Senator Sinks Medicare Bill

The Age

Thursday September 25, 2008

By Leo Shanahan, Canberra

THE health insurance options of up to a million Australians are in limbo after the defeat of one of the Rudd Government's central budget measures.

In the biggest policy setback for the Government since its election ten months ago, almost $1billion worth of budget changes to the Medicare levy surcharge threshold were defeated by a single vote from Steve Fielding, the Family First senator from Victoria.

Despite last-minute changes to the legislation by Health Minister Nicola Roxon on Tuesday - reducing the proposed threshold for singles from $100,000 to $75,000 - the bill now faces an uncertain future and will have to undergo radical changes if it is to avoid being dumped altogether.

Its defeat in the Senate also provides a possible trigger for a double-dissolution election.

Under the Medicare levy surcharge, singles earning more than $50,000 a year and couples on more than $100,000 now have to pay an extra 1% on their income tax if they do not have private health insurance.

In the May budget, the Government sought to increase the threshold to $100,000 for singles and $150,000 for couples, but following an outcry by private health funds and the AMA that the changes would bring higher premiums and harm overstretched public hospitals, the Government announced that it would accept a lower rate of $75,000 for singles.

The Government says the average family could save $1500 a year from the change and expected almost half a million Australians to drop their private health insurance.

The Treasury estimates it will save almost $1 billion in no longer having to pay the private health insurance rebate, with the Government set to gain net revenue of $350 million.

Further debate on the bill was supported by fellow balance-of-power holders the Greens and independent Senator Nick Xenophon, but Senator Fielding chose to kill it at his first opportunity.

Last night Senator Fielding defended his move, saying the Government had done nothing for lower-income earners who could be affected by higher health insurance premiums.

Senator Fielding - who is lobbying for changes to the bill that would see lower-income earners compensated for rising premiums through a higher private health insurance rebate - said the Government ignored his desires by bringing on the vote for the bill too quickly.

Altering the bill further is likely to be complicated, with the Government unlikely to agree to the changes proposed by Senator Fielding.

Last night Ms Roxon laid the blame on the Opposition for the defeat of the bill but took a swipe at Senator Fielding.

"At a time when many families are struggling with their household budgets, the Liberals are denying them tax cuts," Ms Roxon said.

"I am disappointed that Senator Fielding has refused to even debate our very sensible proposal."

The Age believes the Government is considering rewriting the proposed legislation but may risk putting it to the Senate again soon, risking complete failure of the bill if it is defeated again.

Opposition health spokesman Peter Dutton described the bill as a bad public policy measure that would have had a disastrous impact on Australia's health system.

THE STATE OF PLAY

Luxury car tax Government strikes a deal with Greens and Family First to pass 33% tax increase despite the Coalition's bid to block it.

Pensioners Coalition bill to increase single age pension by $30 a week passes in the Senate but the Government uses its numbers to block the bill in the lower house.

Medicare levy surcharge Government's move to increase the threshold to $100,000 for singles fails in the Senate.

Amended Medicare levy surcharge Government backs down and lowers threshold to $75,000 but Family First sides with Coalition to block this compromise.

© 2008 The Age

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