POLITICS

Bill Shorten: Why A Medicare Tax Increase Was Good Before But Not Now

Housing affordability is one of those reasons.

01/06/2017 12:25 AM AEST | Updated 01/06/2017 12:30 AM AEST

CANBERRA -- Ever seen a politician do or promise one thing and later do exactly the opposite?

No! Get out!

Well, as federal politicians debate the merits and pitfalls of the second Scott Morrison budget - whether it is Labor-lite, fair, a Triple-A rating threat or more of the same - there are particular tussles over two big new revenue measures; the Medicare Levy increase to pay for the National Disability Insurance Scheme (NDIS) and the new big bank levy.

To the ire of the major banks, Labor is supporting the bank levy, but it is only going part way on the Turnbull Government's bid to raise $8.2 billion through increasing the Medicare Levy from two percent to 2.5 percent from 2019.

We will get to what Labor wants to do in a second, but in excerpts of a major speech, to be given on Thursday morning to the CEDA State of the Nation conference in Canberra, seen by HuffPost Australia, Shorten will argue the Coalition have found a replacement for the 2014 "budget emergency".

"Now they're at it again, yelling about an 'NDIS emergency,'" Shorten will say, again insisting the scheme is fully funded.

"Trying to spread anxiety among people who rely on the NDIS, as an excuse to increase the taxes working people pay. We have every right to be sceptical of the Liberals' motives and their intent."

But - and this is the key - Labor have raised the Medicare Levy before. In 2013. For the NDIS funding.

The Labor Leader's current counter offer to the Turnbull Government is only agreeing to the rise for the top two tax brackets – that is, Australians earning over $87,000 a year. It will push the top marginal tax rate to 49.5 percent, a handbrake on prosperity according to Prime Minister Malcolm Turnbull.

So why is the opposition not supporting the levy increase in full now?

Shorten will tell the CEDA conference on Thursday that wages growth in 2013 was over three percent, Labor had just tripled the tax-free threshold and there were "progressive revenue measures like reforms to Private Health Insurance."

Now, he notes, wages growth is at the record low of 1.9 per cent, under-employment is at a record high, living standards have "stagnated," housing affordability is "harder and harder" for young Australians, apprenticeship numbers have crashed by over 130,000 and penalty rates cuts are on the way for 700,000 people in retail, hospitality, pharmacy and fast food.

"We won't ask millions of people on more modest incomes to pay more tax," Shorten will say. "And we won't give millionaires a tax cut, while making everyone else pay for it."

"The Liberals can call it what they like – but a tax is a tax is a tax.

"Labor will not ask people who already spend every dollar they earn – and then some – to make another sacrifice, while millionaires get a hand-out."

Prime Minister Malcolm Turnbull, on Wednesday defended higher taxes under his Liberal Coalition Government and attacked Labor over its plan to increase the top marginal tax rate to 49.5 percent and its "shameful abdication of responsibility" in disability funding.

"We have made the tough and pragmatic decisions to put the Budget in a stronger position," Turnbull said. "Yes Liberals prefer lower taxes - but we dislike unsustainable deficits and mounting debt even more.

"Labor floats grand schemes, Liberals fund vital services.

"In the case of disability funding, it was a shameful abdication of responsibility to some of our most vulnerable people.

But, the opposition leader is not standing for that.

"There is no economic logic to hitting demand and confidence again by hitting the millions of Australians who earn less than $87,000 with a tax increase," Shorten will say.

And he rejects Turnbull's argument that targeting high income earners with the Medicare Levy increase is not fair, will entrench poverty or place a handbrake on Australia's productivity. Shorten insists any argument of 'every second dollar going to the government' is dishonest.

"Firstly, because of Australia's progressive tax system, no-one pays the top rate of tax on all their income," he is expected to say.

"For example, the decisions taken in this budget would mean from 1 July 2019, an Australian who earns $200,000 – will pay an average tax rate of 34.1 per cent.

"Under Labor's plan, the same person on $200,000, would be paying an average tax rate of 34.3 per cent.

"I find it hard to believe this will herald the end of Western civilisation as we know it."

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