Friday, May 3, 2013

The NDIS, the levy and the post that is going to lose me friends and readers

By now, you would have to have been living somewhere under a very large and wifi-proof rock not to know that the Australian Government has advanced their final proposal to implement a National Disability Insurance Scheme (NDIS).

The scheme, which has been talked about for years and is sorely needed, will support Australians with permanent disabilities that affect their mobility, self-care, self-management or communication. Despite some of the propaganda to the contrary, it will also cover individual assistance for people with disabilities or differences where there is good evidence that early intervention will increase functioning (ie. autism, celebral palsy, acquired brain injuries) or decrease decline of function (ie. MS, Parkinson's Disease).

The next thing that has become apparent this week is that the NDIS is going to be partly funded from the budget ($1 billion has been committed from July 2013), and partly funded by an increase of 0.5% in the Medicare levy, taking it from 1.5% of earnings to 2% of earnings. This means an increase of $325 a year for someone earning $65,000 a year, or $500 a year for someone earning $100,000 a year.

In the debate that has ensued, there have been opinion pieces galore from every conceivable perspective. Comments have been flying, on social media, in the MSM, and at the school gate (it's an oldie but a goodie, the school-gate radar - equivalent, I suppose, to water-cooler chitchat in an office). The scheme and its funding method has fierce defenders, equally fierce detractors, and everything in between. This is not unexpected, as it's a major policy initiative with taxpayer consequences.

However, one aspect of all this that has struck me as NQR and quite counter-productive is the rhetoric that I have read directed against people who oppose the levy. Commenters and columnists alike have characterised levy-opponents as, effectively, greedy, selfish and hard-hearted. Moreover, they have conflated opposition to the levy with opposition to the NDIS, despite the ample evidence that a great majority of people want and support the NDIS, including those who oppose the levy.

It seems to me that there are two issues here that can be and should be separated, and the fact that they aren't being separated by politicians and commentators smells pretty cynical to me. The issues are:

1. Should we have an NDIS?
I would suggest that a very comfortable majority of Australians, myself included, would answer this with a conclusive YES.

2. How should it be funded? Specifically - should it be funded through an increase to the Medicare levy?
And here is where consensus breaks down, and I cannot stress this enough, NOT just because "people are greedy". Or "people are selfish / heartless."

Because, you know what?

It is possible to feel a heart-sinking at the idea of another increase in the take of the government from your wages, without being a bastard.

It is possible to be a family whose income has gone backwards while inflation has marched on, and feel distressed at the notion of increased costs and suspicious that, in time, they will be increased again.

It is possible that all the "0.95c a day" rhetoric will sound hollow to people who have heard the exact same line with the increases to their rates, their rents, their insurances, their electricity, their water, their pharmaceuticals, all in the last three years. At some point, you know what? There ARE no more 0.95c a day to spare.

It is possible that people may resent being asked for more when governmental spending in areas is so demonstrably inefficient and wasteful - offshore detention centres, anyone? BER? It is open to people to ask WHY exactly the NDIS, which we want, can't be funded from general revenue *instead of all the other things that we don't want or cost ridiculous amounts of money that was badly deployed*.

I will lay my cards on the table:

We can afford the 0.5% increase in Medicare, my husband and I. Of course we can. To claim otherwise would be ludicrous in a family that just bought a new car and is planning a big holiday for next year.

We support the NDIS too, and think it's long overdue.


I do not agree that the levy is necessarily the right way to fund the NDIS. Not because I resent giving up a cup of coffee a day (I don't drink coffee) or I am greedy or selfish, but because I think it's a terrible precedent to set, one that will be hard to contain, and, most importantly, one that did not need to happen if other, better decisions had been made with budget spending.

I know many individuals and families that will feel this increase. No, not be bankrupted; no, not become homeless. Anyone that close to the tipping point, frankly, has bigger problems than a 0.5% Medicare rise. Nonetheless, they will feel it to the extent that they will resent it, and it may force sacrifices of kinds they don't really want to be making. Not of coffee or booze (although maybe), but, as one mum at school in a single-income family said, maybe of the family holiday that her partner's tax return usually pays for. Or swimming lessons for the winter term. Or a new bike for a kid. Or regular physio apointments for an able-bodied, but poor-postured and frequently sore, woman. (That one is me).

So I just wish supporters of the levy would knock it off already in their determination to cast all levy-opponents as villains who, in their selfishness, want to deny people with disabilities access to a scheme to help them. I support the NDIS, but I am, at best, ambivalent about the levy, and I want to be able to say that without being told I'm a monster.


  1. The problem I see with the argument that NDIS should be paid from general revenue is that it will open up such a political bun-fight over funding that NDIS will never get off the ground.

    The estimates are that NDIS will require $15-20 billion recurrent funding. If this amount is to come from general revenue, the discussion turns to where cuts are to be made and the political point-scoring begins (cuts to negative gearing concessions? cuts to superannuation tax concessions? delete paid parental leave? solar energy concessions? etc. etc.) BER was a 16 billion non-recurrent funding so the cuts won't come from there.

    NDIS will lose bi-partisan support and the chance to implement such a sorely needed scheme will be lost.

    1. You're right of course about BER being non recurrent, although it was still a huge waste of money IMO. Nonetheless, point taken - it shouldn't be part of this argument, because the NDIS needs recurrent funding.

      I also acknowledge what you say about the bunfight that would result if the funding were sourced from general revenue, but I don't agree that it would signal the death knell of the scheme. Lots of things that general revenue funds are contentious (the BER was, remember) but they still get done.

      And it's not as if the levy is uncontentious either. Yes it may have bipartisan support, but that doesn't mean it has universal or even majority popular support.

      At the end of the day, if the NDIS is core business (and it should be), it ought to be funded from general revenue, AS core business. If other things have to be reduced to deliver it, that's the nature of slicing the budget pie, isn't it? Perhaps they could start with the expensive and inhumane Pacific Solution; there's an easy $800 million a year right there.

      I don't think it's good policy to impose extra levies for core business. I think it's resented and it's dreaded, because people have seen so many times that program costs blow out and then the take to pay for them is increased. I think the concerns of the median Australian income earner, which, in August 2012, was a person earning $69,170, or, even more so, the 50% of people who earn less than that, are not trivial here. $325 less a year isn't nothing to a family living on $65,000 (aka lots of the families at our school which is in an area of moderate disadvantage). If it rises over time, as I have seen many predictions that it must to pay for the scheme, it is not unreasonable to say it will become a real issue for many workers and families.

      PS: To be quite honest, I would personally favour cutting negative gearing concessions, as I think they are quite inequitable and bad social policy (driving house prices up and rendering home ownership unreachable for many people) but I realise my view isn't universal.

  2. It's true that NDIS may be able to be funded from the existing core business budget without this levy, but I don't have the knowledge to assess how feasible that is. I know France has compulsory health insurance for all workers running at 5.25% of earnings. This is on top of similar (though slightly less than Australia) spending on health as a % of GDP. The World Health Organisation makes the assessment that France has the best "overall health system" in the world.

    If this example is any guide at all to what it costs to run a functioning health system, it makes our 1.5% Medicare Levy look relatively modest, even if it's increased to 2.0% to fund NDIS (and even, for that matter, if the levy increases further over time.)

    However, I agree that levies are a *very* poor policy measure overall. They *are* resented and dreaded, due largely to their unpredictable nature and the "hidden tax" element. There are landfill levies, fire levies, flood levies and no doubt more. It's hard to work out how much extra in taxes we are really paying and it really impacts when it hits the budget suddenly, added to one-off bills like insurance.

    At least in the case of the Medicare Levy (a) it's more transparent: it's easy to see that it's adding 0.5% to the overall tax rate (b) there is bill-smoothing involved (a big element in the resentment factor, I think) i.e. the Medicare Levy comes as an adjustment to PAYG tax witholdings; $6 per week less in the pay-packet going forward for the average earner/PAYG worker rather than a lump-sum hit.

    Re: the $325 less a year for the median Australian earner or lower...don't forget that many lower to mid-income earners have benefited from the reduction to the tax-free threshold (from $6K to $18K.) This is particularly so for families that have a second, part-time income earner who falls under the threshold (e.g. a primary carer of children who works part-time.)

    I know that personally, as a primary carer/part-time worker under the threshold, I've saved much more in tax from the threshold adjustment than I will have to pay for the NDIS proposal.

    But I accept the point that the person/family right on the median earnings level is probably the one to be hit hardest by this proposal, and particularly if/when mortgage interest rates start going up again to the levels they were at 2 years ago.

    1. Yes.

      I think actually that a family with a single income earner is probably the worst affected - eg a family with one adult earning say $65,000 - $85,000. Divided between two adults, and with kids to support, that family is looking at a relatively slim margin of error if mortgaged (and, as you say, even slimmer if interest rates go up again). $10 less a week probably won't sink them, as I said in the main post; but it could be felt, and even more so if it increases in future years and how can it not?

      And yes, low / part-time income earners probably, on balance, are still better off bc of the change in the brackets, even with the levy. I don't dispute that.

      This is controversial but I would scrap Family Tax Part B before I'd look at a levy. HOWEVER I realise I am a class traitor to even raise the spectre of reducing middle class welfare, so ... :-P

    2. I also forgot to say, the other point worth mentioning is that France's top marginal income rate is 41% to our 47%, and it is scaled by size of household - for a household with 4 people in it, this rate doesn't kick in til you hit around $375,000. In that context, the higher levy / tax for medical services seems pretty necessary and reasonable!

  3. Hi Kathy,

    I read your post on Friday and was still thinking about it today, so I thought I would drop a line. I completely agree that the govt has been terrible at managing finances, and that given their track record it seems like they would waste this money too. I also agree that things are very tight for everyone (except Gina Rineheart!). However, a disabled person has to work three times as hard just to get to where an able-bodied person is, and through no fault of their own. I think that, as a very wealthy nation, we have no choice but to pay this tax, regardless of whether it's a levy or some other means, because it simply isn't fair that we don't take care of people who are less well off than ourselves. Of course people who are ambivalent about paying more money are not monsters, but I do think it helps to stop and think about how well-off able-bodied people are compared to people who have to struggle with their disability, which is stressful and tiring, every day. When you see what they and their carers have to go through (which I see, because I work in a charity for people with autism), giving up the equivalent of two cups of coffee seems very little. I think the govt has tried to get money from other sources, and failed abysmally (I was disgusted that they're taking money from the unis), and I think Declutterer above is right about it never getting off the ground because they'll keep squabbling about it

    Also, by helping people who are disabled get into the workforce, it actually creates money and jobs, so it works out in the end. I am deaf and, with the support of the government and my parents, I've been able to get to the point where I can work & make money & pay taxes. A little bit now means a lot more in the long run. I've written a post about it here:

    Sorry this is so long! I just think the situation is about so much more than money, but I respect you for putting your thoughts out there, as I'm sure there are many others that think the same but aren't game to say it. Cheers,Jessica.

    1. Hi Jessica!

      Firstly let me say thank you for posting here and giving your perspective. I agree with every word you have written about the need for the NDIS and the struggles that people who have disabilities (and their carers) face every day. I would never, ever dispute this and I hope this was clear in my post.

      I guess though to me the issue of asking for more money via a levy comes down to three things - effectiveness, equity and sustainability. You identify yourself that "given their track record it seems like they would waste this money too", and I agree with this, so I think the effectiveness is questionable. There is also an equity issue that must be considered when imposing any new broad-based tax or levy, and I'm not convinced that it has been adequately considered in this case. But perhaps my greatest concern is sustainability. We know the levy won't fully fund the NDIS even in its first year. If / when costs blow out, will the levy be increased to cover this? Where does this end? And how can this be sustainable for low-middle income earners? (I am not concerned about the $150k plus crowd in this, btw :-)

      The other thing that worries me is that levies, as a concept, are bad public policy. There are lots of things that are highly socially advantageous / good but aren't currently being funded - like the Gonski education reforms, for example. These reforms, like the NDIS, will benefit many thousands of disadvantaged people - children in low income area schools, for a start. Should the government pay for that by adding an 0.5% education levy to our taxes? Well, maybe, but then again, maybe this is part of the core business of government, and should be managed from general revenue too.

      Of course I don't want to see the NDIS fall over in a scrabble over funds, but I also think that argument is being used as a scare tactic to prevent a full discussion about how it might be funded from the existing public purse. And I do think that "cups of coffee" argument has been taken as far as it can go. Yes, it's not a large sum per person - yet - but it's an extra charge, it's not guaranteed that it will be contained, and for families on tight budgets, it really can be significant.

  4. Hi Kathy,

    Yes, I agree with everything you're saying, and I despair of there ever being intelligent debate about funding in this government. So much of it is votes-driven that commonsense flies out the window. I wonder if their decision for the levy was because they have tried to take funding from other sources for the Gonski reforms, and now they haven't got any other option. What really makes me cross is that they never capitalised on the huge amounts made from the mining boom; it all went into inflated wages. But I think once you get started on talking about politics, you never stop! So I will end here :)