Penny Wong
Penny Wong Inga Williams

Levy to fund the NDIS is being considered

THE Federal Government is considering slugging taxpayers with a Medicare-style levy to help pay for the expensive National Disability Insurance Scheme, Finance Minister Penny Wong has confirmed.

Prime Minister Julia Gillard said on Monday "options previously taken off the table" were being considered to plug a $12 billion drop in revenue since October.

Speaking on Tuesday morning Senator Wong said this included a levy to fund the NDIS, despite the government previously ruling out such a measure.

"We're considering a number of funding options and what I would say is obviously a levy is something stakeholders have been calling for and have been calling for in the last 24 hours," Senator Wong told ABC radio.

"Whatever option you look at, you have to look at what will give security to people with a disability.

"What will ensure we have a strong scheme, not just for a couple of years but for the decades ahead.

"And what is a fair approach in terms of making sure, as the Prime Minister said, we all fairly contribute."

The government has already committed $1 billion for the first stage of the NDIS, which will launch in July at four test sites around the country.

Some economists have suggested increasing the Medicare levy from 1.5% to 2% of a person's taxable income to raise an additional $3.2 billion per year, which is still less than half of the estimated $8 billion per year that will be needed to fund the NDIS when it is up and running.

Australian Federation of Disability Organisations CEO Lesley Hall said the introduction of a levy to pay for the NDIS made sense.

"We believe that any stable, secure form of funding for the NDIS which gives people with disability certainty into the future is great," Ms Hall said.

"At the moment, we have people with disability who can't get more than two showers a week.

"Obviously that's not meeting their basic human rights, but it also means they're not working or participating in the community. We know from the Productivity Commission report that just getting people with disability into work by giving them better support will cover the cost of the scheme into the future."

The idea also attracted praise from the Australian Lawyers Alliance, with the group's president Tony Kerin predicting most Australians would be prepared to help fund the scheme.

He said it was encouraging to see a sustainable funding model being debated - whether through a levy or reform of the GST.

"For too long real debate about DisabilityCare has been compromised by a lack of certainty over its future funding," Mr Kerin said. 

"Secure funding is essential to the scheme's sustainability and protecting individuals' legal rights.

"Otherwise, there is no certainty for individuals in the long term. This was the reason that the NDIS was proposed in the first place."

But the idea of levy was not universally welcomed.Australian Chamber of Commerce and Industry CEO Peter Anderson said while the business community supported the establishment of the NDIS, funding it via a levy would be a "big mistake".

"Levies generally are there for temporary purposes. We need a disability scheme that is a permanent fixture," Mr Anderson told Fairfax.

The government should consider scaling back the scope of the NDIS so it could be paid for out of the budget without the need for a levy, he said.Mr Anderson also suggested a "root and branch" review of expenditure to repair the budget.

Opposition Leader Tony Abbott told reporters in South Australia the Coalition remained committed to the NDIS, and that the best way to fund it was to "build a stronger economy".

"Now the government is coming after you for yet more money to fund its schemes. It's just not good enough," Mr Abbott said.

But under persistent questioning Mr Abbott refused to say unequivocally whether the Coalition would support or oppose a levy.



If the Medicare levy was increased by 0.5% to help fund the NDIS, a person with a taxable income of $50,000 per year would have to pay an extra $250 per year on top of the $750 Medicare levy.