The Turnbull government has ruled out extending the deficit levy to help pay for the National Disability Insurance Scheme and has called on Labor to “come clean” about whether it will support an increase in the Medicare levy.
Before Bill Shorten’s budget reply on Thursday night, the finance minister, Mathias Cormann, said the 2% deficit levy applying to earnings above $180,000 would wind up on 30 June.
Shorten will use his speech to argue that the levy should remain in place – a position also supported by the Greens and key Senate player Nick Xenophon – but Cormann told reporters that would mean people were paying additional tax “before the NDIS bills start to ramp up”.
The government is proposing to fund the NDIS with a 0.5% Medicare levy increase – which would mean a tax increase for most Australians instead of just high-income earners.
Asked whether there was any room to compromise on that proposal, Cormann said the government had outlined its position in Tuesday’s budget.
But while backing in the government’s proposal, he did not rule out negotiating with Labor, saying Shorten needed to reveal his hand.
“What we are saying to Bill Shorten is, ‘Tell us what your position is.’ So far he has been fudging it,” Cormann told reporters on Thursday. “He hasn’t come clean with the Australian people so far in what his position is in relation to our proposal to secure funding for the National Disability Insurance Scheme.
“Tonight he has to tell the Australian people, very clearly, yes or no. Is he going to join in with us to secure funding for the National Disability Insurance Scheme so that people across Australia, people with a disability across Australia, can have certainty that the NDIS will and can be delivered in full?”
Labor has made the point that keeping the deficit levy would see higher income earners make a greater contribution to budget repair, rather than distributing the impact down the income scale.
Earlier in the day, the treasurer, Scott Morrison, accused Shorten of playing “class warfare” with disabled people for inviting the political fight about the deficit levy.
Early analysis of the distributional impacts of key budget measures unveiled on Tuesday night suggests families on incomes of between $80,000 and $140,000 will wear proportionately more pain than people on incomes below $20,000 or over $240,000.
A separate calculation by the West Australian newspaper suggests university graduates on incomes of $44,000 will cop a big hit courtesy of the government’s higher education changes and the Medicare levy increase. That analysis suggests a single person will pay $660 a year in extra tax from 2019-20.
Cormann told reporters he believed the net impact of the budget measures was fair.
The continued scrapping over key measures came as furious bank executives were meeting with Treasury officials on Thursday over the $6bn levy unveiled on Tuesday night.
The banking industry has not ruled out launching a mining tax-style advertising campaign against the impost.
Labor supports the new tax on the banks and Morrison said on Thursday the government wasn’t budging.
“This levy’s in, this tax is staying on the banks,” he said. “This is a fair and reasonable tax on our banks, over $30bn in pooled profits, and this is a $1.5bn out of that more than $30bn. I think that’s a very reasonable amount.”
The former prime minister John Howard has been critical of the bank tax.
Howard on Wednesday night also declared himself “troubled” by the new powers the government wanted to impose to police executive conduct in the banking industry. Rather than having special regimes, Howard said: “We should have a set of employment rules that apply to everybody.”
The former prime minister stood by those criticisms at a function in Perth on Thursday.
When asked about Howard’s commentary, Cormann stood by the budget measures. “We believe this is an efficient way to raise additional revenue to get the budget back into surplus.”
