Ms Catherine King (Ballarat, Australian Labor Party) Share this | Hansard source

I rise today to speak in support of the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. I note with some irony the member for Boothby’s absolute defence of his government’s record of somehow keeping private health insurance premiums down. Correct me if I am wrong here, but I do not remember private health insurance premiums going down in the 11 years of the previous government. We had the member for Boothby saying in this place that it is incumbent upon him as an elected representative to ensure that his constituents are represented and to apply as much pressure as he can to ensure that private health insurance premiums go down. We have been in government nine months. Obviously, the world did not start nine months ago. There were 11 years of the Howard government and private health insurance premiums did not go down. Not only did they not go down; they went up by substantial amounts and increasingly a gap emerged between the sorts of things that people thought they were paying for and what they actually got. The member for Boothby came in here and said it is incredibly important for him to ensure that private health insurance premiums do not go up. Well, where was he over the last 11 years?

This bill brings about a change to the Medicare levy surcharge thresholds. It is a change that is long overdue. Families in my own district have been sending the same message to me since I was elected. They tell me that their household budgets are tight. It is no secret that childcare costs are draining family budgets, grocery prices are pressing firmly on hip pockets and petrol prices and rising mortgage stress are at the forefront of most families’ minds. That is why this government has introduced this bill into the House. We are conscious that there are a broad range of cost pressures on Australian families. This bill will deliver tax relief to some 330,000 Australians. This bill is another example of this government’s commitment to assist hardworking families across Australia who are struggling with their household budgets.

When the Medicare levy surcharge was originally introduced by the former Liberal government the aim was—and it was a good policy aim—to provide incentive to high-income earners to take out private hospital cover. That was the principle behind the policy. We subsequently found out that the $50,000 threshold was not determined by any scientific analysis of what constituted a high-income earner at the time—some 11 years ago now. In fact, that threshold was calculated over a bottle of whisky by the then Minister for Health and Family Services, Michael Wooldridge. It is pretty outrageous. This $50,000 was carved in stone, not to be changed or indexed over the subsequent 11 years. That $50,000 that was determined over a bottle of whisky some 11 years ago was set in stone.

How long did members opposite expect the current levels to hit only high-income earners? In its current form the surcharge eats away at the hip pockets of families who are earning less than the average wage. The former government introduced the thresholds that have been laid down in concrete for some 11 years. Not once have they been changed. At present the threshold for singles is $50,000 and for couples and families it is $100,000. Residents in my own electorate of Ballarat will assure members of the opposition that $50,000 is not a high income. The Medicare levy surcharge is hitting the hardworking residents of my district who are earning less than average wages.

The Liberal government failed to adjust the thresholds and members opposite should explain to residents of my community why they allowed this tax trap to continue. This is reflected by the number of people who are now subject to pay this surcharge. In 1997 there were 167,000 people paying the surcharge. By 2005-06 it had risen to 465,000 people. Let us look at those figures again: in 1997 there were 167,000 people and less than 10 years later there were a staggering 465,000 people caught in this tax trap. Should we believe that in those 10 years 298,000 taxpayers became highly paid and started living a life of luxury? Not in my electorate.

The threshold has not kept pace with the rising cost of living. The previous government took their finger off the pulse of ordinary Australians. The Medicare levy surcharge was not meant to hit families on average wages. It was never designed to do that. The surcharge needs to change. I, along with all members of the government, am determined to deliver tax relief to families in my electorate and to all families right across Australia who are struggling on average wages. We are determined to pass this bill. We are prepared to give the Australian people certainty when looking at our country’s budget.

Since we announced our intention to amend this tax we have received varying opinions and opposition to our proposed changes, particularly from those opposite. Members opposite opposed the tax relief for those hardworking Australian families that was in the original bill put before the Senate. The Rudd Labor government is determined to pass its budget measures in full. We are determined to pass our budget and we are determined to protect the budget surplus. We have had detailed consultation with stakeholders with the intention to introduce this new bill, which we hoped would be supported by both parties but clearly is not.

We are proposing new thresholds for the Medicare levy surcharge. In this new proposal we plan to increase the threshold for singles from $50,000 to $75,000. Our previous proposal announced in the budget aimed to lift the threshold for singles to $100,000. Because of the opposition of the Liberal and National parties we have been unable to successfully do that. The intention of the former proposal was to move the tax that crept down over time from high-income earners to ordinary Australians on average wages. We received opposition from the Liberal Party, who saw to it that we could not provide tax relief to as many families as we had hoped.

Our government has continued consultation with stakeholders, and today we are debating our negotiated proposal. This change is a measured proposal that will provide relief to hardworking Australians on average wages. It will help compensate for the continual increased costs of living I mentioned earlier—increases in childcare costs, groceries, petrol and mortgages: essential services the average Australian family relies upon and basic living necessities. Aside from increasing the threshold for singles to $75,000, this bill retains our original commitment to lift the Medicare levy surcharge for families from $100,000 to $150,000.

Combined, these two measures will provide immediate tax relief to some 330,000 Australians—330,000 Australians that are not classed as high-income earners. These amended thresholds are sensible and closely resemble the levels proposed by other groups within Australia. The Australian Private Hospitals Association and Access Economics have both suggested rates that closely resemble those proposed by the government in this bill.

In addition to the threshold changes for the Medicare levy surcharge, the government’s proposal will also see the singles threshold indexed each year, which means that the situation we are currently in, where the $50,000 threshold seems to have been set in concrete for the last 11 years, will not occur again. We have done this because members on this side of the House recognise that wages do change and that this should be reflected in the Medicare levy surcharge thresholds.

I support this bill because it provides tax relief for some 330,000 Australians—and it does provide that relief. Any members opposite who try to say that the 330,000 Australians who will receive that tax relief are not going to benefit somehow or that, as we heard from the member for Boothby, it is somehow not real money, or not real tax relief, have got to be kidding themselves. I support this bill because it is a measured and responsible approach that assists households struggling to meet the many demands that are placed on their household budgets.

The bill will not only amend the thresholds for the Medicare levy surcharge but will also amend the legislation so that the thresholds are indexed. This will make sure that next year, the year after that and continually into the future this bill will be relevant and up to date with the wages of Australian working families. Since the introduction of the Medicare levy surcharge, we have seen hardworking Australians being sucked into a tax trap that the previous government laid for them. In this bill, the government adjusts the current thresholds to appropriate levels and has put measures in place to remove the trap that taxpayers would have faced otherwise into the future. I urge members opposite to support the bill.

The Rudd government is supportive of tax relief for hundreds of thousands of Australians. If the Liberal Party do not support this bill—and they have indicated that they will not support it—then the opposition clearly do not support tax relief for those families. We had the Leader of the Opposition and the shadow Treasurer today in question time calling for tax relief in the context of the global crisis. Today they have the opportunity. They have an opportunity right before them, some few hours after question time when they raised this as an issue, to actually support tax relief for Australian families. It is incumbent upon them to support this bill if they believe what they said in question time, that tax relief for Australian families is absolutely necessary in the current context of a global crisis. I commend the bill to the House.

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