Julia Gillard rejected states' NDIS offer

JULIA Gillard this week rejected an offer from state leaders of unconditional political support for a Medicare-style levy to fund an NDIS.

JULIA Gillard this week rejected an offer from state leaders of unconditional political support for a Medicare-style levy to fund a National Disability Insurance Scheme, fearing Tony Abbott would seize on the proposal as a "great big new tax".

The Australian understands premiers and chief ministers meeting the Prime Minister at The Lodge in Canberra on Tuesday night strongly backed the push for an NDIS and argued that a levy would avoid messy intergovernmental bickering and be the most effective way to fund the landmark reform.

Sources confirmed Ms Gillard refused, opting to press premiers for funding from their budgets, which led to Wednesday's Council of Australian Governments decision for limited NDIS rollout trials in Labor states.

As news of the offer emerged yesterday, Ms Gillard, facing frustration from an impatient disability sector, began a politically charged media blitz to attack the NSW and Victorian governments, accusing them of refusing to offer funding for the scheme for political reasons.

With bickering continuing last night, the Opposition Leader accused Ms Gillard of political posturing, renewing his appeal for the establishment of an all-party parliamentary committee to oversee the development of the NDIS. "The last thing that we would want to do would be to give people with a disability and their families false hope that there will be an NDIS by allowing it to become bogged down in political posturing," he wrote in a letter to Ms Gillard.

The NDIS is estimated to cost $15 billion a year when it is fully operational in 2018-19. The Productivity Commission recommended that the commonwealth government should be the single funder of the NDIS and said it should be financed from general government revenue.

If the commonwealth did not adopt this option, the commission said, it "should legislate for a levy on personal income (the National Disability Insurance Premium), with an increment added to the existing marginal income tax rates, and hypothecated to the full revenue needs of the NDIS".

On Wednesday, Ms Gillard sought state contributions to go with $1bn in commonwealth funding to be spent developing the insurance scheme through trials in several states.

However, she won agreement only with the Labor states, leaving the most-populous states of NSW and Victoria without trials.

Yesterday, as Ms Gillard hit the airwaves to apply pressure to NSW Premier Barry O'Farrell and Victorian counterpart Ted Baillieu, The Australian confirmed that state premiers dining with Ms Gillard at The Lodge the night before the COAG meeting attempted to persuade her to adopt a levy.

Sources said Queensland Premier Campbell Newman suggested a tax along the lines of the Medicare levy, describing the chance to achieve an outcome on the NDIS as a potential Obama moment for Ms Gillard, referring to the US President's landmark healthcare reforms. However, according to one of the premiers who attended the dinner, Ms Gillard was worried about the politics of such a move, expressing concern such a levy would be described as just another big tax.

Mr Abbott has used the "great big new tax" political attack to deride new levies introduced by Labor. The premiers pledged support to fight any political attack on a levy but she rejected the idea.

A spokesman for the Prime Minister confirmed that Mr Newman had proposed a levy to fund the NDIS at the dinner and the topic was supported by other premiers and chief ministers.

However, he rejected claims the proposal had unanimous support from the premiers and chief ministers, naming Mr O'Farrell and Mr Baillieu as two who did not speak in its favour. Mr O'Farrell would not comment but others at the meeting said he supported the proposal.

Ms Gillard's spokesman attacked the proposal as "nothing but a political stunt" by Mr Newman. "In public, Mr Newman was complaining about higher taxes; in private, he was hatching spur-of-the-moment plans to jack up income taxes," he said.

"If Mr Newman was serious, he'd find a way of funding the NDIS as smaller states have done. The commonwealth is not going to jack up income taxes because Mr Newman can't be bothered finding money for people with a disability."

Sources told The Australian the NDIS discussion came as the premiers and chief ministers were finishing their main courses, with Mr Newman asking Ms Gillard: "Have you thought about a tax?" as a way of achieving consensus on the scheme. "Like a flood levy," Mr Newman added.

The flood levy, applied at 0.5 per cent on incomes between $50,000 and $100,000 and 1 per cent on incomes above $100,000, raised $1.8bn last financial year. In 2009, Kevin Rudd's Health and Hospital Reform Commission called for its proposed denticare scheme to be funded by a 0.75 per cent rise in the Medicare levy that would raise $3.7bn.

When the Prime Minister expressed concern about the politics of using a tax or levy to fund the NDIS, Mr Newman pointed out that the levy to help cover the rebuilding of Queensland after last year's floods had not turned into a political problem for the federal government.

South Australian Labor Premier Jay Weatherill spoke next, saying he had raised the issue of a levy previously with federal Minister for Disability Services Jenny Macklin, who reportedly told him not to bother mentioning the idea to Ms Gillard. He said his government had crunched the numbers and considered a 0.5 per cent increase in the Medicare levy should be sufficient to fund the NDIS.

It is understood West Australian Premier Colin Barnett agreed, with Tasmanian Premier Lara Giddings and Mr O'Farrell both offering support for Mr Newman's suggestion. Mr O'Farrell said for a levy to work, all parties must support the idea.

Conservative premiers claimed Mr Baillieu supported the idea but said little. He could not be reached for comment last night.

Talks resumed the next day over a breakfast attended by the four conservative premiers, who agreed Ms Gillard seemed more interested in being able to get the trials in place ahead of the next election than sorting out the long-term funding mechanism required to make the NDIS a reality. It is understood the premiers said they felt Ms Gillard did not want to share any credit for the scheme.

The levy proposal was not discussed at the COAG meeting.

Mr Newman told the ABC on Wednesday a deal was put before the Prime Minister, but he refused to discuss the details.

Mr Barnett yesterday confirmed the premiers had been united at the "very convivial" dinner on the need for an NDIS but that Ms Gillard had missed an opportunity reach an agreement.

"We got to a point where every person around the table, each state premier, chief minister, was saying, 'Look, there are issues, we've got complexities from one state to another' but . . . everyone around the table said, 'We support going down this path'," he told Sky News.

"We're committed to doing it, and I don't know why Julia Gillard did not grasp that opportunity the next day. She had every state premier saying, 'Let's do it, let's go down this path'."

Yesterday, Ms Gillard sought to increase pressure on Mr Baillieu and Mr O'Farrell, saying the issue at hand was whether they could "find it in their hearts to do the right thing by the people that they represent".

"We'll find ways of funding the NDIS just in the same way that we found ways of funding other big reforms," she said. "I'm not having people start speculating and starting fear campaigns about how this will be funded."

Mr Abbott has strongly backed the NDIS and the Productivity Commission report but been non-committal on funding.

In his letter to Ms Gillard last night, he accused her of political posturing and failing to provide premiers with sufficient detail to secure their financial backing.

Urging her to reconsider his proposal of setting up a bipartisan parliamentary committee to ensure the planning and delivery of an NDIS remained well above politics, he said he feared Labor was working to " a political timetable" on the NDIS rather than the commission report: "Without the necessary funding and the involvement of all states and territories, the NDIS will never move from being a good intention to a policy reality."

Additional reporting: Sue Dunlevy