Doug Cameron (NSW, Australian Labor Party) Share this | Hansard source

I rise to support the Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2009. The bill increases the Medicare levy low-income thresholds for individuals and families in line with increases in the consumer price index. The individual threshold amount is to be increased from $17,309 to $17,794. The family income threshold is to be increased from $29,207 to $30,025. The Medicare levy low-income threshold for pensioners below pension age is also increased to ensure that where pensioners do not have a tax liability they do not have a Medicare levy liability. The low-income threshold and the Medicare levy surcharge provisions are similarly increased. These changes ensure that low-income individuals and families will continue to be exempt from the Medicare levy or surcharge.

The amendments to the Medicare levy low-income thresholds apply to the 2008-09 year of income and later years of income. Indexation of Medicare has enjoyed bipartisan support for a number of years, and I acknowledge the support of the opposition as outlined by Senator Cormann.

It is proposed to increase the Medicare levy low-income thresholds for individuals and families in line with movements in the consumer price index. It is also proposed to increase the Medicare levy low-income threshold for pensioners below age pension age to ensure that individuals in this cohort will not incur a Medicare levy liability when they do not have an income tax liability. The increases will apply to 2008-09 and later income years.

The Medicare levy is imposed at a flat rate of 1.5 per cent on a resident’s entire taxable income. However, low-income earners are not liable for the Medicare levy, consistent with the progressive nature of income tax. The low-income threshold in the Medicare levy surcharge provision will also be increased in line with increases in the CPI so that a low-income family member will continue to not be subject to the Medicare levy surcharge. For example, in 2008-09 the combined income of a couple where one partner had income of $130,000 and the other had income of $15,000 would be above the Medicare levy surcharge threshold of $140,000 and, therefore, both members of the couple could be liable for the surcharge—that is, if they do not have appropriate private health insurance. However, the low-income threshold and the Medicare levy surcharge provisions ensure that the partner on $15,000 would not be liable to pay the surcharge. The higher income partner may still be liable to pay the surcharge.

This bill proposes, as I mentioned earlier, to increase the Medicare levy low-income threshold for individuals and for families and, in particular, the Medicare levy surcharge provisions themselves. The increases are to ensure that low-income individuals and families will not continue to be required to pay the Medicare levy or surcharge. It would be an unfair and undesired outcome if this were not the case. These increases are in line with movements in the CPI. The amendments will apply to 2008-09 and later income years. Similar amendments have been announced in previous budgets and have enjoyed bipartisan support. I am pleased to note that this is the case on this occasion and I commend the bill to the Senate.