A Medicare levy increase of 0.5%, which will affect most Australians, would not be needed if it was not for two of the government’s controversial tax cuts for high income earners, according to new modelling.
This weekend marks the start of the new financial year, the date from which cuts to Sunday penalty rates kick in, federal politicians get a 2% pay rise, and the top 3% of income earners enjoy a 2% marginal income tax cut (when the temporary budget repair levy is abolished).
A new poll, commissioned by the Australian Council of Trade Unions, has found 71.5% of voters believe the three changes that came into force on 1 July create an unfair economy “that benefits the wealthy over ordinary workers”.
And new modelling from the Parliamentary Budget Office (PBO), seen by Guardian Australia, has found one of those changes – the abolition of the 2% budget repair levy – could be put to good use if it was kept in place.
The PBO modelling reveals if the budget repair levy remained in place this weekend, and the marginal tax cut for workers earning over $80,000 a year (which is planned for 1 July 2019) did not go ahead, the Turnbull government could save $7.95bn over four years.
That money could be used to help fund the National Disability Insurance Scheme, while also allowing voters to only pay a 0.1% increase in the Medicare levy, rather than 0.5%, the modelling shows.
The Greens, who commissioned the PBO modelling, says it shows there are more progressive ways to fund the NDIS than to force the majority of Australians to absorb a 0.5% Medicare levy increase.
The Turnbull government plans to increase the Medicare levy on 1 July 2019, to help fund a $55.7bn, 10-year funding shortfall in the NDIS.
But the PBO modelling shows the government would save $34bn over 10 years if it did not pursue those two tax cuts.
It shows that $34bn would almost completely cover the cost of a much lower 0.1% increase in the Medicare levy – the government would be down just $600m after a decade.
However, the modelling shows if taxpayers accepted a slightly higher 0.15% increase in the Medicate levy under the Greens’ plan, the government would be $3.85bn ahead after ten years.
It also shows if taxpayers accepted a 0.2% increase in the Medicare levy, the government would be $8.3bn ahead in 10 years, which would significantly help fund the NDIS.
Greens leader Richard Di Natale says the Turnbull government has it priorities backwards.
“They should not be taking more money from people on $22,000 per year, while handing a tax break to people getting hundreds of thousands of dollars each year,” he told Guardian Australia.
“The highest income earners will not even notice the difference, but for those families, young people, individuals who are doing it tough, those extra dollars make a huge difference. It’s about time the top end of town contribute their fair share.”
Phil Bowen, the Parliamentary Budget Officer, has confirmed the modelling results.
The ACTU president, Ged Kearney, said the majority of Australians do not support Sunday penalty rate cuts and the timing, just as Australia’s highest income earners are getting a tax cut and politicians are getting a pay rise, was ‘galling’.
She said the ACTU’s poll also found a large proportion of Australians (46.5%) also support the union campaign to address stagnant wage growth, while a minority (29.1%) oppose the campaign.
“Today, working Australians begin to bear the cost of the Turnbull government’s perverse policies,” Kearney said.
“It’s galling for all Australians that while the lowest paid will be forced to sacrifice the basics in life, Malcolm Turnbull and his millionaire mates are getting pay rises and tax cuts. Everyone knows that employers are not paying fair wages because wage growth is completely stagnant while profits continue to grow. The research released today shows that Australians have had enough,” she said.
The ACTU-ReachTEL survey of 2,032 residents across Australia was conducted on 29 June.
