While an income tax increase may be hard to sell to some people in the community in the lead-up to a federal election, it’s the right choice for a sustainable National Disability Insurance Scheme (NDIS).
From July 1 next year, the Medicare levy will increase by 0.5% to partly fund the NDIS, taking the Medicare levy to 2% and adding an extra $1 per day to the Medicare levy of an average worker on A$70,000.
But the move is a risk for the Gillard government because it gives the Coalition, if elected in September, the power to delay or veto the scheme.
Increasing income tax the right choice for a sustainable NDIS
Last night’s budget contained an important step towards realising a National Disability Insurance Scheme (NDIS), with $1bn allocated over the next four years. Of these funds, $342.5 million will pay for individualised care and support for 10,000 people in four yet-to-be-announced “launch sites” in 2013-14. The trial will grow to include 20,000 people by 2014-15.
The remainder of the funding will go towards the set-up costs of the NDIS over four years, including systems for data collection and analysis, local area coordinators, a new agency to oversee implementation and manage delivery, assessment of need and monitoring of outcomes and the effectiveness of the scheme.
The government’s announcement will see people assisted by the scheme a year earlier than the timeline the Productivity Commission suggested in its 2011 report into disability care and support.
But there are some major shortfalls in last night’s announcement.