Prime Minister announces Medicare Levy Increases to Cover the National Disability Insurance Scheme

Prime Minister Julia Gillard has announced planned increases to the Medicare levy to fund DisabilityCare Australia, the renamed National Disability Insurance Scheme (NDIS).
The Government will seek public support for the levy increase at the September election, so it can introduce legislation to parliament next year if it retains power.
This reform will see an increase in the Medicare levy of half a percentage point from 1.5 per cent of taxable income to two per cent from 1 July 2014. For someone earning around average wages of $70,000 a year, this will be a contribution of approximately $340 a year.
Low income earners will continue to receive relief from the Medicare levy through the low income thresholds for singles, families, seniors and pensioners. The current exemptions from the Medicare levy will also remain in place, including for blind pensioners and sickness allowance recipients.
The change to the Medicare levy will raise approximately $3.3 billion in the first year, and $20.4 billion by 2018-19, when the full scheme comes into place.
Every dollar raised by the levy will go directly to fund DisabilityCare Australia. To ensure this, the Government will create in legislation a special DisabilityCare Australia Fund, through a dedicated special account. Revenue from the additional levy will be paid into the fund, which will only be drawn down to meet expenditure directly related to DisabilityCare.
DisabilityCare requires the support of State and Territory governments with agreements already reached with New South Wales, South Australia and the Australian Capital Territory to deliver DisabilityCare in full, and to launch in Victoria, Tasmania and the Northern Territory. Discussions are continuing with other states and territories.
To assist with establishing DisabilityCare, the Government will make 25 per cent of the revenue collected in 2014-15 available to states and territories. Funds will be distributed to states from the DisabilityCare Fund for spending on this scheme once key conditions are met. States that have not yet agreed to participate in the full scheme will have their share of the fund quarantined until they reach agreement to participate. These states will still be required to match, from their own revenue, the funding terms of the Commonwealth’s agreements with NSW, SA and ACT