NDIS backflip: Disability advocates demand funding certainty from Turnbull Government

AFTER scrapping a proposed rise to the Medicare levy, Treasurer Scott Morrison has revealed more about what to expect from this year’s Budget, including a tax crackdown on big tech.

AMAZON, Google and other digital giants will be in the firing line of this year’s federal Budget as the government seeks to extend its crackdown on multinational tax avoidance to the digital economy.

Treasurer Scott Morrison today signalled there would be a tax overhaul to deal with a “big part of our tax base being ripped up and thrown out the door” by the business models of global digital and social media companies.

In a major speech in Sydney two weeks out from the Budget, the Treasurer also confirmed the government would dump its plan to increase the Medicare levy to fully fund the NDIS.

He also guaranteed there would be tax relief for middle Australians in the Budget.

Federal Treasurer Scott Morrison will today announce the government will no longer raise the Medicare levy. Picture: AAP

While signalling the crackdown on the digital economy today, Mr Morrison said the government’s recent measures to target multinational tax avoidance had already gained $1.85 billion for the nation’s GST funding pool.

But he said taxing the digital economy as a whole remained “more of a conundrum”.

“We are seeing a big part of our tax base being ripped up and thrown out the door as the business models of global digital and social media companies dominate,” Mr Morrison told the Australian Business Economists forum today.

“Our international tax system was simply designed for a different time and a different economy. This is increasingly acknowledged by the companies themselves.

“I met with a handful of those large companies in Seattle and Silicon Valley, including Google and Amazon, and there is an understanding the current system that has benefited them greatly is just not sustainable and certainly not palatable to the public.”

Amazon CEO Jeff Bezos and his wife MacKenzie Bezos. Picture: AFP/ Jorg Carstensen

Australia is working with other countries and the companies themselves to reform taxes for the digital economy, Mr Morrison said, acknowledging it was a global problem.

“We want to see the economic benefits of this new economy flourish and grow, but they shouldn’t be growing simply because the tax system hasn’t caught up with them yet.

“It will — but I prefer that to happen in a sort of way that doesn’t stymie its growth or hold back the benefits that it can provide to the broader economy and the jobs it will provide.”

HIP-POCKET RELIEF FOR MIDDLE AUSTRALIA

Tax relief for middle to low-income Australians, also in the May Budget, would not endanger Australia’s AAA credit rating or the scheduled return to surplus in 2020-21, Mr Morrison said today.

“We will be delivering tax relief to put more money back in the pockets of middle to lower income Australians to deal with their own household and family budget pressures,” he said.

“We acknowledge that as our economy continues to strengthen and as our budget position is improving, many Australians have been doing it tough and many are yet to experience the benefits of that growth.

“This is why it is important that when we consider any plan for tax relief, middle to lower income families will come first as part of any broader plan.”

Mr Morrison dismissed suggestions the tax relief was a handout designed to win over voters.

“It’s simple, we believe the tax that you pay is your money. You earned it. You’re paying us, not the other way around,” he said.

Tax relief for middle to low-income Australians will not endanger Australia’s AAA credit rating or a scheduled return to surplus in 2020-21, Mr Morrison says.

He slammed efforts to play “class warfare” in Australia by targeting wealthy taxpayers.

“Do we really think the country and our economy is going to grow by adopting the politics of envy rather than the economics of opportunity? It has never worked before,” he said.

“Success should be nurtured and celebrated, instead of having a target on its back from Labor.”

MEDICARE LEVY HIKE SCRAPPED

Earlier today, disability advocates said they feel “betrayed” by the government’s decision to dump a Medicare levy hike that would have fully funded the National Disability Insurance Scheme.

The average working family will escape paying about $600 extra per year now the government has ruled out raising the Medicare levy from 2 to 2.5 per cent.

But disability advocates said the backflip on the levy, which was designed to fill a $57 billion shortfall in funding, would mean they have to go “cap in hand, like charity cases” to argue for funding ahead of every future budget.

“We are stunned at the news that the federal government is walking away from the commitment to fully fund the NDIS, now and into the future,” People with Disability Australia co-chief Therese Sands said today.

“Last year, the Prime Minister said that the increase to the Medicare Levy was essential so that it is fully funded,” Ms Sands said.

“People with disability feel betrayed and ambushed by this decision and are left wondering what else is in this year’s budget?”

PWDA said the Treasurer’s announcement only guaranteed funding for the NDIS for this budget but would not lock in funding in the future.

“We are now left to go cap in hand, like charity cases, at each and every budget. This is unacceptable,” Ms Sands said.

Disability Discrimination Commissioner Alastair McEwin. Picture: Kym Smith

Disability Discrimination Commissioner Alastair McEwin also raised concerns today that no long-term funding plan is in place.

Mr McEwin told ABC radio he wasn’t fazed where the funding came from so long as it was guaranteed.

“Whether it be through taxation or through other revenue streams, we need to remember the core responsibility is for the government to provide a fully funded NDIS so people with a disability can lead independent lives,” he said.

Australian Medical Association president Michael Gannon also called on government to ensure sustainable funding, while National Disability Services chief executive Ken Baker demanded the government outline its funding plan.

“The government must go as far as they possibly can to removing any uncertainty about the security of this funding for this very important reform,” Dr Baker said.

Mr Morrison will declare today that a better-than-­expected Budget bottom line means the government does not have to implement the Medicare levy hike.

“Our economy is finally shaking off the dulling effects of the downturn in the mining investment boom,” he will tell Australian Business Economists in Sydney today.

“That is why we are now in a position to give our guarantee to Australians with a disability, and their families and carers, that all planned expenditure on the NDIS will be able to be met in this year’s Budget and beyond without having to increase the Medicare levy.”

The levy, announced in last year’s Budget, would have cost a family on $200,000 an extra $1000 a year.

A low-­income worker on $40,000 would have paid an extra $200 a year.

The government has been unable to pass the legislation through the Senate however, with Labor only supporting an increase in the Medicare levy for people earning more than $87,000.

Shadow Treasurer Chris Bowen welcomed Mr Morrison’s announcement, saying the government should never have proposed the levy hike.

He pledged that Labor in government would always ensure the NDIS was funded.

Mr Morrison will reveal further detail about how the government will fund the NDIS in the Budget on May 8.

Originally published as NDIS backflip: Disability advocates demand funding certainty from Turnbull Government