Disability reform banks on a levy
Business and the community are divided over the merits of a levy to fund the government's National Disability Insurance Scheme.
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- Prime Minister Julia Gillard will make an announcement on disability insurance at 9.30am
Labor's $14 billion national disability insurance scheme will be funded in part by a special Medicare-style levy set at 0.5 per cent of income, after Julia Gillard reversed her opposition to the funding option.
The reversal came just one day after the Prime Minister declared all reasonable options were back on the table.
Prime Minister Julia Gillard. Photo: Andrew Meares
With just days to go before the May budget is finalised and printed, Fairfax Media has learnt that the government has decided to introduce the new special tax - effectively taking the 1.5 per cent Medicare levy to 2 per cent for all taxpayers - after the expenditure review committee met on Tuesday.
It means the NDIS will become a reality, lifting the hopes of 2 million Australians living with disabilities and their carers.
The decision, likely to be announced within days, will result in the collection of about $3.5 billion a year towards the Commonwealth's major share of the scheme. It is expected to begin in 2014.
But while the new levy suggests the future of the NDIS is assured, both the scheme and Ms Gillard's school funding reforms face new doubts after the Coalition indicated neither was assured of identical funding it it won government at the September 14 election.
In a series of mixed messages emanating from the Coalition, Opposition Leader Tony Abbott recommitted to the NDIS but questioned the wisdom of a levy and hinted that the starting date should be subject to the state of the economy.
At the same time, his would-be treasurer, Joe Hockey, declared that an Abbott government would scrap Labor's school funding deal with the states and territories unless it had unanimous support, despite NSW Liberal Premier Barry O'Farrell signing on last week.
''We have said repeatedly that if all states don't sign up, then it is not a plan we can support,'' Mr Hockey told Sky News on Tuesday.
His comments came just hours after fellow Liberal frontbencher Jamie Briggs said the Coalition would ''of course'' be bound by any existing agreements with states.
''As far as honouring contracts, we'll honour contracts, of course we will, if we win the election … we're not going to back away from what has been agreed to between two governments,'' Mr Briggs said on the ABC's Q&A program from Adelaide on Monday.
Mr Hockey's concerns about affordability have put him at odds with Mr Abbott on the disability scheme.
''I am sometimes accused of being Dr No … when it comes to the NDIS, I am Dr Yes,'' Mr Abbott told a Perth rally a year ago.
But Mr Hockey said the scheme might not be affordable in the current environment.
''Well, it depends on what the state of the budget is. This is like trying to grapple with shadows and grapple with smoke,'' he said.
My Hockey said he did not regard a new levy "as the right solution in this environment".
"If the economy is under-performing, you don't tax it to increase performance. You never tax and regulate your way to prosperity, this is something the Labor Party just doesn't get."
Trade Minister Craig Emerson described the threats to undo the Gonski reforms as a ''betrayal'' of the nation's children.
''What a tragedy it would be if Mr Abbott became prime minister, because he would ensure that Australian kids get a second-rate education,'' he said.
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