Means testing Disability Care won’t save any money this budget, but it will in future budgets.
And because of the improvident promises that Labor and Liberal made in the election campaign, future budgets are going to be just as difficult to manage as this one, if not more so.
Effectively the public at the last election agreed to a transfer of some wealth from most of us to those who are at school or disabled. I’m not sure that the public understood that is what Gonski and Disability Care stood for, but that’s politics.
While the “I” in the original NDIS stood for “insurance” (National Disability Insurance Scheme), it never was an insurance scheme, just another welfare program.
Now that it has been rebadged it might be thought to be like Medicare, but Medicare is actually tied to a levy in the tax system, and there will be no disability levy.
In which case I can see no reason to pretend that Disability Care is anything other than a welfare measure. And one thing we’ve gotten very good at in Australia is tightly targeted welfare, via means tests.
If the old age pension, which is essentially meant to deal with the disability called “old age” can be means-tested, why not Disability Care. Disability is not something that sets someone apart from the human race.
Like any part of the human condition it can strike anyone at any time.
If Jamie Packer had fallen on that brick fence in Bondi the other day and broken his back rather than a tooth, he could have been disabled. But I see no reason for the state to give him a disability benefit, any more than they will fix his teeth. He ought to be entirely self insured.
For it to work any other way means that money is being transferred from those of us with less who have other costs to bear to meet a cost he, and others much poorer than him, but still far richer than average, can also bear themselves.
Come to think of it, that is an approach that could be expanded to Medicare. The Medicare Levy only covers somewhere around one-quarter of the cost of Medicare.
Perhaps those who earn more than a certain amount of money could lose the ability to claim more on Medicare than they have contributed through their levy.
The alternative is to take the means test of everything else. And that hardly seems fair.
Currently, the GST collects around 50 billion per, which is distributed around the states.
If it was extended to include everything, including health care, it would raise around 150+ billion?
This sum would allow pensions to be doubled, at a cost to the bottom line of around 78 billions, with the additional 39 billions coming from the expanded GST?
Meaning, they could pay their way like everyone else?
Or carry more personal health insurance and what have you?
All of which would further improve GST collection?
The states could have their GST share doubled, meaning they could finally take full responsibility for all public education and health, which could be means tested, so our charity is not frittered away supporting millionaires, who should be able to pay their way, but particularly, if we finally expect pensioners to do likewise!
Who by the way, would provide some serious domestic stimulation, with their enlarged personal budgets!
Settling for once and for all, who does what, and ending duplication, should also save the budget bottom line 50-60 billions per, or more than the current structural deficit!
And given a new enlarged GST collection model, collecting around 150 billions per, there’d still be an annual surplus of around 11 billions, which could be stashed in a sovereign fund?
Which could also be allowed to keep and reinvest any and all profits, to perhaps be worth more than 150 billions in a decade, or more than twice that twenty years from now?
But particularly, if we invested in new energy paradigms or extraction?
It’s not my ideal solution, but one I’m almost certain, most conventional economists would accept?
Alan B. Goulding.
Comment by Alan B. Goulding — May 8, 2014 @ 3:38 pm
Written by someone who inhabits the parallel universe that is not disability in Australia, this article is flawed fundamentally. The problem is that, to date, disability equals poverty, so you can means test all you like. Because the supports that are taken for granted in other first world countries are not in place here, people with a disability and often the family carer cannot access employment. They are trapped in a cycle of dependence on a welfare system. I would know, having given birth to a severely disabled child nearly forty years ago and never having been able to use my tertiary education. The proposed NDIS will provide the necessary supports to allow people with a disability and the family Carers to access the workforce. They will then pay taxes and add to the overall wealth of the nation. I would call this equitable and far sighted, quite the opposite of “improvident”. It is wrong to call the NDIS another welfare program. It is also wrong to say there is no levy, when the increased Medicare levy has been earmarked to partially fund the NDIS. There can be no comparison with aged care, delivered after a lifetime of work and building assets. For me it is too late, but for the next generation I want the chance to do just this – work and build assets, be independent and productive. This will be the result of the NDIS.
Comment by Estelle Shields — May 9, 2014 @ 10:06 am
If the GST rate was increased to 12%, and on everything? The yield would rise to around 180 billions PA. The additional 30 billions, would probably be a useful start on fully funding the NIDS.
If the rate was increased to 15%, the yield would rise to around 2250 billions PA! More than enough to completely cover a very generous NIDS.
And I dare say, more money available for a generously enhanced sovereign fund!
This is what is missing and would shore up our economy against future economic shocks, and indeed, make us far less reliant on foreign debt, and even more problematic foreign masters!
The fact that the additional welfare would be almost certainly be added to the domestic economy, would almost immediately boost it quite dramatically!
And given this same additional money would likely pass through around 7 different pairs of hands, before exhausting, add quite generously, to tax receipts.
By as much, given a 15% average tax, an additional 575 billions, and indeed, as much as an additional 55 billions to a 15% GST!
Much of which would be absorbed by more adequate aged care, but particularly, those very frail over 80’s!
Given treasury and the govt completely lack imagination, we are unlikely to get anything like the genuine tax reform we need, and will remain eternally handcuffed to tax compliance costs, which put an additional impost to the average bottom line of around 7%!
A 7% impost which well thought through reform and quite massive simplification would remove, along with other no longer necessary taxes, inclusive of the ubiquitous, cascading GST, payroll tax and fuel excise, just to highlight the most regressive, economy contracting taxes that put a handbrake on the real economy.
A simple 4.8% expenditure tax, applied without fear or favor to all expenditure, plus all internationally transferred or remitted funds, would raise more than 100 billion per, than currently collected by internal revenue.
The very simplification of just one single, stand alone, unavoidable system, would completely negate the need to part with any tax compliance costs, to reiterate, adding around 7% averaged to the average bottom line.
Do the sums.
Think about it, a 4.8-5% variable impost on expenditure, is less than the 7% averaged added to the average bottom line!
And if your take home pay was your gross before tax, who would feel any pain, when 4.8-5% was collected as an expenditure tax!
If anyone is in doubt just how much this tiny Tobin like tax, would collect, then why not introduce it as a 1% deficit levy on all expenditure, including international transfers and remittances!
Look, the GST was introduced to make up for the revenue lost, as around 95% of corporate Australia headed offshore, taking their considerable tax liabilities/remittances with them.
We also face the destiny of demography, which leaves us with no other choice, but to introduce real tax reform, that just garners its entire funding from the GNP, rather than a shrinking base of individual taxpayers.
And all that would then be required, would be to grow the economy, to also increase the revenue base.
And that is as simple as providing the lowest energy costs, coupled to the lowest total tax impost!
Both of which are very doable, by people who remove the earwax, and replace it with just a little creative imagination!
As opposed to always being right, and intent on growing a personal, if very costly, control freak empire, or simply standing in the road of real reform, simply because it impacts on personal interest, and or a crony’s interest; and to hell with the national interest?
And if the cap doesn’t fit, why try force it to fit, with self identifying objections!?
The very simplicity of the proposal is what makes it the most transparent, least complicated ever proposed.
Whereas, complexity confers extreme opaqueness!
A very wise republican Senator, appearing on Q+A said, and I quote, “at some point complexity always becomes fraud”!
Alan B. Goulding.
Comment by Alan B. Goulding — May 9, 2014 @ 10:48 am
Correction: The 2250 billions should read, 250 billions. Please excuse, the fat fingers. Alan B.
Comment by Alan B. Goulding — May 9, 2014 @ 10:55 am
Further correction, The 2250 billions should 225.0 billions. Abject apologies.
Alan B.
Comment by Alan B. Goulding — May 9, 2014 @ 12:29 pm
Sorry Alan, but those figures don’t seem realistic to me. I think you aren’t allowing for input credits in your calculation of what the GST might bring in. Otherwise, what your figures seem to suggest is that exempt products cover two-thirds of the economy. As we’re talking about fresh food, education and health goods, I don’t think we’re talking about two-thirds.
Comment by Graham — May 9, 2014 @ 1:34 pm
Sorry Graham, not my numbers but those of former Prime Minister and merchant banker, John Hewson.
And when one can pay, i.e. $70,000.00, just for two months in a public hospital, I think the numbers probably stack up.
However, feel free to take economist John Hewson to task, for lack of quality figures or analysis, or do you think it’s the birthday cake all over again?
Comment by Alan B. Goulding — May 9, 2014 @ 3:39 pm
As I mentioned previously, it’s not my ideal solution.
My ideal solution would remove all the complexity in favor of a single stand alone expenditure tax, that was applied to all spending.
If some are worried that a number as modest as just 4.8-5% variable, wouldn’t raise sufficient funds, then that can be answered for once and for all, by the deficit reduction levy, being collected as a 1% levy on all expenditure, including all international remittances or transfers, from Australia!
This would then allow us to virtually road test the principle, and end for once and for all, any speculation on just how much revenue could be raised by one single unavoidable tax measure, as 4-5 multiples of the road test.
Given that model, there’d be no need to engage in any time wasting and costly reconciliation or compliance issues, meaning with the roll out of the final number, as the only tax collected; all compliance costs could be rolled back into the average bottom line, which would be improved by around 7% as the first consequence, and further improved by a much more generously shared tax load, courtesy of finally dealing with, and ending all avoidance, for all time!
I for one, could live without payroll tax, fuel excise and the GST, all regressive taxes, inasmuch as, they impose further and entirely unnecessary imposts on business.
Which is really where we grow all our jobs and wealth creation!
A single stand alone expenditure tax, as a self regulating indexed tax, would rise with any and all economic expansion.
Making that happen is just not that hard, when we couple what should be the lowest tax rate, to the lowest energy prices!
All very doable, if we just crack on and build cheaper than coal, thorium power stations, made even cheaper by half, by locating them adjacent to the industrial estates, to finally end transmission line losses.
Given all the high tech industries are also entirely energy dependent, then relocating here, would then be the only logical way of actually reducing production costs.
This imperative could be further magnified, by us providing an entirely integrated, roll on roll off freight forwarding system, inclusive of rapid rail and nuclear powered national fleet shipping.
This would be taking a leaf out of a very pragmatic Singapore,s book, which simply has not handcuffed itself away from most of its most pragmatic options, by refusing to join in with the nonsense moronic mantra, that the govt has no business in business!
We have to move out of the 19th century, and our self evident lunatic dependence almost exclusively, on mining and agriculture.
Not that either of those are not important, but ought only be exported with considerable value adding!
There has never ever been a better opportunity to road test an expenditure tax, nor a better reason for actually imposing one.
This road test, to reiterate, would allow us to adjust to a final number, which could still be marginally varied, region by region, where necessary, to alone control all inflation or stagnation; and simultaneously where necessary![ And allow us to lower and set and forget interest rates to historical lows, to turbocharge the non mining industries!]
Made possible by the preferred fee free collection methodology, via the banking fraternity, as part of the cost to them of having a licence to virtually print money!
Albeit adjusted downward, by increased public competition.
[Sell Australia post? Why, to stop them ever becoming the public face of a new peoples’ bank?]
We have to finally understand that all western style economies rests entirely on just two support pillars, energy and capital.
Which should be returned to or remain in public hands almost exclusively, to keep the cost of both down, for the best social and economic outcomes; rather than just pad the bank balances of cronies or foreign debt laden speculators/cartels!
Whose only real input, has been a quite massive increase in record foreign debt, and a 30%+ premium at the checkout, for abysmally lead Australians!
Former PM Keating, has accused treasury of having no imagination!
That accusing fickle finger needs to also point at the governments of recent years, including that led by the honorable Gentleman!
It really is time, that the national interest trumped personal ambition, party political interests, and or personal political ambition!
Alan B. Goulding
Comment by Alan B. Goulding — May 11, 2014 @ 11:26 am
Other choices include, ending negative gearing, a saving of 5 billion PA.
Ending tax concessions on all super, another 30 billions PA.
Ending health insurance rebates another 3 billions PA.
A total of around 38 billions PA, and only 2 billions short of a balanced budget?
Ending all avoidance by imposing a minimum expenditure tax, to catch international remittances and transfers, would then likely produce a reasonable if modest surplus.
And we can and should means test all government provided services, for those with incomes higher than $80,000 PA.
A sliding scale could be employed and exhaust at $150,000 PA?
By the way, $80,000 is 4 times higher than a single pension, and people on just that level of income are supposed to carry their own weight, when it comes to mortgage, insurance payments, fuel, fuel excise and the GST?
It’s a real shame that there are a few bludgers claiming disability support, and for two compelling reasons. They just don’t deserve to be carried, often by people less able bodied or intelligent.
And they cause genuinely disabled to be constantly required to prove their disability. A very demeaning soul and character destroying practice!
I just don’t understand why we don’t include space age lie detection as part of the test!
This would single out, at least those telling blatant pork pies, which could be followed with a couple of lumber puncture tests, just one of which, is likely to change the minds of the able-bodied, merely swinging the lead.
I would also increase the penalties, for seeking to hoodwink Social security.
By obliging them to say, serve a signature reported, three year minimum community service obligation.[ No friends or relatives please!]
Which if breached, could be supplanted by ten years of compulsory military service.
Well even soldiers need someone to muck out the toilets, peel the spuds and what have you, very menial jobs that keep the army marching!
And if they don’t like that, they’d like it even less if that duty was replaced by being obliged to white wash the cells with a toothbrush, or cut grass, with just a pair of scissors etc/etc.
And there are worse things, like being obliged to shift a few tons of large logs on the run, with a bayonet equipped corporal, at the rear, ensuring you didn’t slack off!
And having transferred a couple of tons of timber to one end of the parade ground, to be then obliged to put it all back from whence it came!
[There is nothing more soul destroying than being made to do entirely unproductive work, something conferred on too many, courtesy, of an extremely complex tax act!]
Long, drug, tobacco and mobile phone free, southern winter hikes, carrying everything you need for a week or a fortnight, and learning to start a cooking fire without matches, may seem harsh, but it is very character and the missing self esteem building, as is walking the Kakoda trail!
We really do need to divert youngsters, rather than put them in jail, where they all too often come out, incorrigible criminals for life!
Whereas, divergence programs, could turn significant numbers into very useful model, self reliant citizens! And if the first divergent program doesn’t take, a second one, where they set the pace and the show and tell example for a new lot, often can!
Whereas, just catering for one prisoner for just one year, costs the taxpayer around $70,000!
I don’t see any value, trying to trim the very basic budgets of the genuinely deserving, just to catch a minority of bloated belly bludgers!
If however, they could be found out, with the mandatory assistance of space age lie detection and then made to carry a little more than their share, they may see real value in honest work; even say, swilling the pigs on a dairy farm or some such. Just as long as the money is clean!
And we’d lighten the load of those expected to chase these crooks down, with often very expensive private detectives/investigative agencies and endless inquiry!
Alan B. Goulding.
Comment by Alan B. Goulding — May 13, 2014 @ 9:50 am