Treasurer Scott Morrison backs down from controversial Medicare levy hike saving families $600

A SHOCK move by Treasurer Scott Morrison to back down on a controversial Medicare levy hike before the Budget will save everyday Australians up to $600 every year.

FAMILIES will be $600 a year better off with today’s monumental Turnbull government backflip on raising the Medicare levy.

Treasurer Scott Morrison has sensationally scrapped plans to push up the Medicare levy from 2 per cent to 2.5 per cent next year, after failing to get it through the Senate.

It will cost the government $8.2 billion in revenue.

Less than two weeks before handing down his third federal Budget, Mr Morrison said the hip-pocket relief for families was possible because the economy had strengthened to the point that the government can now fully fund the National Disability Insurance Scheme.

Treasurer Scott Morrison says ‘all Australians must share in the benefits of a stronger economy. Picture: Luis Ascui

The increased revenue is a result of stronger commodity prices and improved business conditions.

“All Australians must and do share in the benefits of a stronger economy,” Mr Morrison­ said. “Naturally, a stronger economy provides for a stronger budget.

“Business conditions are also strong, prompting a welcome surge in investment in the non-mining sector, ­increasing by 12.4 per cent through the 12 months to ­December 2017 — the largest rise in a decade.”

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The Medicare levy rise was set to take effect from next year and would have cost families earning $60,000 about $600 a year, and families on dual incomes totalling $140,000 about $700 a year.

Mr Morrison is now set to be accused by Labor and his critics of gross hypocrisy.

At last year’s Budget, Mr Morrison was moved to tears as he argued the Medicare levy increase would fund the $57 billion shortfall in funding the National Disability Insurance Scheme. An emotional Mr Morrison drew on the experience­ of his brother-in-law, Gary Warren, who suffers­ from MS.

Families will have an extra $600 in their wallet with no levy rise.

Today, in a speech to the Australian Business Economists, Mr Morrison will say that the government will now be able to fully fund the NDIS without raising the Medicare levy.

“We did not put forward this proposal in last year’s budget lightly, as we knew it would cost Australians more, but we had faith in the big heartedness of Australians,” he said. “A year later, our fiscal position has improved. That is why we are now in a position to give our guarantee to Australians living 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 any longer having to increase the Medicare levy.”

Labor’s policy is to raise the Medicare levy for those earning more than $87,000, meaning the government will now be able to argue a clear difference ahead of a federal election — one party is for tax cuts while the other will tax more.

“As economists, you are more than aware of the intrinsic link between tax and economic growth and how creating an unnecessary tax burden squashes incentive and aspiration, and chokes demand,” Mr Morrison will say in his speech today.

Originally published as Treasurer Scott Morrison backs down from controversial Medicare levy hike saving families $600