Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Hansard source

I would like to thank all those senators who have participated in this debate on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. This is a bill which will increase the Medicare levy surcharge thresholds for individuals and families. It is aimed at delivering immediate relief for many thousands of Australians on modest incomes. The surcharge imposes a one per cent increase in the Medicare levy liability on individuals whose incomes are above the threshold and who do not have private health insurance or hospital cover. This bill increases the thresholds from $50,000 to $75,000 for singles and from $100,000 to $150,000 for couples and families.

The amendments will apply to the 2008-09 year of income and to later income years. In addition, the singles threshold will be annually indexed for movements to average weekly ordinary-time earnings and it will increase in $1,000 increments. I note for the chamber that, in order to ensure that taxpayers are not disadvantaged by the change in the singles threshold to that proposed in the budget announcement, the law will be amended so that, as long as taxpayers obtain appropriate private health insurance cover before 1 January 2009, they will avoid the Medicare levy surcharge for the period 1 July to 31 December 2008.

The Medicare levy surcharge was introduced in 1997 by the then government, which stated that the goal was to target high-income earners. Wages have increased by more than 55 per cent since then and that is pushing many people on modest incomes, who cannot necessarily afford private health insurance, into the net. Hundreds of thousands of Australians on modest incomes have been paying this tax—more each year as the threshold lost its relevance to wages growth. Families with two income earners on $60,000 each have been paying this tax; they will get relief via this bill of $1,200, an amount not to be sneezed at even by those on the other side who seek so earnestly to defend those who obviously can afford luxury cars. The Liberals have been very dismissive of this amount of money and they are demonstrating just how out of touch they are when it comes to people in this country who are trying to make ends meet.

We need to remember that these thresholds were not developed through some scientific or empirical methodology. Former health minister Dr Wooldridge has admitted that, when negotiating this with former Senator Harradine, he did so over a bottle of Jameson whiskey.