Federal Budget 2017: Senate likely to back Medicare levy increase, but path unclear for welfare crackdown and schools funding changes

THE Senate should approve an increase to the Medicare levy but the government will find it harder to secure backing for a crackdown on lazy dole recipients and drug testing of Centrelink recipients.

AN increase to the Medicare levy should get the Senate’s tick-of-approval but the government will find it harder to win the backing it needs for a crackdown on lazy dole recipients and the drug testing of Centrelink clients.

Coalition Senate negotiators have been emboldened in recent months by their success at convincing the Nick Xenophon Team to support company tax cuts in exchange for an energy security and affordability package.

Labor and key crossbenchers have previously indicated they would be willing to consider voting for an increase in the Medicare levy to ensure the National Disability Insurance Scheme.

The government is giving two year’s notice of an intended 0.5 percentage point increase in the Medicare levy.

Nick Xenophon (left) and Senator Derryn Hinch. Two of the Senate crossbench. Picture: Lukas Coch/AAP

The Opposition’s preferred option is for the government to shore up programs such as the NDIS by retaining a levy on high-income earners and dumping plans to cut taxes for large companies — but that doesn’t mean it will vote against the levy increase.

Labor, the Greens and the Nick Xenophon Team have all previously voted against measures they believed unfairly targeted welfare recipients.

The passage of the “Gonski 2.0” to boost schools funding by $19 billion over the next decade will require delicate negotiations with the Senate crossbench.

Labor is siding with Catholic education authorities who claim they are being ripped off under the new funding formula.

The Greens have indicated that they are likely to support the changes but key crossbencher Nick Xenophon will consult with the Catholic education lobby before deciding how to vote.

Australian Conservatives Senator Cory Bernardi is opposed to the school funding changes.

Some Senate crossbenchers will be sympathetic towards the plight of university students facing higher fees and lower student loan repayment thresholds, but the government can argue the measure is far less radical than its former plan to completely deregulate fees.

Communications Minister Mitch Fifield will be on safer ground when he tries to win support for an extensive overhaul of media laws.

Labor is opposed to an easing of media ownership restrictions but Senator Xenophon and other crossbenchers have been impressed by the government’s promise to ban gambling advertising during live sporting broadcasts, invest in women’s sport broadcasts and abolish broadcast licencing fees for free-to-air TV and radio stations.

The abolition of 457 work visas and a new levy on employers who bring in foreign workers is likely to pass with crossbench support.

Negotiating new spending measures is generally easier than cuts in government spending and entitlement programs.

The spending cuts blocked by the Labor and the crossbench in the 2014 Budget were generally unpopular but many of the measures in this year’s Budget will be popular with large sections of the community.

HOW THE BATTLELINES ARE DRAWN

MEDICARE LEVY

LIBERAL

Increase the Medicare Levy by 0.5 percentage points to help fund the National Disability Insurance Scheme

LABOR

Has been willing to consider a Medicare Levy increase but argues that it would be better to cancel tax cuts for big businesses and the wealthy

HOUSING AFFORDABILITY

LIBERAL

New savings scheme for first home buyers, minor changes to negative gearing rules

LABOR

New tax on landlords who leave homes empty; reform negative gearing and capital gains tax

SCHOOL FUNDING

LIBERAL

Increase school funding by $18.6 billion over 10 years through the Gonski 2.0 needs-based funding model

LABOR

Claims the Government is actually cutting funding by $22 billion and the new funding plan is unfair to Catholic schools

UNIVERSITY FUNDING

LIBERAL

Tuition fees to increase by up to $3,800 per degree and graduates to replay loans sooner

LABOR

Believes the Government’s measures are too harsh

FOREIGN WORKERS

LIBERAL

Replace 457 visas with two new temporary visa classes and tighten eligibility criteria.

LABOR

Increase employer fees for temporary 457s visas to about $1,600 per year and tighten eligibility criteria

WELFARE

LIBERAL

New “three-strikes” policy for job seekers, random drug testing to be trialled

LABOR

Suspicious of measures it believes could hurt welfare recipients

MEDIA REFORM

LIBERAL

Ban gambling advertising during lives sport broadcasts, allow media companies to own a newspaper, radio station and TV station in the same market

LABOR

Wants to maintain the ban on media companies owning a newspaper, radio and TV station in the same market

TERRORISM

LIBERAL

Boost funding for spy agencies ASIO and ASIO and hire almost 300 additional Federal Police

LABOR

Says diverting funds from foreign aid to boost the security services is contrary to the national interest

Originally published as Federal Budget 2017: Senate likely to back Medicare levy increase, but path unclear for welfare crackdown and schools funding changes