May 1 (Bloomberg) -- Australians would pay a higher public health levy to help finance a new program to aid the disabled, Prime Minister Julia Gillard said as she seeks support for a key pledge less than five months ahead of an election.
The Medicare levy would rise from 1.5 percent to 2 percent to help fund the National Disability Insurance Scheme, or NDIS, Gillard told reporters in Melbourne today. The increase would mean an Australian on an average income of about A$70,000 ($72,600) a year will pay around A$1-a-day extra to aid the nation’s 410,000 disabled people, Gillard said.
“Every Australian lives with the prospect that at some time in their lives they or one of their family members could be confronted by a profound disability,” Gillard said. “I will be asking the nation in September to make a choice too, to endorse this plan, to make sure we support disability care around Australia.”
Gillard’s ruling Labor party, trailing in polls ahead of the Sept. 14 election, faces a slump in tax receipts that forced her in December to abandon a commitment to return the budget to surplus. Australia’s first female leader is also pledging to increase funding for schools as the government prepares the next fiscal year’s spending plan, to be released on May 14.
“Improving support for the disabled appeals to Australians, as most know of a disabled or ill person who is struggling to cope financially,” said Andrew Hughes, who conducts political-marketing research at the Australian National University in Canberra. “Now Gillard’s backed away from the surplus, she needs to go hard on health and education, which is Labor heartland policy. It’s a chance to sound positive in what’s so far been a negative year.”
The NDIS aims to provide lifelong support for people with physical and mental handicaps and their families through increased joint funding from the federal government and the states. Medicare is a government-run health care system first introduced in 1975, which currently charges most Australians a 1.5 percent surcharge on their income tax in return for subsidized treatment from doctors and some specialists, as well as free access to public hospitals.
Federal and state governments spend more than A$7 billion a year on the disability sector, according to a Productivity Commission report released July 2011. It estimated that amount would need to about double to provide disabled people with necessary support.
The change to the levy would raise about A$3.3 billion in the first year after becoming operational on July 1, 2014, Gillard said in a separate statement today. Between then and mid-2019, when the full scheme comes into place, the levy would accumulate A$20.4 billion if parliament approves the plan.
Gillard’s National Disability Insurance Scheme Bill, which passed parliament in March, allows the program’s initial launch in July in the states of South Australia and Tasmania, with other regions trialing the program. New South Wales, the largest state, will do a full roll out of the NDIS by July 2018. Some states, such as Queensland and Western Australia, have balked at signing up to the program over funding and management issues.
The prime minister is also seeking agreement by June 30 from the eight states and territories to implement her plan to boost education spending by A$14.5 billion over six years. New South Wales signed on to the plan on April 23.
The government will collect A$12 billion less tax revenue in the year to June 30 than forecast by Treasury in October, placing pressure on the federal budget, Gillard said April 29.
After recording a A$44 billion deficit last fiscal year, the government forecast a budget surplus of A$1.08 billion in the 12 months ending June 30 in its October mid-year review.
Since then, the national budget has fallen behind projections due in part to the effects of the high Australian currency. The deficit was at A$23.6 billion for the first eight months of the financial year, A$5.7 billion wider than was projected in the government’s Mid-Year Economic and Fiscal Outlook, according to Treasury figures released April 12.
Australia’s budget will remain in deficit for longer than forecast and the government faces tough decisions to make up for tax revenue shortfalls caused by the currency’s sustained strength, Treasurer Wayne Swan said.
“The money simply isn’t coming in the door like it used to,” Swan said in the text of an address to be given in Melbourne today. “That means as a country we are facing some very difficult choices.”
Labor’s support remained at 45 percent on a two-party preferred basis, while Tony Abbott’s Liberal-National coalition held at 55 percent, according to a Newspoll published in the Australian newspaper on April 23.
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