Tuesday, March 01, 2011

It's serious. Why they'll back a $6.3 billion disability scheme but not a $1.8 billion levy

We need it

The Productivity Commission is proposing the most important social reform since Medicare without a plan to fund it, and there's scarcely a complaint from the Opposition.

Invited twice to complain about the big new tax or tax increase that will inevitably fund the scheme or about the irresponsiblility of proposing an unfunded $6.3 billion scheme the Opposition refused to play politics.

"Disabled people and their families wouldn't welcome talk about where the money is coming from," said shadow disabilities and carers minister Mitch Fiefield. "They have a very low threshold for politics".

Both sides of politics support the proposed National Disability Insurance Scheme and both are prepared to leave it to their successors to find the money.

And funding it on the never-never, out of unspecified future revenue probably makes more sense than the special levy the Commission was expected to propose. Medicare itself is funded out of general revenue, despite the fig-leaf of a levy insufficient to meet its costs. The government's "plan" to return the budget to surplus is no more than a commitment to do it some how in the future...

The $6.3 billion per year the government would need when the scheme got going is about one tenth of what it rakes in from the goods and services tax, meaning it could get the money down the track by bumping up the GST from 10 to 11 per cent, which is probably what it will do when it summons the courage as part of an overhaul of the tax system.

The extra $6.3 billion per year would double the $6.2 billion presently kicked in $1.7 billion from the Commonwealth and $4.5 billion from the states.

The Commonwealth would take over the funding because it is better at it. State taxes on things such as insurance and real estate transactions are frustrating and expensive to collect. The Commonwealth income and goods and services taxes are the cheapest, least bothersome and most stable taxes we have.

Which is what you would want if you regard the lifetime support and case management of someone profoundly disabled as a core function of government rather than an add-on.

Asked yesterday whether ordinary Australians would welcome a total of $12.5 billion being spent on 360,000 especially chosen Australians productivity commissioner Patricia Scott said it would actually be spent on all Australians, buying 22 million of all of us the assurance that if we are suddenly made profoundly disabled or our children are born disabled we will be looked after.

The scheme would start slowly with limited pilot program in 2014 (Ted Baillieu wants to volunteer Victoria) becoming national and gradually building up coverage from 2015.

The existing no fault motor vehicle schemes funded from third party insurance premiums would stay and be expanded to cover other types of accidents, possibly by lifting local government rates.

In time supporting Australians with disabilities would come to be seen as central to the role of government as funding health services and running schools. Everything else would become an add-on.

Published in today's Age

Read all about it. It could be the start of something big.

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