Senate fight looms over NDIS funding

Key crossbenchers warn of the levy increase’s impact on low-income earners, which may spell trouble for the PM.

Malcolm Turnbull has called for a bipartisan approach to funding the NDIS. Picture: AAP

The Turnbull government is facing a fight with the Senate over its plans to fully fund the National Disability Insurance Scheme by increasing the Medicare levy, as key crossbenchers warn of the tax’s impact on low-income earners.

The government has proposed hiking the Medicare levy from 2 per cent to 2.5 per cent in two years for all taxpayers earning above $21,655.

But independent senator Nick Xenophon, who leads a crucial bloc of three upper house senators, said he had concerns about its effect on Australians on low wages.

Like Labor and the Greens, he wants the temporary deficit levy on the nation’s most wealthy — which is due to lift from July 1 — kept in place.

“The issue of the Medicare levy and the impact that may have on lower income earners is something that we want to raise,” Senator Xenophon said.

“It’s been our view that a deficit levy on high income earners would not be unreasonable to continue considering we still have a deficit — it was a deficit that was supposed to disappear years ago is still with us. I would’ve thought that top 3 per cent or so of income earners should be able to pay just that little bit more tax while we still have a deficit.”

Calling on the parliament to “depoliticise” the NDIS, the Prime Minister said the government’s policy was a “fair proposition” as those on higher incomes would “pay a lot more” than those on lower incomes.

“We are confident that the Senate will approve it. We call on the Labor Party to support it, and we call on Bill Shorten to be consistent,” Mr Turnbull said.

“What it will mean is it will take the funding of the National Disability Insurance Scheme out of politics. Let’s depoliticise this. Let’s just pay for it ... the time has come to pay for the National Disability Insurance Scheme and the best way to do that is transparently through that levy, so it would be 1 per cent of the Medicare levy’s 2.5 per cent would go to the NDIS, and I think that’s fair.”

Scott Morrison also blasted Labor’s plan to limit the Medicare levy to those in the top two income tax brackets and insisted the government had “come to the middle ground” with its proposal.

“Apparently a rich person today in Bill Shorten’s lexicon is someone earning $87,000 and one dollar. I mean, if he wants to make that case to the Australian people I think they’ll call him out on it and they will tell him he is dreaming and he is completely out of touch, particularly in cities like Melbourne here and in Sydney, he is seriously out of touch,” the Treasurer said.

“What we saw last night was just a political rant, and Australians are just fed up with that. They are not interested in Bill Shorten’s political rants, shaking his fist at the clouds and carrying on he like he is at some sort of union conference.”

Labor last night announced its plan to keep the deficit levy in place while restricting the Medicare levy to those earning over $87,000.

However Bill Shorten was today unable to say how much revenue the policies would raise during a radio interview — later clarifying they would bring in $7.8bn over the forward estimates.

Greens treasury spokesman Peter Whish-Wilson has also pushed for the deficit levy to be made permanent instead of a “flat increase” to the Medicare levy.

Without the support of Labor or the Greens, the government will need to win over 10 of the 12 Senate crossbenchers to legislate the 0.5 per cent Medicare hike.