In announcing today that — way hey! — the Turnbull government now has a revenue windfall to fully fund the National Disability Insurance Scheme without last year’s budgeted increase to the Medicare levy, Treasurer Scott Morrison was the cat who got the cream.
Morrison told the Australian Business Economists group: ‘A year later, our fiscal position has improved. Our economy is stronger and it is continuing to strengthen under the Turnbull government’s national economic plan. That is why we are now in a position to give our guarantee to Australians living with a disability and their families and carers that all planned expenditure on the NDIS will be able to be met in this year’s Budget and beyond without any longer having to increase the Medicare levy.’
That’s it. Revenue’s exceeding projections, so we’ll can the NDIS surcharge on the Medicare levy. Given the levy is really just another tax cut, that’s an annual extra $375 in the pocket for someone earning $75,000. Well, it would have been when the levy hike cut in next year.
Good on ScoMo, as it’s always better to fund big programmes without raising taxes, but when is the other shoe going to drop? If the government’s serious about reducing debt and deficit, surely it just can’t plough revenue windfalls into big-ticket spends like the NDIS. It still needs offsets — whether these be fine-tuning NDIS spending, finding savings in other programmes and running costs, slashing wasteful spending wherever it can be found, or all of the above.
If this NDIS move eats up too much of the revenue windfall from a stronger economy without adequate offsets, we’ll just keep on borrowing as we already have been for far too long. Returning to surplus will be as far away as ever.
What’s more, the NDIS itself is still evolving and is a tortuously complex scheme to administer and deliver, with over 100 new client assessments are considered every day.
Last year a Productivity Commission study concluded NDIS policy, programme and funding settings are more or less right –- something Chris Bowen cited when announcing Labor would scrap its own NDIS levy on higher earners. Bowen should be careful, however, as should Morrison. The Commission recognised these complexities, and cautioned that because we still are learning about the disability services market the NDIS has opened up, we still can’t be certain that the settings that now look right are right. What looks ok now might prove to be not enough to meet a surge of client demand, let alone the high expectations raised by Labor, and to a lesser extent by the Coalition, of what the NDIS will do for its vulnerable clients when its full roll-out starts in 2019.
So the Treasurer had better hope the revised revenue projections he’s relying on will hold up, especially as he’s foregoing the one tax increase in recent memory that’s drawn no complaint from anyone when it comes to paying it. And if he’s truly serious about smaller government and reducing public debt, he’d better be sure that there is still a net save to the Budget bottom line from his generosity. As it is, the lack of detail in his announcement exposes him to twelve days of pre-Budget questions about where the money really is coming from to remove a levy that, until Wednesday night, the Government has argued is indispensable to keeping the NDIS going. This measure must be shown to be more than a sugar hit for the pre-Budget media cycle.
All in all, however, Morrison is shaping as the Santa Claus Deputy PM Michael McCormack said he will be on Budget night. Announcements like this, the $5 billion allocated for a rail link from Melbourne to Tullamarine Airport, Christopher Pyne’s shipbuilding spectacular, and multi-billion dollar boosts to federal funding to the states for public hospitals, it’s getting to look a lot like Christmas –- or at least a goody-laden Budget followed by a dash to the polls after the footy season.
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