Prime Minister Julia Gillard has announced that the Government will introduce an increase to the Medicare levy in order to fund its proposed National Disability Insurance Scheme (NDIS).
Speaking in Melbourne today, Ms Gillard confirmed the Government would raise the levy from 1.5 to 2% from July 2014. The increase would add an estimated $3 billion in the first year, falling well short of the $6.3 billion per year required to fund both schemes recommended by the Productivity Commission.
In its 2011 report, the Productivity Commission put forward a number of funding proposals for the NDIS, including a levy, but the Prime Minister initially ruled out any changes to existing Medicare arrangements. Ms Gillard said today that she had “thought deeply” about the scheme, and had determined that in order for it to be securely funded well into the future, a levy was the most appropriate funding choice.
The Prime Minister acknowledged that it would be an extra expense for Australians, but that the cost of disability was one that should be shared.
This news comes at a time when life insurance lapse rates are at their highest for the last four years (16% up from 12.5% according to a report by Credit Suisse Australia), and new sales growth slowed to just 6.3% (see: Plan For Life’s December 2012 Life Insurance Report).
The Financial Services Council has previously voiced its concern that the introduction of the NDIS and National Injury Insurance Scheme (NIIS) may see Australians abandon disability insurance in the expectation that these schemes will provide for their needs (see: FSC Calls On Govt to Fund Awareness Campaign on Disability Insurance).
The Coalition strongly supports the NDIS, but has not confirmed whether it would back the levy increase.
