the family bills under control.

The Medicare levy was, when it was introduced by the former Howard Government in 1997, intended to apply to “high income earners” or roughly only 8% of single taxpayers.

This measure, introduced by Labor will see the levy once again apply to the 8% of taxpayers—the high income earners, for whom it was intended.

This means bringing to an end, some of the unnecessary financial pressure placed on average middle income earners, by the former Government.

I support this and any other such measures which move to reduce the pressure on working Australians and at the same time gives them a degree of choice when it comes to access to health care.

I concur with the key recommendation of the Senate standing Committee, and commend the legislation to the Senate, and urge all Senators to support this bill.