David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill is part of a package of measures to transform disability services by creating and locking in funding for DisabilityCare Australia, the national disability insurance scheme.

DisabilityCare Australia will change the lives of people with disability, their families and their carers. It will provide the 410,000 Australians with a significant and permanent disability the care and support they deserve, support they have waited far too long to receive.

The government is also providing certainty. Certainty for people with disability. Certainty for their families and carers. And certainty to all Australians. Certainty that DisabilityCare Australia will be funded in the long term.

The Gillard government will increase the Medicare levy by half a percentage point, from 1.5 per cent to 2 per cent, from 1 July 2014. This will provide DisabilityCare Australia with a strong and enduring funding stream.

The government will also ensure that every dollar raised from increasing the levy will go directly to fund DisabilityCare Australia. As part of this package of bills, the Deputy Prime Minister and Treasurer introduced the bill that will establish the DisabilityCare Australia Fund. The fund will hold and invest the proceeds from the increase in the Medicare levy and can only be used to meet expenditure directly related to DisabilityCare Australia.

To ensure that all Australians benefit from this fundamental reform, the government will make a share of the fund available to the states and territories to assist them in establishing DisabilityCare Australia.

Over a 10-year period, the government will allocate around $9.7 billion of the revenue from the increase in the Medicare levy to the states and territories to help fund their contribution to DisabilityCare Australia.

The risk of disability is something that all of us face and the rewards of supporting people with disability will be shared by all. That is why we are asking Australians to make a small contribution to fund DisabilityCare Australia.

For someone earning average wages of around $70,000 this will mean a modest contribution of around 96c a day—a small amount that will make a big difference to those with disability, their carers and their families.

Despite this small increase, virtually every taxpayer is still paying less tax now than they were in 2007.

I will now turn to the details of the bill.

This bill contains consequential amendments as a result of the increase in the Medicare levy contained in the Medicare Levy Amendment (DisabilityCare Australia) Bill 2013.

The family trust distribution tax is payable where a trustee of a family trust has made a family trust election and a distribution is made to, or a present entitlement conferred on, a person other than the primary individual or a member of their family.

The rate of the family trust distribution tax is currently 46.5 per cent, the top marginal tax rate of 45 per cent plus the current Medicare levy of 1.5 per cent. The alignment with the top marginal rate and Medicare levy minimises the incentive to reduce a person's tax through the use of a family trust.

To maintain this alignment, the Family Trust Distribution Tax (Primary Liability) Amendment (DisabilityCare Australia) Bill 2013 will increase this rate of tax to 47 per cent.

These consequential amendments will help to ensure the integrity of the tax system.

Further details of the bill are set out in the explanatory memorandum for the package of bills.

Debate adjourned.