Mike Freelander (Macarthur, Australian Labor Party) Share this | Hansard source

I'm not really sure that the member for Gilmore really understands how government programs are funded, but anyway. Today's debate is not about whether the National Disability Insurance Scheme should be fully funded but about how it is to be funded. We all want to see the NDIS in full operation as soon as possible, properly funded and transforming the lives of, ultimately, millions of Australians. I've already seen it transform the lives of many of my patients. The relief that their families feel knowing that their children with severe disabilities could be cared for long after they are gone is almost palpable.

The bills before us today, we shouldn't forget, are the Turnbull government's plan B for guaranteeing future funding to the NDIS. Back in February, the Treasurer's plan A—the plan that no longer dares speak its name—was to make the NDIS's funding contingent on the parliament agreeing to unfair cuts to family tax benefits, paid parental leave, Newstart and the energy supplement. No cuts, no NDIS, we were told. It was like something developed by the local schoolyard bully. That plan met with such universal public outrage that it barely survived a single 24-hour news cycle. Now, of course, the Treasurer is amongst the most fulsome of NDIS supporters. The would-be poacher has turned gamekeeper.

The NDIS was devised, approved and negotiated with all the relevant stakeholders, including the states and territories, by the Gillard Labor government. I will never forget the strength that Julia Gillard showed in getting this done, and we should be grateful for her commitment to the most disadvantaged. I remember meeting her at a lunch organised by the member for Fowler some considerable time before she became Prime Minister, and even at that time she told me she was committed to getting funding for those most disadvantaged people with disabilities in our community.

Labor remains unswervingly committed to the NDIS, and Labor is as deeply committed to the NDIS as it is to the preservation of Medicare. Those on the conservative side, including a couple of now former state premiers, haven't always been so unreservedly supportive and committed to it.

The Productivity Commission has recently reaffirmed that the NDIS is the most significant social reform in a generation. It's an essential part of Australia's social safety net, and when it's fully operational it will be something we can all be truly proud of. The community recognises that. Seemingly no-one, not even the Treasurer, wants to see public faith in the NDIS undermined by corner cutting or underfunding. The government has recommitted to fully roll out the NDIS by 2019-20, even though the Productivity Commission, like many others, believes that that target can no longer be met. However, it is, hopefully, committed too to addressing the failings identified in this month's Productivity Commission report.

The NDIS is, of course, by any measure a massive undertaking. It will provide individualised services and support to at least half a million Australians with a permanent or significant disability, and that also does not include the families involved in caring for someone with a severe disability. That's an increase of about 16 per cent on the base number that the Productivity Commission used to calculate the cost of the NDIS for the Gillard government. The core feature of the NDIS is that participants will have a significant say in identifying the form that support takes and in choosing how their needs are met. Access to NDIS services is not means tested, and, like Medicare, it will be available to all Australians irrespective of their wealth or income.

To the extent that the scheme is not funded from designated sources, it remains a cost to the Commonwealth budget. The state and territory governments pay about half of that. The Commonwealth will be liable for the rest, hence this package of bills. The annual cost of the NDIS, when it becomes fully operational, is estimated to be close to $22 billion. It will be the biggest contributor to expenditure growth over the next four years and will reach about one per cent of GDP by 2020-21. About 70,000 extra disability support workers will be required. That target also is at risk of not being met. No-one on this side of the House underestimates the enormity of the task, and no-one here expects the government to get it all right the first time round.

The trouble with this government is that it blows so hot and cold on the NDIS, as it does with so many other aspects of public policy. That includes things like the debt and deficit, energy policy, education funding and an endless list of others including the NBN. You can't be confident that another U-turn isn't about to happen. It's still into the blame game and torn between its commitment to make the NDIS succeed, which I think we all want, and its free-market DNA, which tells it that any public enterprise is a mistake.

By the time the NDIS is fully operational, it will be close to a decade since the Productivity Commission conducted its inquiry into disability care and support and the heads-of-government agreement was entered into to establish and fund the NDIS. The Productivity Commission, as mandated by the heads-of-government agreement struck by the Gillard government with the states and territories—excepting Western Australia—has only recently completed a full review of the scheme, and not all the news is good. The states have withdrawn funding far in advance of federal funding for many programs.

I am constantly being contacted by my paediatric colleagues about the withdrawal of state funding for children with severe disabilities long before NDIS funding is available. Most recently my paediatric colleague from the Fairfield-Liverpool area, Dr Duc Van, has contacted me, very concerned about children being diagnosed with severe disabilities having months, sometimes even years, to wait before they can access NDIS funding and early intervention, yet we know these programs are the only ones that really work for these kids. So there is a gap, and that needs to be addressed. I've certainly approached the ministers involved, Jane Prentice and Christian Porter, about this.

Labor believes it's unusual to fully guarantee in advance the funding of any government policy or program, yet both sides of politics have done so in the case of the NDIS because it is so important. Even the recently enacted Medicare guarantee legislation, another Turnbull government face-saving measure, does not fully fund Medicare or the PBS. It merely makes more visible whatever level of funding happens to be determined by government from time to time. The NDIS is universally funded, and it's up to the government to provide the funding.

Labor fully funded the NDIS based on the information available to it in 2013, and the coalition government understands that. The coalition, for its own political purposes, says the scheme was underfunded. On the information available, it was not. We will disagree with the government, but we will support additional funding. However, here comes the crunch. The government wants to increase the Medicare levy on all Australians by a further 0.5 per cent as of 1 July 2019, a date selected because that's when the government had hoped the NDIS would be fully functioning. That appears to be wishful thinking at this stage.

Labor would also prefer to fund the NDIS by raising additional revenue rather than by cutting either the NDIS itself or other government programs. Where we differ from the government is that, given the current economic conditions, we believe now is not the right time to raise additional revenue by an across-the-board increase to the Medicare levy.

Labor also opposes the government's proposal to close the Education Investment Fund and use the balance remaining in that fund to support the NDIS. The Education Investment Fund forms part of a special government account to provide dedicated ongoing capital funding for tertiary education and research infrastructure. It was established by Labor in 2009 to address chronic problems in ensuring that the physical assets that sit on our university campuses are properly maintained and modernised where necessary. The need for such funding is felt most acutely by Australia's smaller regional universities. Abolishing the EIF is short-sighted and a false economy. Australia's tertiary sector is already reeling from what has been an ongoing, if not entirely successful, assault from this government to its baseline university funding. I remain unconvinced of the alleged merits of this proposal.

The government's case is not assisted by either absence of alternative government capital support or its 2016-17 budget decision to renege on its commitment to proceed with the creation of an Asset Recycling Fund for universities. That would have picked up around $3.5 billion of uncommitted education investment funds and deployed them on new government infrastructure, including in the education system. Again, like Canberra weather, it's hot one day, freezing the next.

Let me return to the main matter in contention: how best to raise an additional $4 billion to fund the NDIS. The government must rethink its plan to increase the Medicare levy by 0.5 per cent. According to the Parliamentary Budget Office, the proposed across-the-board increase in the Medicare levy will be one of two major contributors to the government's personal income tax take rising from 11.3 per cent to 12.5 per cent of GDP between 2016 and 2021.

Labor believes that the added cost of the NDIS can be met without making life any more difficult for those on modest and middle incomes. We recognise that low- and middle-income earners are already struggling to make ends meet. The government's plan was announced in the Treasurer's budget on 9 May, and Labor's approach was announced a short time after. Labor would retain the budget repair levy on those earning more than $180,000 a year and restrict the proposed Medicare increase to those earning over $87,000, which is not a high income by any measure. Labor's plan keeps some pressure off low- to middle-income earners while providing a further significant source of funding for the NDIS. The government is more about extricating the Treasurer from his failed attempt at blackmailing the parliament into passing his omnibus bill back in mid-February.

Six months after budget night, we're still to hear a sensible reason for not adopting Labor's approach or some variant of it. The Treasurer's second reading speech was, as usual, short on constructive ideas. It was a rendering similar to Sir John Falstaff but with twice the bluster and half the wit. Indeed, while calling for Labor's cooperation, the Treasurer, running hot and cold, yet again, and blustering, yet again, spent a good portion of his time falsely claiming Labor was abandoning the NDIS. Nothing could be further from the truth.

Labor does endorse raising additional revenue, but not from the poorest. Put the NDIS on an even more secure footing before it's fully operational. We won't give this government political cover for a tax increase that will fall most heavily on middle Australia, the very group that has not had a tax cut from this government in four long years and can't expect one in the immediate future. I've already dealt with the Treasurer's claim that the coalition has been a consistent supporter of the NDIS. His specious argument that somehow Labor left office with the scheme unfunded and his claim that he wants to take the politics out of the debate are completely laughable.

Labor is being neither inconsistent nor obstructionist in not supporting an across-the-board increase in the Medicare levy. Labor had the political ticker to introduce the Medicare levy and raise it in small, manageable steps in 1984, 1993, 1995 and 2013. Labor recognises that social reforms and better health outcomes come at a price. So too do the voters. Like us, they want those costs shared equitably. Whenever Labor has raised the Medicare levy it has acted on the back of measures that ensure the least well-off and those not so well-off are protected. That's how the accord and the social wage concept functioned during the lives of the Hawke and Keating governments. That's why there are the carve-outs that the minister referred to in his second reading speech.

When Labor voted to increase the Medicare levy across the board in 2013, it was just after we reduced taxes on low- and middle-income earners. Labor had just trebled the size of the tax-free threshold and the groups that benefited most from that were those on low to middle incomes. The current Treasurer may not have adopted a similar approach this time simply because there wasn't enough time between his plan A sinking without trace in late February and the budget in early May. In all probability, the Treasury would also have warned that further increasing the tax burden and the Medicare levy on middle Australia at this time would dampen economic growth quite severely.

The Treasurer argues that low-income earners don't need to be protected from his further 0.5 per cent increase in the Medicare levy because they are already carved out of the system. Not true. It's only true for those at the very bottom of the income distribution graph. As ACOSS submitted to the Senate economics committee, most of those with taxable incomes above $22,000, or $37,000 in the case of families, would pay the extra 0.5 per cent flat tax on all of their income. Labor's plan protects all of those earning more than the princely sum of $22,000 annually.

Middle Australia simply isn't up for another hike to the Medicare levy. Private debt is at record levels and, as we all know, the cost-of-living pressures are bearing down hardest on ordinary working Australians. We can dispense too with the superficially appealing argument that because all Australians can access the NDIS, irrespective of income, each should pay the same proportion of their income to fund the scheme. We have a progressive tax system, not a proportional one. The government's plan doesn't even try to rework the tax scales to protect the most vulnerable. This is a bad measure by any account.

The independent Parliamentary Budget Office only a week or two back reported on the distributional effects of this government's continued failure to index the income tax scales. Not only that, the cost-of-living pressures are already disproportionately affecting those on lower to middle incomes. In four years of office, this government has not once cut marginal tax rates applying to those with an income of $80,000 or less. That stance is set to continue for the foreseeable future. Over the next three years, if there is no adjustment to the taxation scales, the middle 20 per cent of income earners will see their average tax rate rise very significantly. This government is helping fund the NDIS by further fuelling the impact of budget bracket creep. (Time expired)

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