Fiscal illusion and the Medicare levy

Only mean-spirited people would begrudge paying more tax to support the disabled. Right? Well that’s the story the Prime Minister’s Press Office is pushing on Twitter.

NDIS -PMO tweet

Wrong.

This is a classic case of fiscal illusion. The first thing to remember is that the Commonwealth cannot earmark money for specific purposes. Section 81 of the Constitution reads:

All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution.

So all revenue raised goes into a single big pot of money that then gets used to pay for all the school halls and insulation and what ever else they can think up in Canberra. So by increasing the so-called Medicare levy the government have simply increased taxes. In this case an additional income tax with a slightly different tax base to the larger well-known personal income tax.

The fact of the matter is this: The new tax increase will not cover the cost of the NDIS. The government is going to have to increase debt to pay for the NDIS – this is because the government simply refuses to cut any wasteful expenditure. As Peter Costello told the ABC last night:

I wouldn’t be introducing it in this form at this time. The budget’s in deficit. To fund it you’ll have to borrow more money. Wouldn’t you say, seeing as we’re in deep deficit, seeing as we can’t afford to pay for all the spending we’ve currently got on the books, why should we actually spend more? I’d actually be looking at ways in fact to reduce the spending now, maybe to put it – put some money aside in the future. I wouldn’t be sitting down and saying we’ll go into a new spend which could be when it fully flowers something like $8 billion a year.

It’s not like Australia doesn’t already spend nearly $24 billion on disability care.

Disability - 2012-13

That’s just the Federal government.

So the point isn’t whether people think we should spend money on the disabled or not, the question is how is the additional expenditure on the disabled going to be financed?

Update: Stella Young at The Drum is worth while reading on this topic.

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51 Responses to Fiscal illusion and the Medicare levy

  1. Leigh Lowe

    If the PMO is saying that there are 400,000 people with a disability, why are there 800,000 receiving the disability pension?

  2. adrian

    clearly the medical test for the DSP needs to be toughened up. seems like we are a nation of disabled people.

  3. Driftforge

    I begrudge the fact that I have to pay extra because ‘our Wayne’ lost $12B down the back of the couch.

  4. Driftforge

    Stella Young at The Drum is worth while reading on this topic

    Why does a wheelchair – which is basically a reconfigured push bike without pedals – cost $22k?

  5. candy

    I suppose the extra 3 billion gained from the levy increase is included in this month’s budget figures to make Mr Swan look better than he is.

  6. Lysander Spooner

    QLD Flood Levy, Gun Buyback Levy, Timor Levy have all been introduced regardless of the Constitution. However, each of these were TEMPORARY.

  7. twostix

    A sickening, pathetically unAustralian attack and new low coming even from this particularity vicious Prime Ministers Office.

    Headline: “Julia Gillard says if you don’t like more tax hikes you hate the disabled”.

  8. Pingback: magic money … miracles and illusions | pindanpost

  9. twostix

    * Oops

    Headline should read: “Julia Gillard says if you don’t like more tax hikes you hate the disabled”.

  10. Amfortas

    Ever since this PM took power we have been treated to a Mistress-Class in the dark side of feminism.

    This latest profligacy has a purpose totally unrelated to the disabled. It has nothing to do with nurturing of compassion. It is an emotional blackmail and a ‘fixing’ of future demands upon the taxpayer to make ‘that woman’ look as though she has a higher moral purpose.

    But it is sheer mendacity.

  11. Pingback: Fiscal illusion and the Medicare | Australian Taxpayers' Alliance

  12. Roger

    My God, they are completely lost if they are resorting to this argument. OK lets take it further. Is the PMO saying that other people, equally struggling within the community are less deserving of our largess? Veterans, widows of dead veterans, retiries, etc. Yes they currently receive some benefit just as disabled carers received benefits, just not enough benefit.

  13. Tom

    How many of the unemployed who are unwilling to work are being hidden in the disability support pension and freed of the obligation to attend Centrelink? Urgent full audit required beginning Monday, September 16, with particular attention to claimants in Pinkenba, Qld.

  14. crocodile

    How many of the unemployed who are unwilling to work are being hidden in the disability support pension and freed of the obligation to attend Centrelink? Urgent full audit required beginning Monday, September 16, with particular attention to claimants in Pinkenba, Qld.

    Tom, why September 16. What is so special about that date.

  15. Tom

    Croc, first workday after the election. When they cracked down on sickness benefits in the UK, they found one-third of claimants were bludgers rorting the system:

    Nearly 900,000 people who were on incapacity benefit dropped their claim to the payments rather than undergo a tough medical test, latest government figures show.

    The 878,300 who decided not to have an official assessment of whether they were fit for work was more than a third of the total number of people claiming sickness-related benefits.

    The statistics also revealed that some claimants cited conditions such as “blisters”, “sprains and strains” and “acne” as preventing them from having a job.

    More than 46,120 people claimed incapacity benefit because of “behavioural disorders due to the use of alcohol” while 29,130 claimants cited drug use.

    Ministers said the figures showed the full extent of how millions had been “trapped on welfare” for decades.

  16. twostix

    My God, they are completely lost if they are resorting to this argument. OK lets take it further. Is the PMO saying that other people, equally struggling within the community are less deserving of our largess? Veterans, widows of dead veterans, retiries, etc. Yes they currently receive some benefit just as disabled carers received benefits, just not enough benefit.

    As far as Labor is concerned unionised car manufacturers are more important than the disabled.

    As far as Labor is concerned high speed porn is more important that the disabled.

    As far as Labor is concerned people in distant lands are more important that the disabled.

    As far as Labor is concerned keeping an ex-PM happy with world-wide jaunts and money to splash around to buy favour in the UN is more important than the disabled.

    That Tweet is a refreshingly frank expression of the political lefts beliefs though “Give us money and say you like it or you’re evil”.

  17. .

    24 bn, 410 000 disabled?

    58k each. 8k on admin, 50 k to them or their carers.

    I fail to see why we need an NDIS, or the taxes used to “fund” it.

    50k a year tax free allows you to live on the Northern Beaches for example.

    That’s generous enough.

  18. Leigh Lowe

    The most worrying thing reported was that Jenny Macklin said there would be no crack-down on rorting of the DSP.
    So we can expect 800,000 to migrate to the NDIS (not the 400,000 claimed by McRasputin at the PMO).
    Does this mean they will get a pension AND home-help to mow their lawns and clear away the pizza boxes and Vodka Cruiser cans before they obstruct the view of the flatscreen?

  19. .

    Let’s say it costs 240 k all up to employ the average public servant.

    That means 30 disabled people to every public servant – PRE NDIS.

    13500+ public servants writing cheques and having a caseload of less than one a week, and almost down to half a case a week.

    Bloody ridiculous.

    Cut the funding in toto by 33% and just make sure the genuinely disabled get 1k per week.

    Do not increase funding.

    Do not increase any taxes.

    Do not levy new taxes.

  20. Tom

    The Lying Slapper confirms she using NDIS as a grubby political wedge:

    JULIA Gillard has demanded Tony Abbott declare his hand on her proposed 0.5 per cent tax hike to fund disability care, saying she will legislate it before the election if he agrees to support it.

    The Prime Minister said if Mr Abbott refused, she would take the policy to the people at the September 14 election.

    The Opposition Leader has challenged Ms Gillard to put her national disability insurance scheme before the parliament before the election, revealing how she will fund the full cost of the scheme.

    Ms Gillard said she would not allow the NDIS to become a political plaything.

    “Let me say this very clearly to the Leader of the Opposition and to the people of Australia – if the Leader of the Opposition says he will support a half a per cent increase in the Medicare levy to fund disability care then I will bring the legislation into the parliament immediately,” she said.

    “If the Leader of the Opposition is unable to answer the question, what he believes in, on this matter, or wants to oppose this increase to the Medicare levy, then I will take it to the Australian people in September.”

  21. Dan

    Currently 800,000 odd on the DSP, so NDIS actually leaves behind 400,000. FMD, even people in the PMO are not across the full numbers.

  22. Robert Crew

    Just some back of the envelope calculations:
    The $1B price-tag offered-up so far is for a 3 year trial covering 10,000 people for the first year, and 20,000 people in years 2 and 3, so let’s say 16,500 people per year so about $20,000 per recipient per year (including all the admin costs). That would make the cost for 410,000 people roughly $8.2B per year; divided by roughly 12.5 million taxpayers would make it around $650 per year each (not looking at how the tax is levied on individual taxpayers, my envelope isn’t that big).

    For $650 per year, my super fund will offer me roughly 23 units of TPD-only cover (less than 8 cents per $75K unit per day) which would give me a lump-sum payout of $1.7M, which would give me an income stream almost four times larger than Gillard’s guinea pigs will get.

    Even if we take that “dollar a day” quote at face value, I could still get a $1M policy for that price, or about double what the government is offering.

    I say I “could” do that, but I’d much prefer to save the money and have an enduring medical power of attorney that basically says “turn the morphine drip up to 11”.

  23. Gab

    Nigerian scammers have a sob story too and use this kind of emotional manipulation to get your money. Given the new gillard tax will be mandatory, the emotional blackmail from gillard and Labor is just s ruse for votes.

    Just because this undetailed, unfunded, uncosted scheme has an emotional name doesn’t mean it is rational nor does it mean it will actually provide a service. Recall that the NDIS is not supporting people with any mental illnesses or conditions such as autism.

  24. blind freddy

    Abbott response

    I will not tolerate such blatant misjohnny , from this women

  25. Major Elvis Newton

    Stella Young is a serial whinger.

    Never has anyone abused her privileged platform in the media so often and with such vigour.

    Ms Young’s relentless campaign against bipedal hominids enjoys wide distribution alongside being a taxpayer funded lobbyist for the NDI$.

    A self-described “crip”, Stella bangs on endlessly about the seemingly insurmountable problems in her life all the while blaming those she screams are rent with “funky ableist prejudice” for ignoring her interminable ‘plight’.

    Most, however, just recognise the rent-seeking harpy for the ‘woe is me’ guilt-flicking opportunist she is.

    As for the $22K wheelchair…do what Julia Gillard suggests ‘John’ does. Get a loan.

  26. Dan

    Joke cancelled due to bad performance

  27. Splatacrobat

    My post from open thread
    Can someone do a calculation on the difference between Medicare revenue average take with and without the threshold/exemptions etc.?

    I would be interested to know what the total take of the current levy (1.5%) would be if everyone paid it as opposed to those that currently pay without exemption and the now proposed added 05% NDIS component.

    My theory being if everyone paid 1.5% of their earnings it would probably be worth more than the extra slug on middle and high income earners who will not benefit at all.

    If NDIS and Medicare is to be touted as universal care for all Australians then it should be funded by all Australians. Remember the widow’s mite.

    Universal health care (Medicare) should be universally collected. There would be no need to raise the existing levy from 1.5% to 2% if all “income” earners paid regardless of the level.

    Fine if there is a tax free threshold for low incomes but if NDIS is going to be peddled as a wedge to only the selfish rich ($70,000 is not rich) then the collection base should be broadened as a wedge back.

    I’m sick and tired of being made to feel guilty because I earn just enough to have my pockets rifled to fund people who have been exempt from funding their own skin in the game.

  28. Dash22

    So if we’re already paying $24b,at 12.5m taxpayers, we’re already contributing $1,920 each to help people with disabilities.

    That’s pretty generous in my book.

  29. Dan

    Splat, I think the difference would be a few million dollars

  30. Peter Whiteford

    Actually according to the ABS there are about 2.2 million people of working age who have some level of disability (including people over 65 and children the number is 4 million). About 800,000 people of working age get the DSP, with the others being able to work to some extent or married to people who have jobs which cuts the family out of the DSP. The 410,000 figure comes from the Productivity Commission and is an estimate of the number of people with significant additional care needs who will get additional services under the NDIS.

  31. Pizzaskase

    Can someone help me here. If we spend $24B without an insurance scheme, then doesn’t the $12B insurance scheme replace the $24B we spend now?

  32. Rococo Liberal

    No, Stella Young is not worthy of reading on any topic.

  33. Happymonkey

    Her Slapperness has offered to take this to an election should Abbott (he who spits on disabled people) ask too many questions.

  34. Ubique

    The latest polls demonstrate that somewhere between 42% and 45% of the voting population suffer from a severe mental disability. That lot will certainly swell the extent of NDIS liability.

  35. Gab

    Mental disability is not covered under the NDIS.

  36. Carpe Jugulum

    No, Stella Young is not worthy of reading on any topic.

    Not true, she is good value when she writes about…..nah, i got nothing.

    As you were people.

  37. Steve of Glasshouse

    I love the coy .5 % wording they use all the time.
    If you’ve just increased a levy from 1.5 to 2 %, that’s an increase of 33%. If I’ve got that wrong, send me some gonskis..I’m willing to learn

  38. Tracey

    I wish someone would ask The Slapper why the disabled weren’t important enough to attract Labor’s attention beteen 2007 and now.

  39. Carpe Jugulum

    Mental disability is not covered under the NDIS.

    Thats going to be a tragedy for Maxwell Swan and Dancing Emmo.

    Who will be able to cover their after playgroup care and existential dance lessons?

  40. Happymonkey

    I wish someone would ask The Slapper why the disabled weren’t important enough to attract Labor’s attention beteen 2007 and now.

    Tracey – this is absolutely spot-on. I heard mama Milne on ABC radio this afternoon bleating about how leadership speculation killed any plans to ‘push reforms through’ last year. Call me cynical but… election year?

  41. Tracey, Stupidmonkey: would it kill you to Google to find the history of the matter?

    Rudd in late 2009 started the ball rolling to get the Productivity Commission to look into disability services and funding.

    Their report issued in August 2011. Gillard said she would start working on it with the States.

    By April 2012 funding for trials was announced.

    It has not been pulled out of a Labor Party rectum at the last minute.

  42. Dan

    Jayzuz Stevie, she ruled out a levy, and then today announced such a tax. See a pattern emerging here?

  43. hzhousewife

    Mental disability is not covered under the NDIS.

    I would rather my .5% went to Mental Health.

  44. Dan

    To add to that, what no doubt started in 2009 as an idea by Dear Kevin as a way to spend $10 billion to shore up a million votes, has turned into a new tax to fund A Trial that can’t be paid for, even with the new levy, because of a mountain of debt.

    See another pattern emerging here?

  45. Tom

    Tony Abbott is coming after your ill-gotten government rort, Canine Faeces. Your nice little tax extortion racket is coming to an end.

  46. lotocoti

    Gillard said she would start working on it with the States.

    Provided it wasn’t a levy.

  47. Tracey

    With respect Steve, she and her moronic offsiders act on other thought bubbles at the speed of light. FFS they closed down an entire industry after watching 4 Corners.

  48. Andrew

    So just from the Federal Government, 800000 people receive $24 billion p.a. which divides out to be $30000 per person p.a and we need another $15-$22billion to fund this scheme because people with disabilities need that sort money to fund their costs? I am not even including the costs that the States already fund. This is plain absurd.

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