Helen Polley (Tasmania, Australian Labor Party) Share this | Hansard source

I do not know where to start to respond to those comments. To say the least I think that there is a little bit of selective memory on the senator’s part. I rise today to speak in favour of the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008. Firstly, I would like to begin by thanking all those senators who have made a contribution in support of this legislation and those who will follow me. This is an important measure and I hope that the bill is passed so that low-income earners are no longer hit with this surcharge.

This bill will increase the Medicare levy low-income thresholds for individuals and families in line with increases in the consumer price index. The bill will also increase the Medicare levy threshold for pensioners below age pension age to ensure that, where these pensioners do not have an income tax liability, they will also not have a Medicare levy liability. This is another example of the Rudd Labor government doing the right thing by working families. We are taking the pressure off families and their budgets. This measure, like our tax cuts and our education support measures and like axing Work Choices, will help working families. Essentially, as a result of this change, many individuals will be up to $1,000 a year better off and couples will be up to $1,500 per year better off.

The thousands of Australians without private health insurance who are being hit with this unfair tax will receive immediate tax relief. This bill is a good policy and it is keeping the commitment that Labor made prior to the election. Unlike the Liberal coalition, the Labor Party keep their election promises. We do not try to fool the Australian people with core and non-core promises. This measure provides real choice for families. Taxpayers on low incomes will be able to choose whether to take out private health insurance or whether to use that money in another area of their budget. Those on the Liberal coalition benches are threatening to block this bill. Why? Their only objective is to score cheap political points. This readjustment is something that is long overdue, something that the previous government should have done a long time ago but did not.

When the Medicare levy surcharge was introduced the policy was targeted at high-income earners. The Medicare levy surcharge thresholds have not been increased since the surcharge was introduced on 1 July 1997. The fact is: since 1 July 1997 average weekly earnings have increased significantly so now many people are being unfairly hit with this tax. Around eight per cent of single taxpayers are estimated to have exceeded the Medicare levy surcharge threshold when the surcharge was introduced. If the thresholds remained unchanged, by 2011-12, 45 per cent, or more than two million single taxpayers, would be subject to the surcharge.

With the new thresholds, around 8.5 per cent of single taxpayers are projected to exceed the new singles threshold at the end of the budget forward estimates. The member for Corangamite, Darren Cheeseman, commented on this bill earlier this year—and I will use what he said because I think it reflects the state of the Liberal Party and its current situation. He said:

The threshold has been frozen for a decade. When most other similar measures have been adjusted for changing circumstances, time has stood still on this one. In a way, it has mimicked the Liberals. It has moved about as far as Peter Costello’s leadership bid, and that is nowhere. The only difference is that this has not been frozen by fear; it has been frozen because of Liberal policy paralysis.

The Rudd Labor government is committed to ensuring Australia’s healthcare system remains accessible and sustainable into the future. We support a mixed-use health system with both the public and private sectors working in tandem to meet the health needs of the community.

The reason why we have increased the Medicare levy surcharge thresholds is to get rid of an unfair tax on average income earners. When the surcharge was introduced by the previous government the then health minister, Michael Wooldridge, said:

High income earners will be asked to pay a Medicare Levy surcharge if they do not have private health insurance. These are the people who can afford to purchase health Insurance.

The Rudd Labor government shares that view, and that is why we have raised the thresholds to give relief to average earners who are now being forced to pay the tax.

Three things undermine the false argument that this measure will put unmanageable pressure on our public hospital system. Firstly, a number of people with private health insurance are young, healthy people who do not draw on the private health system and, similarly, they will not draw on the public system. Those opposite want to use healthy young Australians as cash cows.

Secondly, scores of people with private health insurance already use the public system. Thirdly, and perhaps most importantly, the government is injecting significant resources into our public hospitals, after years of disinvestment.