Doctors warn financial uncertainty of payroll tax will fuel existing recruitment challenges

The Treasurer’s last-ditch bid to waive fees for GPs is “too late”, according to doctors who warn clinics will go under and wait times at hospitals will go through the roof.

Applying a “draconian” payroll tax to GPs will accelerate the decline in medical graduates entering general practice and worsen the workforce shortages, doctors fear.

The warning comes after the Herald Sun revealed Treasurer Tim Pallas’ quiet offer to waive fees for doctors facing the prospect of going under.

But the last-ditch assurance sparked a fierce backlash from peak GP bodies, who said the measure will still leave many practices with no choice but to pass on costs to patients.

Victorian Treasurer Tim Pallas offered to waive fees for doctors facing the prospect of going under. Picture: Luis Enrique Ascui

Australian General Practice Alliance board member Dr Sarah Lewis said the olive branch was “too late” by the time a clinic was facing bankruptcy.

“All the doctors and nurses have left,” she said.

“Patients are going to be left without timely access to their care.”

Dr Lewis said clinics had such small margins that they could not absorb the rising costs and the financial uncertainty would fuel existing recruitment challenges.

“I have no doubt that this is deterring junior doctors from entering a career in general practice,” she said.

Dr Sarah Lewis says ‘patients are going to be left without timely access to their care’. Picture: Jake Nowakowski

“A lot of clinics will close.

“The waiting times in the hospitals are just going to go through the roof as patients have delayed care, delayed chronic disease management.”

She said it was “blindingly obvious that the state should step in with exemptions as other states have”.

“It’s a problem across the board, it’s not just a problem for the odd clinic.”

SIA Medical CEO Martin Sia, who owns eight practices across Melbourne, said he was now deterred from opening up new clinics.

“On the one hand I want to expand, but there’s too much uncertainty,” he said.

“You want independent GPs to open up their own practices and give patients a choice but chasing payroll tax will further detract people from going into the profession.

“There is already a huge shortage with GPs and this will further add to that challenge.”

The state opposition has urged everyday Victorians facing financial strife because of state-imposed taxes to write to Mr Pallas and request the same bail out.

Opposition leader John Pesutto likenesses Mr Pallas’ pledge to use his extraordinary powers as a “corruption of Victoria’s tax system”.

“Basically Tim Pallas is saying that if our taxes under Jacinta Allan are sending you broke, then write to us and we’ll let you off the hook,” he said.

“Is Tim Pallas going to decide to spare you this harmful payroll tax because he likes you, or because you’re a Labor Party supporter, or maybe you live in a marginal Labor seat?

John Pesutto says ‘basically Tim Pallas is saying that if our taxes under Jacinta Allan are sending you broke, then write to us and we’ll let you off the hook’. Picture: Luis Enrique Ascui

“He’s given no indication of what criteria he is going to employ to determine whether he decides to spare doctors this payroll tax. That’s not how our tax system should work.”

Mr Pallas questioned the concerns raised by peak doctor groups that some clinics will go under, and said not one GP had become insolvent during his time in government.

“There’s no evidence to demonstrate that and certainly no insolvency proceedings initiated by the SRO to demonstrate that that’s real, but if that is true I thought it was important that I spell out exactly what options would be available to GPs,” he said.

“They are the same options that are available to any other business that’s encountering difficulties.”

Mr Pallas said he rarely used his powers to wipe tax payments but has done so in the past for other industries, including construction businesses.

“The government looks at the fairness of the situation to make sure that we’re not extracting unreasonably from people who’ve not been able to be prepared and make adequate provision for it,” he said.

Mr Pallas said he would not scrap the payroll tax on medical services.

“If I make a special exception for GP practices, then I have to make other exceptions for other business in very similar material circumstances to GP practices,” he said.

“It would not be fair to every other taxpayer if I were to make a special exemption for GPs.