Government considering new levy to fund NDIS

Updated

Sorry, this video has expired Video: NDIS levy back on the table (7pm TV News ACT)

The ABC understands that a levy to pay for a national disability insurance scheme has firmed as the most likely option.

Government sources have also revealed that the full scheme, including costings, will be unveiled before the May 14 federal budget.

Earlier today, Finance Minister Penny Wong confirmed the Government was considering a dedicated levy to fund the scheme as it tries to plug a revenue hole in next month's budget.

Prime Minister Julia Gillard had previously ruled out a Medicare-style levy to pay for the scheme, but it is now back on the table.

"We're considering a number of funding options and a levy is something stakeholders have been calling for in the last 24 hours," Finance Minister Penny Wong told ABC Radio National this morning.

"Whatever option you look at, you have to look at what will give security to people with a disability, what will ensure we have a strong scheme, not just for a couple of years but for the decades ahead and ... what is a fair approach in terms of making sure as the Prime Minister said, we all fairly contribute.

"So we're looking at options across the board on a range of fronts.

"I'd acknowledge that a levy is something that stakeholders have raised."

Sorry, this video has expired Video: Finance Minister Penny Wong speaks with Radio National (ABC News)

Opposition Leader Tony Abbott has refused to say if he supports the option of a levy or if he would repeal legislation enacting a levy if he were to win the September election.

"Let's see what specific proposal this Government comes up with, let's see whether it can get it through the Parliament and then we'll deal with that situation," he said.

"It's up to the Prime Minister, having raised all this uncertainty, having made all these promises, having raised all these expectations, to tell us exactly how it's going to be funded."

Mr Abbott said a Coalition government would fund a disability insurance scheme "over the long run" by "building a strong economy" and said it would be best to fund it through general revenue.

"We think that is the best way forward, we think if this government had its budget under control, the NDIS would be affordable from the ordinary revenue of government," he said.

He said the Prime Minister was "desperately casting around for new sources of revenue" and added, "Now the Government is coming after you, the people, for more money".

He said the Opposition had supported the NDIS "every step of the way" and wanted to support it to its conclusion.

"It's got to belong to all Australians, it's got to belong to the Parliament, it can't be the property of any one side of politics.

"But we want to ensure it is a reality as soon as is reasonably possible."

Ms Gillard has warned she is putting all revenue-raising options on the table and that everyone must share the burden.

Senator Wong denied the Government is desperately scrambling to manage its deepening budget hole.

"Look, I think we need to understand what we're seeing at the moment," she said.

"We're seeing revenue substantially fall.

"If we were getting the same level of tax that John Howard and Peter Costello did, we'd be over $23 billion more in this financial year than was previously anticipated.

"I mean the reality is whether we like it or not, whether it's a time of our choosing, the nation has a challenge, the Government has a challenge which is we're getting less money in tax for the reasons the Prime Minister outlined than was anticipated."

One of the architects of Medicare, Dr John Deeble, says a levy has every chance of being accepted by the public in the same way the Medicare levy has been.

[A levy] has every chance of being accepted in the same way as the Medicare levy has been accepted. Medicare architect Dr John Deeble

"It'll go up and down with income but won't go up and down with market fluctuations and it has every chance of being accepted in the same way as the Medicare levy has been accepted," he told The World Today.

"The Medicare levy has been accepted because it was linked to a tangible benefit, it's never really been questioned."

The Government has already committed $1 billion to support the first stage of the scheme from July 2013. However, the Productivity Commission estimated its ongoing cost would be $8 billion a year.

Economist Chris Richardson from Deloitte Access Economics believes the scheme should be funded from by cuts to so-called middle class welfare, but he also sees the political sense in a levy.

"For politicians, it's one of those taxes that people don't notice and that makes it attractive," he told AM.

Mr Richardson has surmised the Government is considering an increase to the Medicare levy of half a per cent.

"As a rough rule of thumb, if the government were to add half a per cent to the existing Medicare levy, move it from 1.5 to 2 per cent, that would give them an additional $3.2 billion a year," he said.

"I think they could achieve a lot with that."

Craig Wallace from People with Disability Australia supports a levy to pay for what is now known as DisabilityCare Australia, and believes the broader community would too.

"Many Australians realise that disability is only one car accident or one stroke away from them and their families," he said.

Topics: disabilities, health, budget, federal-government, government-and-politics, australia

First posted