Media Release by The Hon Jenny Macklin MP

Release of Medicare Levy and DisabilityCare Australia Fund Draft Legislation

Joint Media Release with:

    Deputy Prime Minister and Treasurer

The Government will introduce legislation this Wednesday to provide for a half a percentage point increase in the Medicare levy from 1.5 to 2 per cent of taxable income from 1 July 2014.

DisabilityCare Australia will provide peace of mind to all Australians that if they or a loved one acquire or are born with a disability, they will get the support they need.

It is the most fundamental social policy reform since the introduction of Medicare.

DisabilityCare Australia requires a strong and stable funding stream to provide Australians with a disability, their families and their carers with the certainty they deserve – so they can have confidence that this vital reform will be locked in place.

For this reason the Government has announced these changes to the Medicare levy, with every cent raised to be put towards DisabilityCare Australia.

Draft legislation has today been released so that it can be considered by Members and Senators ahead of its introduction so as to facilitate prompt passage through the Parliament.

The legislation will increase the Medicare levy by half a percentage point from 1 July 2014, taking the Medicare levy from 1.5 to 2 per cent of taxable income.

In addition, the legislation will establish the DisabilityCare Australia Fund in which the additional Medicare levy proceeds will be invested. The DisabilityCare Australia Fund will be managed by the Future Fund Board of Guardians, so that funding can only be used to meet the costs of delivering DisabilityCare Australia.

A total of $9.7 billion will be allocated to the States and Territories to reimburse spending on the scheme once key conditions are met, including reaching agreement to deliver the full scheme.

In addition, there are a number of minor consequential bills to amend tax laws flowing from the increase in the Medicare levy, including fringe benefits tax and excess contributions tax, which will maintain the integrity of the tax system.

For constitutional reasons there is generally a requirement to include each consequential tax rate change as separate consequential tax law amendment bill, in addition to the amendment to the Medicare levy legislation.

Copies of the draft bills are available here.