Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

This bill will increase the Medicare levy low-income thresholds for individuals and families in line with increases in the consumer price index. The low-income threshold in the Medicare levy surcharge provisions will be similarly increased. These changes will ensure that low-income individuals and families will continue to be exempt from the Medicare levy or the Medicare levy surcharge.

The bill will also increase the Medicare levy threshold for pensioners below age pension age to ensure that individuals in this cohort do not have a Medicare levy liability when they do not have an income tax liability.

Those on low incomes are among the most vulnerable Australians—particularly amid this global recession—and the Rudd government is determined to make sure these Australians remain exempt from the Medicare levy.

The amendments will apply to the 2008-09 year of income and later income years.

Full details of the measures in this bill are contained in the explanatory memorandum.

I commend this bill and present the explanatory memorandum.

Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

These are just a few comments to make the point that the opposition will support the Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2009. We consider this to be a housekeeping bill and think that it could actually have been dealt with in the non-controversial timeslot. It is a bill that comes up every year, and every year it is supported by everyone. It is about indexing a number of thresholds, in particular indexing by CPI the low-income threshold for the Medicare levy, making sure that the threshold for those who do not pay the Medicare levy because they are low-income earners is increased in line with inflation.

A number of other, related thresholds are indexed at the same time, one of them being the low-income threshold for the Medicare levy surcharge. We had an extensive debate in this chamber last year in which we said what our thoughts were on the Medicare levy surcharge threshold changes. We opposed those changes vigorously. A very comprehensive Senate inquiry into the proposed changes to the Medicare levy surcharge threshold, last year over the winter recess, forced the government to review its legislation twice, and to reduce those thresholds in the original measure from $100,000 for singles and $150,000 for couples and families down to $70,000 and $140,000. We still took the view that that was bad policy because it was a measure that would force 492,000 people out of private health insurance, put upward pressure on the cost of premiums and put additional pressure on public hospitals. From that point of view, we were very much opposed to it.

We just note for the record that in Senate estimates over the last fortnight both the health department and the Treasury department gave evidence that, contrary to what the Minister for Health and Ageing, Nicola Roxon, and Senator Cameron at various times have tried to make people believe, the government still expects 492,000 fewer people to be in private health insurance as a result of the Medicare levy surcharge threshold changes passed last year. In fact, not only does the government still expect 492,000 fewer people to be in private health insurance, they need 492,000 fewer people to be in private health insurance in order to achieve the $740 million in estimated savings which are still, to this day, part of the Rudd government budget.

Notwithstanding those few comments, as I have said at the outset this is a housekeeping bill. It is about keeping the thresholds in line with inflation, and it is one that has been supported by oppositions of both persuasions over many years. On that basis, the opposition supports this bill.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to 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.

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I thank members of the Senate who have taken part in the debate on the Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2009. This bill increases the Medicare levy low-income thresholds for individuals and families in line with increases in the consumer price index. The low-income thresholds in 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 Medicare levy low-income threshold for pensioners below pension age is also increased to ensure that where these pensioners do not have a tax liability they will not have a Medicare levy liability. Those on low incomes are amongst the most vulnerable Australians, particularly amidst this global recession, and the Rudd Labor government is determined to make sure these Australians remain exempt from the Medicare levy. The amendments to the Medicare levy low-income thresholds apply to the 2008-09 year of income and later years of income. Full details of the measures in the bill are contained in the explanatory memorandum. Again, I thank those who participated in the debate and commend this bill to the Senate.

Question agreed to.

Bill read a second time.