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Wednesday, 3 October 1984
Page: 1084

Senator WALTERS(10.52) —I find it very interesting that the Government has not put up the names of any speakers for the speakers list on this legislation. A package of taxation Bills is before the Senate and so far the only speakers have been Senator Dame Margaret Guilfoyle, Senator Peter Baume and me. I note that only one member of the Government is prepared to speak in support of the Government's taxation Bills. Only one Government back bencher is willing to speak in support of the Government's taxation Bills. We will see how far the Bills get. I find it very interesting that Government members are not prepared to support the Government on its taxation levies.

I too will speak to the Medicare Levy Bill. Senator Dame Margaret Guilfoyle covered the taxation Bills in the other areas very effectively. We were told that the Medicare levy was to be one per cent of taxable income. It was thought that meant the levy was to be imposed on all income over and above $4,595 per annum, at which point income becomes taxable. That is not so. Income for the levy is taxed from the first dollar. We were also told that provision would be made for low income earners and that once they earned above a certain figure the shading in would be done in a very just and sensible way.

I will point out some of the anomalies that exist. The levy in some situations is not one per cent but 20 per cent. We do not hear any great noise from the Government members or indeed from the Minister for Social Security, Senator Grimes, on this. The Parliamentary Library has given us a paper--

Senator Maguire —Twenty per cent?

Senator WALTERS —Yes, 20 per cent. If Senator Maguire does not understand the situation he should not be the back bencher who is to speak to this Bill on behalf of the Government. Let us look at how that situation arose. I refer to the situation in which a single person with a taxable income of $7,000 is exempt from the levy. When the taxable income reaches $7,450 the levy is increased considerably. As this paper points out a levy amounting to 20 per cent of the difference between $7,110 and $7,450 is applied to that single income person. On an additional $340 earned that single person pays $68 on the levy alone. This does not include other income tax. We on this side of the chamber will be interested to see whether Senator Grimes will deny these figures. I will be most interested to see whether he will deny them.

We then find that if this person's income goes up a little more, indeed if that single person earns an additional $375, he pays $74.85 out of that $375. That is a 20 per cent levy. That amount covers the levy alone not the total tax paid. We find that a married couple on a taxable income of $12,300 pays 20 per cent on the difference between the non-levy amount, which is $11,803. So if an additional $497 is earned the family pays a levy of $99.40. That is nearly $100. That, I stress again, is not the total tax; it is purely the Medicare levy.

Senator Giles —It is a figment of your imagination.

Senator WALTERS —Senator Giles obviously does not have a clue. She says it is my imagination. I have just pointed out to her that this is a paper put forward by the library of the Parliament, headed 'Medicare Levy-How it Works'. The paper was not prepared by me or the Opposition. It was prepared by the library, which I presume Senator Giles and Senator Grimes have faith in. If they do not have faith in the library of this Parliament they had better stand up in this place and say so and not do so by interjection. We will see whether the Minister will deny that these figures are correct when he gets on his feet. I will be asking the Minister for permission to table some of these papers.

Senator Grimes —You can table what you like because we want to see the interpretation that you are putting on them.

Senator WALTERS —I thank the Minister. I shall be tabling them by leave. The Minister is now backing off and agreeing that the library papers are indeed accurate. We will be interested to see how he goes. I will refer to the anomalies created by this levy. As I have said, at times the levy amounts to 20 per cent. Let us have a look at how the Government deals with families in this regard. I will take an example in the paper that I wish to have incorporated, not tabled.

Senator Grimes —You can incorporate your whole speech, if you like.

Senator WALTERS —Fine. I seek leave to have this paper incorporated in Hansard.

Leave granted.

The paper read as follows-


The Parliamentary Library




Taxpayers whose taxable incomes fall below a certain level are not required to pay the levy. Those levels are known as low income thresholds and are

singles $7,110;

married couples (or de facto couple) and single parents $11,803;

The low income thresholds are increased by $1,330 for each dependent child or student.

A ''shading in'' mechanism operates on incomes slightly in excess of the low income thresholds. The ''shading in'' ranges are:

Single-$7,110 to $7,484;

Married couples and single parents $11,803 to $12,424.

Therefore if the income of the individual or couple is within their shading in regions the levy payable is 20 per cent of the excess of taxable income over $7, 110 and $11,803 (adjusted for dependent children) respectively.

People whose only income is the aged pension fall below the low income thresholds.


The Family Income Threshold (FIT) is calculated to see whether (1) couples, married or de facto, and (2) single parents who are entitled to an income tax rebate as a sole parent, or for a daughter-housekeeper or a housekeeper, are required to pay none, some or all of the Medicare levy.

for example, the FIT for a couple or single parent with one dependent child is $11,803 plus $1,330 = $13,133;

in this case the upper limit of the shading in region would be $12,424 + $1,330 = $13,754;

therefore if combined income is:

below $13,133, no levy is due;

between $13,133 and $13,754, a levy of 20 per cent of the amount in excess of $ 13,133 is payable;

more than $13,754, a levy of 1 per cent of taxable income is payable

Examples-1. Single person: taxable income: $7,000; levy: zero.

2. Single person: taxable income: $7,450; levy 20 percent of ($7,450-$7,110) = $68.

3. Single person: taxable income : $7,485; levy: $74.85.

Examples 4, 5 and 6 concern couples with only one income earner and no dependent children.

4. Couple: combined taxable income: $11,700; levy: zero.

5. Couple: combined taxable income: $12,300; levy: 20 percent of ($12,300-$11, 803) = $99.40.

6. Couple: combined taxable income: $12,425; levy = $124.25.


No One Two Three Four

dependent dependent dependent dependent dependent

children child children children children

or students or students or students or students or students

$ $ $ $ $ Family Income Thresholds Phase in Range 11,803 13,133 14,463 15,793 17,123

to to to to to

12,424 13,754 15,084 16,414 17,744 Taxable Income of Income Earner or sole Parent

12,000 39.40 . . . . . . . . 13,000 130.00 . . . . . . . . 14,000 140.00 140. 00 . . . . . . 15,000 150.00 150.00 16.80 . . . . 16,000 160.00 160.00 160.00 82.80 . . 17,000 170.00 170.00 170.00 170.00 . . 18,000 180.00 180.00 180.00 180.00 180.00 19,000 190.00 190.00 190.00 190.00 190.00 20,000 200.00 200.00 200.00 200.00 200.00


The following is based on an annual income of $15,000. The examples below show how the Medicare levy varies from household to household according to a number of factors: the number of income earners; the number of dependent children or students; if there are two incomes, how the total income is composed.

(i) Single person: income: $15,000; levy: $150.

(ii) Couple: one income: $15,000; levy: $150.

(iii) Couple plus one dependent: one income: $15,000; levy: $150

(iv) Couple-no dependents: one income $7,500; other income $7,500; total income $15,000; levy: $150.

(v) Couple-no dependents: (a) one income $10,000; (b) other income $5,000; Total income $15,000; levy on (a) = $100; levy on (b) = zero; Total levy = $100.

(vi) Couple-no dependents: (a) one income $8,000; (b) other income $7,000; Total income $15,000; levy on (a) = $80; levy on (b) = zero; Total levy = $80.

(vii) Couple-two dependents: one income $15,000; Family income threshold = $14, 463; phase in range $14,463 to $15,084; levy is 20 per cent of ($15,000-$14,463) = $107.40.

(viii) Couple-two dependents: one income $7,500; other income $7,500; as singles both income earners would have to pay a levy of $75 each, but as a couple with two dependent children, their FIT is $14,463. The couples total levy is $107.40.

(ix) Couple-two dependents: (a) one income $10,000; (b) other income $5,000; as singles, income (a) would face a levy of $100 and income (b) would pay no levy- total levy $100. FIT is $14,463 and as couple they would face a levy of $107.40; the single levy rate is therefore, applied.

Education and Welfare Group

2 October 1984 Legislative Research Service

Senator WALTERS —I thank the Senate. This paper refers to incomes of $15,000. The levy on a couple with one dependant and one income will be $150. I now take a couple with no dependants. One income earner in that family earns $8,000 and the other $7,000. Their combined income is $15,000. This couple has no dependants and a total income of $15,000. Because one person earns $8,000 and the other $7,000 the levy is $80. It is not $150 but $80. A couple with no dependants on a total income of $15,000 pays $80 a year. A couple with one dependant child and the same income pays $150.

Let us have a look at a few more anomalies. I take now a couple on a single income of $15,000 a year, with two dependants. That couple's levy is $107.40, whereas the previous couple I mentioned on the same income but with no children is paying $80. That is exactly the sort of thing that this Government is doing to families, and is doing so repeatedly. Senator Giles, Senator Maguire and Senator Grimes not only could not care less but also try to deny it. Senator Maguire raises his eyebrows and seems to be saying to me: 'Paying 20 per cent, you must be mad'.

Senator Maguire —I said nothing.

Senator WALTERS —He said that because he is not aware of what is going on. That is why he has been hoodwinked. He has not done his work. He has not asked the library to do an independent paper that will tell the people of Australia the truth. He just absorbs all the guff from Senator Grimes and the Minister for Health, Dr Blewett. Let us have a look at just what this levy is. We have been told that Dr Blewett does not believe that there is any need to increase the levy. He made that very clear. He said so in a news release. The article was headed 'Medicare levy rise unlikely'. It continued:

Australia's Medicare levy was unlikely to rise from the present 1 per cent, the Federal Health Minister, Dr Blewett, said in Brisbane yesterday.

Of course it is unlikely to rise. The increase in Medicare expenditure in the last Budget was $2,021m. The levy raises $1,191m. Therefore there is a shortfall of $830m. That is a shortfall for additional Medicare costs, and Dr Blewett says he will not increase the levy. Why should he? All he has to do is take the additional amount out of Consolidated revenue, out of ordinary taxes. Indeed, that is exactly what he is doing.

We were promised by Dr Blewett, in his second reading speech, that the levy would be identified on every one's pay slips. That has not been done and it will not be done. I have sought answers and I have been told there were technical difficulties in carrying out the Minister's promise in his second reading speech . These technical difficulties mean the Government would lose the opportunity honestly to put before the Australian people just what is happening and to inform them just what they are paying in the way of the Medicare levy. The Medicare levy has indeed gone up-to 1.7 per cent. The additional 0.7 per cent has been taken out of Consolidated Revenue, if you like, or the levy has been increased. We really do not know which, because the Medicare component is not identified on pay slips as the Minister told us it would be.

Indeed, we have been told that nine out of 10 Australians would be better off under this new system. Ask the Queenslanders. They have always had a free hospital system. Ask the Queenslanders. They know they are not better off. They are well aware of that. Ask the people who privately insure for private hospitals so that they can at least get into the hospital and have their surgery done. They represent over 50 per cent of the community so ask them. They know they are paying the levy as well as private hospital cover. They know they are paying 15 per cent of the schedule fee and they know that they are not better off. The Government also knows they are not better off but the Prime Minister ( Mr Hawke) and indeed Senator Grimes and Dr Blewett still say that nine out of 10 Australians are better off under Medicare. We will see what Senator Grimes says in answer to that. I wonder whether he will answer that point. He will not answer that. He will pick the bits he does want to answer and he will not answer that.

Let us consider the waiting lists that this great Medicare system has created. We know that in Senator Grimes's own area in Launceston the Examiner reported the hospital backlog in Tasmania is now 3,500, as reported by the Examiner.

Senator Robert Ray —Do you believe that?

Senator WALTERS —We know it is a fact because Tasmania has at least done its figures. We also know that Dr Blewett said that if that figure of 3,500 is accurate there is a lot of bed wastage in Tasmania because Tasmania has many public hospital beds. The Minister is so lacking in understanding of the situation in Tasmania that he believes that because we have a tremendous backlog and waiting list at the main hospital in Hobart we ought to be able to send patients up to Burnie to fill the public hospital beds there because they are not full. This demonstrates the stupidity and lack of knowledge that the Minister has of the various States. We cannot ease the backlog using that sort of method.

I find some of the other headlines most interesting. In the Australian of the 22nd of this month is a headline 'The wait for surgery now up to 12 months'. That article reported that in Victoria up to 30,000 people are now waiting for elective surgery. Thirty thousand people cannot get into hospital to have hip replacements, cataract removals or any of the surgery that creates a better quality of life for the people of Australia. The Government talks about elective surgery as though it is not the sort of surgery that is necessary, that people just want it and do not really need it. The article in the Australian reported:

Dr Horvath said people seeking elective surgery could wait up to 12 months. Lists were re-arranged daily to give precedence to emergencies.

'For example, if you are a little old lady with cataracts, you may have to wait between six and nine months . . .

Members of the Government laugh at the fact that little old ladies with cataracts have to wait six to nine months to have their cataracts removed because Medicare is forcing people into the public hospitals and emptying the private hospitals. The situation is such that the Victorian Minister of Health, Mr Roper, is making contracts with the private hospitals to alleviate the position by taking in some of the public hospital patients because the flood that this Opposition warned the Government about is occurring. I refer to the flood of people into public hospitals because the Government is forcing them to pay the levy and they are unable to take out private health cover as well. It is a tragedy. Although we received congratulations from the Prime Minister on our entry into the best health system ever devised, his own Health Minister is not willing to abide by that system for his own family. He did not consider it good enough for his daughter. I do not blame Dr Blewett one bit for demanding a better system for his own daughter to have her appendix out. I do not blame him one little bit because that is exactly what I would do. I would want the doctor of my choice for my daughter if she needed to have an emergency operation. I do not blame Dr Blewett for that, but I do blame him for saying that what is good enough for the rest of the people is not good enough for him. That is the tragedy of this Government.

We should consider also the one per cent levy we did not realise was to be put on lump sum superannuation payments. Did the people of Australia realise that the money they have put away for their superannuation, perhaps for 40 years in the work force, would attract a one per cent levy? Did they realise that a one per cent levy would be put on their lump sum superannuation payment? Of course they did not. They had no idea that these are the sorts of things that Mr Keating's people are gradually pulling to bits. The people are gradually wheedling these facts from the Treasurer and Dr Blewett. If we consider what people in other countries around the world pay for their health care, we find that in the United Kingdom-and nobody in this place would suggest that the United Kingdom is a country we should follow in the health sphere-people pay 6 per cent of gross national product on health. I wonder whether Government members know what we pay. Do they have any idea? There is complete silence from the Government benches. Government members have no idea what we pay for health as a percentage of our gross national product. The figure, for their interest, is 8.6 per cent. We are well above the United Kingdom figure. We pay 8.6 of our gross national product for the honour of a health system that does not allow people to get into hospitals for elective surgery such as hip replacement or cataract removal in under 12 months. It is the sort of health system that the Minister for Health does not consider good enough for him and his family but considers good enough for Australia.

Let us consider how Dr Blewett handled Medicare. A headline in the Australian reads 'Government's figures that caused doctors' strike were wrong'. The Government gave the Penington Inquiry into Rights of Private Practice in Public Hospitals which it set up completely wrong figures. I cannot hear any interjections now. We are told that there was a 100 per cent increase in the use of pathology services. The article states:

Commonwealth Department of Health documents presented to the Penington Inquiry into rights of private practice in public hospitals grossly overstated the use of pathology and doctors' income derived from the service, it was confirmed today.

The article pointed out that the figures on pathology utilisation indicated an increase of over 100 per cent between 1975 and 1983 and a substantially greater income for doctors in that area. What was the true figure? It was not 100 per cent. The true increase was 39.6 per cent. I think that that claim by the 800 was either deliberate or there was gross irresponsibility and maladministration. Someone should be called on to answer such a charge. We had a situation where doctors had to go on strike for the first time in the history of this country. The Government gave the Penington inquiry figures which were not just a bit wrong. The Department of Health told the Penington inquiry that the use by doctors of pathology services had increased by 100 per cent between 1975 and 1983 and that as a result their incomes were increased. But the figure was really 39.6 per cent. That is an absolute disgrace. Is it any wonder that the report of the inquiry said that the whole thing was wrong, that changes must be made to Medicare. Another newspaper article carried the headline 'Penington calls for Medicare changes'. Is it not a tragedy that we are finding this sort of thing?

Apart from that sort of doctor bashing we find that the Government has also been doing some doctor bashing, as the whole of Australia knows, in respect of fraud. We have a situation in which the Department says that the doctors have been defrauding the country of millions of dollars. Then a professor of statistics at Macquarie University comes out and says: 'As a scientist I object most strongly to public policies being formulated on the basis of improper studies'. He says that the only basis for the figures that the Government had put out was 'expert opinion' of members of the Department of Health. We all know what 'expert opinion' means in respect of the Department of Health. Anyway, he says that the only basis for the figures is expert opinion of members of the Department of Health supported by a statistical calculation that is both irrelevant and misleading. So we have a professor of statistics coming out and saying that the Government is putting out figures that are irrelevant, misleading and have no basis and that as a scientist he objects very strongly to this situation.

This is only one more area in which incorrect figures are being put out by this Government. We have the Penington inquiry saying that it was given figures that were wrong. The figures were so disastrously wrong that the inquiry came out and said that Medicare has to be changed. We have a professor of statistics at Macquarie University coming out and saying that the Government is being misleading and that as a scientist he objects very strongly to this sort of abuse. The people of Australia know that they have been hookwinked in respect of the Medicare levy. Unfortunately they are committed to it. But we have promised that we will change it. As I said, we have told the people of Australia that Mr Hawke's statement that nine out of 10 people will be better off is obviously a falsehood. We have told the people of Australia that after the next election we will alter the system.