Palaszczuk urges Medicare levy jump over GST rise

Annastacia Palaszczuk has supported a proposal to use the Medicare levy to cover future heath funding.

Annastacia Palaszczuk says she will not be pressured into backing a rise in the goods and services tax. Picture: Lyndon Mechielsen

Queensland Premier Annastacia Palaszczuk has backed a proposal by her Victorian Labor counterpart Daniel Andrews to use the Medicare levy to cover future heath funding, saying it could be gradually doubled to 4 per cent over the next eight years.

On the eve of today’s leaders’ retreat in Sydney, Ms Palaszczuk ruled-out supporting a hike in the GST to 15 per cent to fund rising health costs as her Treasurer ­Curtis Pitt said the government would consider “sensible proposals’’ to change the consumption tax.

Instead, Ms Palaszczuk said her government was modelling a proposal to increase the Medicare levy — currently at 2 per cent — by a quarter of a percentage point every year for the next eight years which would cover commonwealth cuts to state funding increases, announced in last year’s federal budget.

The additional 2 per cent on the levy could eventually deliver Queensland as much as $800 million a year in new funding and would be quarantined to health services under the plan.

“I think it is an option that we should give serious consideration to,’’ Ms Palaszczuk said in an interview with The Australian.

“COAG should focus in on this health issue, it is going to have a huge impact on families and Daniel and myself are putting on the table an option that I think the Prime Minister and other leaders need to look at.

“We need funding certainty into the future and an increase to the Medicare funding should be additional funding and not replaced or reduced Australian government funding to the states.’’

Ms Palaszczuk, who will meet separately with Tony Abbott over access to the commonwealth’s $5 billion infrastructure fund, said she would not bow to pressure to sign on to changes in the rate or base of the GST.

Any changes to the GST must be agreed to by state and territory leaders.

Ms Palaszczuk said while she would go to COAG with an open mind, she would not break her promise to voters ahead of her January 31 election win to block any move to change the GST.

“I am sticking to that position,’’ she said. “I don’t believe raising the GST is overall in the best interests of families and households out there.”

Earlier, Mr Pitt said the state government would consider “sensible proposals” to change the GST or other taxes.

“But it would need to be a compelling argument put forward to make us change our view on the GST,” he said.

Ms Palaszczuk said she was also concerned that if the GST was increased, the Abbott government would then “vacate the health space’’ and abandon existing funding grant agreements with the states.

The Queensland Premier said she would also lobby for the federal government to change the tied grant structure with the states.

“I think the states have a better understanding of the service delivery and where money can be better spent,” she said.

Ms Palaszczuk said she was meeting with Mr Abbott about Queensland being locked out of the $5bn infrastructure fund, which requires states to privatise state assets to access funding.

She said voters at the January 31 election had supported Labor’s stance to oppose the former Newman government’s plan to privatise the state’s electricity network.

The Liberal National Party has since abandoned its support of the plan.

“On a per capita basis, Queensland would be entitled to about $1bn and now he is spending that money as he sees fit, splitting it between other states and as Premier I am not going to cop that,’’ she said.