Kerryn Boogaard Kerryn Boogaard
Beverly Goldsmith Beverly Goldsmith
Zoe Bingley-Pullin Zoe Bingley-Pullin

The cost of disability reform:

$6.72 a week is not much to help pay for disability reform - but how far and how long will the contribution stretch?
By Bonita Mersiades
Date: May 02 2013
Editor Rating:

The Opposition is on the record as supporting the policy of disability reform and has been asking the question all along as to how the Government planned to fund its ambitious program. Now it has the answer – of sorts.

Prime Minister Julia Gillard’s unsurprising announcement to introduce a levy to help pay for disability reform is as much a political move to ‘wedge’ the Opposition Leader, Tony Abbott, as well as a test of the extent to which Australians are prepared to support “the most fundamental social reform since the introduction of Medicare”.

In announcing the increase to the Medicare Levy yesterday of 0.5% to 2% from 1st July next year, Ms Gillard said that transforming disability services by the establishment of DisabilityCare Australia (the new name for the National Disability Insurance Scheme or NDIS) will “provide peace of mind to all Australians” - not just those with disability or their families and carers.

The increased levy will mean that someone earning the average wage of around $70,000 a year will pay an additional 96 cents a day, or about the cost of a takeaway coffee and sandwich once a week.

The Gillard Government is counting on the fact that no-one amongst us can possibly put up our hand and say we don’t support it. But the question remains whether we need to raise additional revenue to afford it or can we reprioritise?

While the Opposition is likely to make a noise about how the Prime Minister cannot be trusted because she had earlier said that she wouldn’t introduce a levy to fund disability reform, the Prime Minister and Treasurer, Wayne Swan, had little choice. Neither the Government nor the Opposition are in a position to fund all their programs and promises without addressing the ‘structural deficit’ – or the long-term imbalance between expected revenues and existing expenditure commitments. Professor John Freebairn of Melbourne University explained this yesterday, and I have previously raised the issue of the need to review the tax system to find more money if we are to fund government programs such as the NDIS, Gonski reforms, NBN, parental leave and others.

Affordability of the big ideas that are designed to woo us to either side of politics during this election year lies at the heart of a continuing challenge for the Government and the Opposition – yet it’s one that neither side really wants to talk about.

The increase to the Medicare Levy is expected to raise $3.3 billion in the first year and $20.4 billion over five years, which is only a fraction of the $15 billion a year the NDIS is estimated to cost once it's fully operational. (Similarly, the Medicare Levy itself funds only a relatively small proportion of total health spending). To meet the shortfall, the Government either has some further very significant savings measures up its sleeve; or is hoping like hell that the economy expands and revenue projections pick-up; or, more likely, it is assuming it won’t be in office and a possible Prime Minister Abbott and Treasurer Hockey can worry about it instead.

For the 410,000 Australians with disability and their families and carers, yesterday’s announcement by the Prime Minister is another landmark; but it is one that comes with a big risk that must be weighed against the policy objective.

On the one hand, as a community, can we continue to live with the current situation that has prevailed for years? What do you say to the ageing parents of the severely disabled adult child who lives down the street? Or to the work colleague who is largely independent because of a special wheelchair and who, without it, would need full-time care and be unable to work? Or to the parents of the child who needs round-the-clock monitoring and care? Are you proud to say, as an Australian, that we are ranked 27th out of 27 OECD nations on quality of life measures for people with disability?

And on the other hand? If the economy doesn’t expand sufficiently, and in the absence of any moves to review the tax system that both the Government and the Opposition have discounted, how will we afford the NDIS in the long-term? And just what are we willing to give up to pay for it?

There is clearly still unfinished business.

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