More Australian households worse off under federal govt's plan to raise Medicare levy: ANU

Immigration Officer Scott Morrison — Australia's Minister of Immigration and Border Protection Scott Morrison speaks at a news conference during his working visit to Malaysia, at the Malaysian Maritime Enforcement Agency office in Putrajaya February 5, 2014. Reuters/Samsul Said

A new modelling by the ANU's Centre for Social Research and Methods has found that twice as many households will be worse off under the federal budget's plan to increase the Medicare levy by half a percentage point than under Labor's approach. Research done by Associate Professor Ben Phillips learned that middle-income workers would be forced to do heavy lifting under the Coalition’s plan.

In the federal budget, the government announced a 0.5 percent hike in the Medicare levy to 2.5 percent from July 1. The Turnbull government intends to raise $8.2 billion to fund the National Disability Insurance Scheme.

Based on the ANU modelling, 60 percent of households would be worse off, while another 39 percent will feel no change if the Liberal policy were in place next month. It suggested that only 1 percent of Aussie households will be better off, Sydney Morning Herald notes.

Labor insisted it would support the increase only for those who earn more than $87,000 annually. It is also reportedly planning to re-instate the deficit repair levy for workers whose salary is more than $180,000. Labor claimed its alternative strategy would create $4.5 billion tax revenue over a decade.

Twenty-seven percent of household would be worse off if Labor's policy were implemented starting July 1. The remaining 73 percent would feel no change.

Labor's policy prescription is expected to make $300 million more tax than the Coalition in four years. In one decade, the former would raise another $6.8 billion due to the bracket creep.

Coalition’s policy would generate $4.03 billion in its first year while Labor's policy would raise $4.102 billion at the same time frame. As both sides claim their approach being the fairest, political arguments over the levy have been a main post-budget fault line.

Meanwhile, the Turnbull government assures a new multi-billion dollar fund will safeguard the future of Medicare. Treasurer Scott Morrison launched a legislation on Tuesday ensuring that proceeds from the Medicare levy is paid into the fund every year. The portion intended for the national disability insurance scheme is excluded.

"The government is guaranteeing the MBS and PBS so that all Australians can continue to access timely and affordably healthcare and medicines into the future, proving the deceit that was put to the Australian people by the Labor party at the last election," Morrison told the MPs, according to Nine News. In 2017/18, $33.8 billion will be credited to the fund.

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