Monday, 18 June 2018
Treasury Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2018; Second Reading
Labor supports this Treasury Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2018, which amends the Medicare Levy Act 1986 and A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999.
As members would be aware, the parliament has not, with the exception of a brief period under the Fraser government, indexed income tax brackets but we do on a regular basis increase the Medicare levy low-income thresholds and the phase-in limit in accordance with movements in the consumer price index. That means that under this bill: the individual income threshold for the Medicare levy will move from $21,655 to $21,980; the family income threshold will move from $36,541 to $37,089; the individual SAPTO threshold will move from $34,244 to $34,758; the SAPTO family threshold will move from $47,670 to $48,345; and the child student component of the income threshold for families, whether eligible for SAPTO or not, will move from $3,356 to $3,406, commensurate with changes to the phase-in limits. These measures, which will amount to hundreds of dollars, are certainly warranted—they will provide modest relief to low-income households—but should not be oversold. This is a regular process. It ensures the most vulnerable Australians are not disadvantaged. It maintains their access to Medicare, Australia's world-class universal health system.
At the same time as this bill is before the House, there is much more significant debate around tackling inequality through true progressive tax changes. That debate, which is in the public domain—indeed, it was before the House in the last sittings—is over whether to change the income tax scales in a way that would see middle Australia see a significant tax cut. We on this side of the House have a commitment to providing a bigger, better and fairer tax cut. It would go to those earning less than $125,000. Those 10 million Australians would be $400 better off under the Labor proposal than under the coalition proposal. What is extraordinary is that the government refuses to split its bill; it refuses to split tax changes scheduled to take effect on 1 July this year from tax cuts that will not take effect for another two election cycles. The government needs to do the right thing on that. It needs to split the bill. It needs to provide low- and middle-income taxpayers that immediate tax relief.
The difference between the short-term and the long-term tax packages can be seen in the analysis that Danielle Wood has done for the Grattan Institute. This analysis looks at the impact on tax progressivity of the early stage and the late stage of that package. The early stage improves tax progressivity. Indeed, Labor's proposal would be an even greater improvement in tax progressivity. Under Labor's proposal, the tax system would do even more to ameliorate inequality than it currently does. But the late stage makes our tax system more regressive. According to the modelling carried out by the Grattan Institute, Australia's tax system would do less than it currently does to ameliorate inequality under that third stage of the government's tax proposals, which are not due to take effect until the 2024-25 tax year.
Tackling inequality is a huge priority not just for Australia but globally. Last week saw the release of the World Inequality Report 2018 by economists Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez and Gabriel Zucman. That report compiles a series of new studies, including work that has been done for Australia by the late Sir Tony Atkinson and me, and now updated by Roger Wilkins, and work on wealth inequality for Australia, which Pamela Katic and I conducted. The overall picture of global inequality is summed up by Branko Milanovic, of the City University of New York, as being 'an elephant curve'. If you plot the increase in world income distribution, you see sluggish growth at the very bottom, the tail of the elephant; more rapid growth for most of the 20th to 30th percentiles, reflecting the income growth that has occurred in China and India in particular; weak growth for the middle, the downward curve of the trunk, reflecting the squeeze on middle classes in advanced countries; and spectacular growth among the top 10 per cent, being the tip of the trunk.
To enter the top one per cent of the world's wealthiest earners requires wealth of around one million euros. The wealthiest one per cent of the world now have one-third of world wealth, up from one-quarter in the mid-1990s. If you look at the wealth share of the top one in 100 million in the world, the top 75 people or so, those billionaires have seen wealth increases of around three times the global average.
I want to pay tribute to Australia21 and the Australia Institute for their work in drawing attention to the scale of the inequality challenge. In January 2014, Australia21 held an inequality roundtable in Canberra, bringing together 35 senior government officials; five parliamentarians, myself included; non-government organisations; academics; community leaders; and stakeholders. Today, Australia21 is holding another roundtable here in Parliament House on the theme, 'Dealing with economic inequality in Australia'. It's being hosted by Emeritus Professor Bob Douglas and the member for Lilley, Wayne Swan, and it is bringing together 40 experts to discuss not only the scale of the inequality challenge but what can be done to address it. The key questions being discussed are: how serious is the inequality issue in Australia? What are the factors contributing to it? What changes will be needed in Australian society to make it highly likely that economic inequality will be declining in the next 10 years? And what changes are now needed to address the problem? I again commend Australia21 and The Australia Institute for this important report.
We face multiple futures when it comes to inequality. As the World inequality report 2018 has made clear, if the world follows a trajectory of business as usual in which inequality rises in each country, as it's done since 1980, then we are going to see the global top one per cent increase its share of world income from 20 per cent to 24 per cent, and we will see the bottom half of the world income distribution decrease their share of world income. If we see the world follow the United States' trajectory, a high-inequality-growth trajectory, then that would mean that the global top one per cent share would go from 20 per cent to 28 per cent by 2050, and the bottom 50 per cent share would fall significantly. However, were inequality to follow the European style low-inequality-growth trajectory, then the global one per cent share would shrink to 19 per cent, and there would be significant growth in the income share of the bottom half of the population. They are the multiple futures facing the world. Do we want to go ahead and see a business-as-usual or an American trajectory in which inequality widens, where the top one per cent have more and the bottom half have less? Or do we want to consider a different path forward in which we crack down on tax havens and ensure that there are strong unions able to check inequality, that we have access to an education and healthcare system for all and that the benefits of growth are fairly shared across the community?
One of the contributions of the world inequality report has been to use the massive data leaks from Panama, Switzerland and Luxembourg to look at tax evasion by the very top. In the Scandinavian countries, where it is possible to match up the data leaks with individual taxpayers, it appears that the richest 0.01 per cent of Scandinavians evade over one-quarter of the personal taxes they owe by using tax havens, suggesting that the use of tax havens may be an even bigger problem in other nations.
And we see, too, multinational corporations up to the same tricks. In research recently released in parallel with the world inequality report, Thomas Torslov, Ludvig Wier and Gabriel Zucman find that there is significant multinational profit-shifting occurring among the world's biggest firms. They give the example of the events in 2016 when Google Alphabet reported revenues of $19 billion in Bermuda. This is a small island in the Atlantic where Google Alphabet barely employs any workers and barely owns any tangible assets but where the corporate tax rate is zero per cent. The estimates from Torslov, Wier and Zucman are that around 40 per cent of the profits of large multinationals are shifted to low-tax jurisdictions. And this doesn't simply mean shifting where the tax is paid; it means shifting from jurisdictions where tax is paid to jurisdictions where very little tax is paid. They estimate that, for every $1 of corporate tax paid in a tax haven, $5 of corporate tax is avoided in countries with regular corporate tax rates. So we must crack down on the abuse of tax havens if we are to see more egalitarianism across the world.
Egalitarianism is a fundamentally Australian value. We know that when people like Mark Twain, Anthony Trollope and DH Lawrence visited Australia they remarked on Australian egalitarianism. Australian egalitarianism isn't just a Labor story, though it certainly is that. It is an Australian story, one of a nation in which we're proud not to have private areas on our beaches and not to stand up when the Prime Minister enters the room. We're proud to use the word 'mate' rather than the word 'sir'.
But all of that is at threat from the rise in inequality that we've seen across the globe and in Australia over the past generation. We also see this in the area of health care. We are debating today a bill relating to Medicare, and we know that the cost of seeing both GPs and specialists has hit a new record under the Turnbull government. We know that Australians are paying more for their health. They are paying an average of $38 out of their pocket to see a GP, and it is up to $47 in some jurisdictions. That's almost a $4 increase since Prime Minister Turnbull promised that no-one would pay more to see a GP. Out-of-pocket fees to see specialists have soared even higher. They are up to almost $88 on average, an increase of about $12 since the election, and there are jurisdictions in Australia where the average out-of-pocket cost of seeing a specialist has now soared above $90.
The Australian people realise that, when you have higher out-of-pocket costs, that means that people don't go to see their doctor for those essential check-ups. We have figures from the Australian Bureau of Statistics showing that a million Australians delay or avoid seeing their GPs every year due to cost, and another 1.7 million Australians skip specialist appointments. We're yet to see the government lifting any part of its damaging Medicare rebate freeze. Rebates for GPs, specialists and allied health services all remain fully frozen until 2020. All remain fully frozen and the freeze won't be fully lifted until 2020. As a result of this freeze, the Turnbull government is cutting more than $3 billion out of Medicare.
Medicare is a fundamental part of Australian egalitarianism. Australian egalitarianism is built on the notion that we pay our fair share of tax, we make sure that multinational firms aren't able to shift their profits to tax havens and we ensure that any child who has the smarts to go to university gets a place there. But, under this government, we're seeing $17 billion being ripped out of schools and $17 billion being given to the big banks. Every dollar that is going to the big banks under Prime Minister Turnbull's corporate tax cut is coming out of Australian schools. At a time when we've got Australian test scores going backwards, according to the PISA study, and we have our banks facing an unprecedented royal commission, is it really right to take money from schools and give it to banks? The government's priorities are completely wrong. If they care about egalitarianism, as every Australian should, we need fairer tax policies, fairer education policies and fairer health policies.
Labor has no difficulty in rising to welcome the indexation of the income thresholds below which Australians do not pay the Medicare levy or Medicare levy surcharge. This is a very standard and regular process that ensures that the most vulnerable Australians are not disadvantaged, while maintaining their access to Medicare, our world-class universal health system. It is, though, an opportunity to address the parliament about the key issue that is facing people in using Medicare, and that is that the cost of going to the GP or going to the specialist has risen. I'm talking here about the out-of-pocket costs that Australians face every day when they have to take their kids or themselves off to the GP.
The Liberals' claim that Medicare has never been stronger is false; it is wrong. The out-of-pocket costs of seeing both GPs and specialists have hit new records under the current Prime Minister, with Australians now paying around $47 for a GP appointment and around $90 for a specialist appointment, or at least up to those figures in some areas. Unfortunately, what this increase in out-of-pocket costs means is that there are Australians who are not going to the doctor. They are holding off from going to see a doctor, even when they're sick, because they're worried about what might happen in terms of the cost of seeing the GP. If they're making a choice between taking their kids to the doctor or taking themselves to the doctor, they are making sure that they hold off to make sure that their kids can go. In fact, the ABS figures show that 1 million Australians delay or avoid seeing their GP each year due to cost, with another 1.7 million Australians skipping specialist appointments. This should be incredibly alarming for everyone here.
It is a terrible indictment on this government that there are Australians skipping medical appointments, not going to the GP and not going to the specialist because of the cost. The Turnbull government really needs to lift its game when it comes to Medicare. The Prime Minister himself went to the last election promising that no-one would pay more to see a GP, but the out-of-pocket costs are higher than they have ever been, and this trend will only get worse because of this government's obstinate refusal to properly address the Medicare freeze problem that they created. The freeze won't be fully lifted until 2020, and that's really shameful. The government really needs to take a good, hard look at itself and take action in respect of making sure people can afford to go to the doctor.
The cost in my electorate is very high. In fact, my electorate of Griffith has the highest out-of-pocket costs for seeing a GP of any electorate in Queensland. It's almost $40 in out-of-pocket costs in my electorate of Griffith, on the south side of Brisbane. For our state of Queensland there was a recent increase of nearly 7½ per cent in GP out-of-pocket costs, year on year. The situation is even worse when it comes to specialist appointments. In fact, in Queensland, the year-on-year increase is 21.56 per cent. That's how much out-of-pocket costs have increased—by more than a fifth—to go to a specialist in Queensland, and it's a disgrace.
The fact that the government has been out in the media trying to trumpet a static GP bulk-billing rate shows just how out of touch they are. If you're a parent, if you've got young kids, you don't want to have to worry about the cost of going to the doctor if they're sick. You don't want to have to make choices between pharmaceuticals for yourself and taking your kids to the doctor. Yet that's what skyrocketing out-of-pocket costs do to people and to families. People in my electorate should not be put in a situation where the out-of-pocket costs for visiting a GP or a specialist are skyrocketing. This government needs to address this because the Commonwealth should be providing a universal healthcare system, and a healthcare system where people have to pay high out-of-pocket costs to see a doctor is not a truly universal one.
The Australian people are too smart to fall for the spin that somehow Medicare is strong under this government, because they know from their own firsthand experience that the cost of going to the doctor is very high. It's laughable to claim that Medicare has never been stronger. It's laughable for this government to claim that their commitment to Medicare is rock solid. Australians know the truth. The government can get up and complain all they like about Labor campaigning in respect of their plans for Medicare at the last election. The reason we were campaigning about what this government was going to do to Medicare is because the Liberals cannot be trusted when it comes to Medicare. The Liberals can't be trusted not to Americanise our healthcare system. The Liberals can't be trusted to protect and defend Medicare. The Liberals cannot be trusted to address out-of-pocket costs for GPs and out-of-pocket costs for specialists, just like they can't be trusted on private health insurance. They have refused to meet our commitments to cap premium rate rises when it comes to private health insurance. They're not interested in this crucial cost-of-living issue for Australian families.
Australian families deserve better. Australian families deserve a Commonwealth government that will speak up and, more importantly, will pay up to make sure that we have a universal healthcare system so that everyone can see a doctor, no matter their personal circumstances, and so that your access to health care is determined by your Medicare card, not by your credit card. That's what a Labor government would do. I know that Australians are thinking very carefully about the future of this country after the next federal election, and they're thinking a lot about health care. I say to the Australian people: Labor created Medicare and only Labor will ensure that Australians can access the health care they deserve. It's time for a government that will stand up for people's ability to go to the doctor without having to reach so deeply into their pockets, without having to make those terrible choices between medicine and GP visits, without having to worry about the impact that going to the doctor will have on their family budget and without having to worry.
This is Australia. In Australia you don't have to worry about whether you can afford to go to the doctor. That's the Australia that I want to live in. That's the Australia that I grew up in. But this Liberal government don't care. If they cared they would have done something about it a long time ago. We've had a Liberal government in this country for five years now, and we're seeing the consequences of that when you look at the out-of-pocket cost increases for Australian families. They haven't done enough, and that's because they can't be trusted when it comes to health care.
The words I present today are to address the Treasury Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2018. Every government since 1996-97 has generally decided to increase the low-income thresholds in line with the positive movements of the CPI each year. We all know what CPI means, but, just as a reminder, the consumer price index is a formal way of buying a whole range of items that could be part of household costs, averaging it out and comparing it with the last time the task was done. The increase, through a range of calculations, results in the CPI. The CPI figure is used by many different government departments to calculate a range of changes that apply to pensions and other income support mechanisms. We know that age pensions go up in March and September every year in line with CPI. More importantly, if we don't change the taxable threshold in line with that rise in CPI then people who currently don't pay extra, including the Medicare levy, will have to pay.
Essentially, this bill is about changing the threshold of low-income families before they have to start paying the fees or levies. It's about reducing the impact on low-income families. The Medicare levy low-income threshold makes sure that people who pay no personal income tax because of the tax-free threshold and structural offsets, like the low-income tax offset or the seniors and pensioners tax offset, generally don't pay the Medicare levy yet are able to get into the Medicare system. This is an essential part of ensuring that everyone who does not currently pay continues to not have to pay. It is part of our government guaranteeing the essential services that Australians rely on.
A stronger economy has enabled the government to deliver record investment in Medicare, hospitals, schools and disability services. Australians have guaranteed access to high-quality hospitals and schools, not because we have the lion's share of direct funding to either hospitals or schools but because we have strong agreements with the state governments about investment in these two essential parts of our daily lives that affect all our families. In addition, we have the revenue for the delivery of a strong Medicare system, which is vital and needs to be there to provide the services to those with permanent and significant disabilities as well as those who get ill or who need to go to the doctor or a specialist. One of the problems is that we don't have enough doctors or specialists out there who bulk-bill. That is an issue. But if we've got a good Medicare system then we've got choices.
Talking about choice, we're providing more choice for older Australians to live healthier, more independent and safer lives so that they can take advantage of the opportunities that a longer life brings. It's not just about house cleaning, daily nurses visiting or carers coming to help with daily walks for someone recovering from a knee replacement. Each and every activity like these helps our older people have a better time, a quality time, while they remain in their own homes. A government cannot invest in such services unless there is a very strong economy to back that up—and we are doing exactly that.
Our record investment in schools will give teachers the tools to lift the performance of their students and prepare them for the jobs of the future. As a former science teacher, I'm proud that we have delivered these reforms. I've seen fantastic changes in my local schools where the additional investment has been allocated to teacher training and student courses that have never been offered before. We're looking at recommendations from the review to achieve educational excellence in Australian schools.
From July 2018, the government will ease the cost-of-living pressures for nearly a million Australian families by implementing the new childcare package. And I take this opportunity to remind families in my electorate to register: there are about 5,000 families in Gilmore who will absolutely be better off, but they do need to register.
We have record levels of funding going to hospital services, the Medicare Benefits Schedule and pharmaceutical benefits. Just recently, I had Stan come in. He has lung cancer, and we've put his drug on the PBS. So, instead of it costing him 350 bucks a pop, it's the cost of a script. I then had Richard, who has trouble breathing. A new drug has come through the PBS, so that instead of $204 a hit it's the cost of a script.
If you don't have a strong economy you simply can't deliver these changes, and we're doing it. We're trying to get rural health stronger and I know that all the people who I have seen in my local area want to make this better as well. We're working hard with the National Disability Insurance Scheme. In fact, our revenue is so good that we don't have to change the Medicare levy; we've actually got the funding there to support this scheme for all our people.
The Medicare Guarantee Fund is going to be increased. An additional $34.4 billion has gone to this fund, and a further credit of $35.3 billion will be made to meet the estimated MBS and PBS expenditure in 2018-19. We've got cystic fibrosis testing, 3D breast cancer screening and MRI tests for prostate cancer. You can't do any of that unless you've got the revenue to support that, and we're doing that. I think it's fantastic we've got solar coming into the local regions and community groups. Again, these are grants and subsidies that can only come out through a strong economy. There are a whole stack of things that have been brought through for people with diabetes. There is the insulin pump for young children—an investment of $6.2 million, and I would like to give a shout out to the DENNY Foundation, who were great advocates for that, with Pieta Newport and Marg Smith involved locally. They really got me involved in it and made me understand how important that was.
Medicare is not at risk. With an additional one million jobs, that's a huge increase in revenue for the Medicare levy, not to mention the huge investment by the government. This is an outstanding investment from a strong government with strong revenue streams. I commend the bill.
Firstly, I'd like to thank those members who contributed to this debate on the Treasury Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2018. I particularly thank the member for Gilmore, who I think has set the matter out incredibly well. A stronger economy means the government no longer needs to proceed with the change in the Medicare levy as we advised before the budget this year. It also means the government is able to increase the Medicare levy low-income threshold as set out in this bill.
Through our plan for a stronger economy, the Turnbull government is guaranteeing essential services that Australians rely on. Funding for Medicare has been guaranteed in legislation by this government, as we promised we would—another commitment kept. But there's a much stronger guarantee that this government provides for Medicare, for the Pharmaceutical Benefits Scheme, for social security payments, for childcare support, for schools funding, for hospitals funding and for any area of essential service and support that the government provides. And that is that this government has a plan for a stronger economy that's delivering. The Labor Party can make whatever claim they like about what they think they're going to spend, but if they don't have a plan for a stronger economy they can't pay for it. And, when they hear 'revenue', all they hear is the need to increase taxes. When we hear that, we know the need to create a stronger economy that generates the revenue—not to tax the economy out of existence.
A stronger economy is what guarantees Medicare. A stronger economy is what guarantees schools funding. A stronger economy guarantees the essential services that Australians rely on. Essential services aren't guaranteed by politicians making promises, like the Labor Party does. They're guaranteed by governments that know how to support and grow an economy—as this government has overseen, with more than a million people getting jobs over the last five years. A million people have got jobs over the last five years. That's a simple fact, and they've been created by Australian businesses. Australian businesses have created those jobs—Australian businesses that have been benefitting from the pro-business, pro-economic policies that enable them to grow.
The Labor Party has a proposal for business and the economy, and that's to tax them out of business. If you tax businesses out of business, what happens is you don't have the money to guarantee Medicare and you don't have the money to list important life-saving drugs on the Pharmaceutical Benefits Scheme. If you don't have policies for a stronger economy, you don't have a policy for Medicare. If you don't have a policy for a stronger economy and a plan, you don't have a policy for the Pharmaceutical Benefits Scheme. All you have are glib promises that you can't back up.
This bill ensures—and demonstrates once again—that, through the strong economic and financial management of the Turnbull government, we are in a position to be able to move forward on this measure. The bill will assist Australians on low incomes by continuing to exempt them from paying the Medicare levy. These changes will ensure that low-income households who did not pay the Medicare levy in the 2016-17 income year will generally continue to be exempt in the 2017-18 income year if their incomes have risen in line with or less than the consumer price index. For individual taxpayers, no Medicare levy will be payable for those with a taxable income that does not exceed $21,980 in 2017-18, which has increased from $21,655. Single senior pensioners with no dependants who are eligible for the seniors and pensioners tax offset will not incur a Medicare levy liability if their taxable income does not exceed $34,758 in 2017-18, which has increased from $34,244. As well as these individual thresholds, further relief is available for low-income couples and families. The amendments to the Medicare levy low-income thresholds apply to the 2017-18 year of income and future income years.
Again, the government's plan for a stronger economy is delivering more jobs and it's guaranteeing essential services that Australians rely on—and it is making sure that we do all of that while ensuring that the government continues to live within its means. That is at the heart of the government's approach to guaranteeing those essential services. It's something you can take to the bank—because, if you have a stronger economy, you can take it to the bank. Otherwise, it's just a promise that you have to take back to the Labor Party—a promise that they can never deliver on because they cannot run a stronger economy. But I welcome Labor's support for this bill. They are just fortunate that there's a Turnbull government in place that can run a strong budget and a strong economy that can pay for it. I commend the bill to the House.
Question agreed to.
Bill read a second time.