While many medical professionals will be welcoming the new changes to the Stage 3 tax cuts announced by the Prime Minister today at the year’s first meeting of the National Press Club, the proposed cost of living measures also included lowering the current threshold for the Medicare levy.
And though this is undeniably good news for the 1.2 million low-income earners who will now either remain exempt from paying the levy, or pay less in tax, little mention has been made by any commentators – including the leader of the Opposition, Mr Peter Dutton – about where the extra money to pay for Australian healthcare is going to come from.
The increase to the Medicare levy low-income thresholds is expected to cost $640 million over four years from 2023-24, and while Treasury has noted that this was accounted for in the 2023-24 Mid-Year Economic and Fiscal Outlook – a review of the 350+ document turned up empty handed.
The threshold currently exempts people earning $24,276 or less from paying the Medicare levy, which scales in line with income, with the full 2% levy is paid by anyone earning more than $30,345.
Under the new announcement, those thresholds will increase to $26,000 and $32,500, representing a 7.1% increase in line with inflation, with the same percentage increase applied to seniors, pensioners, and families, even though they are subject to different thresholds.
According to the estimates provided by Treasury, a single person earning $30,000 will receive an extra $172.40 each year by avoiding the levy, while single pensioners would be $272.40 better off.
“This is about not forgetting people who really need that assistance and we are providing a lot,” Prime Minister Albanese said, reiterating the savings already passed onto Australians.
“Cheaper medicines have cost $250 million to the budget… and the benefit is overwhelmingly for Australians on low incomes. Since September 2023, 60-day prescriptions have made selected PBS medicines cheaper for Australians with a range of ongoing stable health conditions, already saving patients over $7.2 million.
“Almost 2 million 60-day scripts were dispensed between September and December 2023, and with the number of medications available as 60-day scripts set to rise to 300 by September this year the savings will continue to grow.”
Mr Albanese also pointed out that the government reduced the PBS Safety Net Threshold, so more pensioners and concession cardholders get free medicines, which has reduced the yearly medicine costs for those 2 million Australians by as much as 25%.
But no answer or information was forthcoming as to where the funding to keep Medicare future-proofed and functional would come from…