Gillard confirms tax hike for NDIS

The Gillard government has confirmed workers will face a tax increase through the Medicare levy to fund the National Disability Insurance Scheme

JULIA Gillard has confirmed workers will face a $300-a-year tax increase on average through the Medicare levy if she's re-elected to fund the National Disability Insurance Scheme.

But she has indicated the proposal will not be legislated in the current Parliament - suggesting the plan to hike the Medicare levy from July 1, 2014,  will be taken to the election as Labor's policy.

Arguing it would cost the average worker on $70,000 a year just $1-a-day, the Prime Minister conceded it represented a break with her previous pledge not to increase the Medicare levy to fund disability care.

A family earning $100,000 a year will pay $500 extra on their Medicare levy, families on $150,000 will pay $750 a year and $200,000 earners will pay $1000.

Ms Gillard said she had hoped to fund the scheme through savings but after a $12 billion shortfall in projected revenue and savings falling short of what was needed to fund the NDIS, she decided on a levy rise.

Julia Gillard has announced a 0.5 per cent rise in the Medicare levy to fund the NDIS.

"This is the right thing for the nation. This is the choice I've made. I know I am asking Australians in their millions to step up and pay an increase in the Medicare levy,'' the Prime Minister said in Melbourne.

She said it "was not an easy choice" to ask Australians to pay more and she said workers would be able to answer whether they wanted to hand over more money to the Government for disability care at the election in September.

Families Minister Jenny Macklin confirmed there would be no further crackdown on disability support pensions to fund the scheme.

After Ms Gillard's announcement, Opposition Leader Tony Abbott said he was "very happy to see the NDIS legislated in this Parliament".

Jessica Irvine and Tory Maguire discuss the levy to fund the disability scheme

"Why not? Let's get it into the Parliament and let's deal with it," he said.

"The PM doesn't have too many monuments. She hasn't done that much except give us the carbon tax that she promised would never happen and a succession of deficits that she promised wouldn't be happening.

"If the PM wants some kind of monument out of this Parliament,  give us the legislation and let's deal with it."

Mr Abbott said he would support the NDIS if he thought it was responsibly funded.

Tax revenue will shrink by $12 billion by the end of June, according to new Treasury forecasts.

"Let's get to the detail," he said.

Treasurer Wayne Swan said the levy increase was "not an easy decision but it was the right decision."

The tax hit will raise $20 billion over the next six years.  A quarter of the money will go to states to set up the NDIS scheme.

"We are asking people to pay a little more to do a lot more for a group of Australians that have been left behind,'' Mr Swan said.

The $3 billion-a-year tax increase would be used only for disability services but would not fund the entire cost of the scheme with further savings required.

Ms Gillard said she had broken her pledge not to increase the Medicare levy for three reasons: the hit to the tax revenues, her discussions with the states and the calls for disability advocates to make sure there was peace of mind and security around funding issues.

"I have thought about this deeply and I have changed my mind," she said.

"The Government will need to make savings for those cuts and there will be no free ride for states and territories.

"All of the money raised will be put in a special fund for disability care. Every cent raised would be raised on disability care.

"Every Australian lives with the prospect that at some time they or one of their family members could be confronted by a profound disability," she said.

Mr Swan said it was vital the NDIS had a "stable, secure funding scheme".

"The advantage of this fund is that all of the money raised from the levy goes straight to this fund and cannot be used for any other purpose," he said.

Ms Macklin spoke about a family in Melbourne who had a disabled son at the announcement today.

"(They) have explained to me how hard it is to get respite, how hard it is to get a couple of days off," Ms Macklin said.

"How hard it was to get a new wheelchair for him as he got older.

"This is the reality for families and carers and people with a disability in Australia at the moment. This is why we need the … National Disability Insurance Scheme.

"I do want to assure families and their carers that this very important part of the disability support net will remain."

West Australian Premier Colin Barnett baulked at signing up to the scheme, saying the increased Medicare levy is the "easy'' part of funding the plan.

Mr Barnett thinks WA will eventually be part of a national scheme but he wants greater flexibility and a more decentralised model before he commits to it.

"We're not going to sign up to a take-it or leave-it proposal,'' Mr Barnett told ABC radio.

Mr Barnett said the cost of the scheme could top $22 billion and that was unaffordable.

"I will not sign up for a scheme that is not even funded,'' he said.

Every Australian Counts campaign spokesman John Della Bosca said it was important to have certainty around NDIS funding.

"A levy does have its attractions... it;s transparent, people know what they're spending their money on and that they're getting a benefit from a social insurance scheme," he told ABC Radio earlier today.

"Anyone can suffer a severe and profound disability at any time."

Mr Della Bosca dismissed comments from former Treasurer Peter Costello and business leaders claiming that now was not the right time for the NDIS because there was no Federal Budget surplus.

"Australians with a disability have waited long enough," Mr Della Bosca said.

"It's a question of priorities."

With Lanai Scarr, AAP

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