Medicare-Levy to help pay for Ageing Population : ACOSS

1 February 2010

ACOSS has called for two measures to free-up billions of dollars to pay for the skyrocketing costs of future health, aged care and disability services – introducing a Medicare-levy supplement and scrapping inequitable tax breaks for seniors.

The 2010 Intergenerational Report released today shows that government spending on health, aged care and age pensions will rise from a quarter to half of the federal budget in 40 years.

“We need to plan now to deal with the rising costs of an ageing population or face critical shortages in community, health and aged care services,” said Clare Martin, CEO, Australian Council of Social Service.

“The ACOSS proposal is for all taxpayers to contribute to these costs, though a Medicare-style health and disability services levy that rises slowly as the population ages.”

For example, a 1% increase in the Medicare Levy (currently 1.5% of income) could raise an extra $8 billion. This could be gradually introduced over a period of 5 to 10 years.

“The structure of our population will radically shift and by 2050 a quarter of the population will be over 65 years,” said Clare Martin.

“Older people are the biggest users of health services. But only a small minority – 20% – are currently required to pay tax. By 2030, half of all household wealth will be held by Australians over 65 years.”

More revenue could be collected from those who can afford to pay to help with the costs of improving health, disability and aged care services by:

  • scrapping the Senior Australians Tax Offset (worth $900 million);
  • removing loopholes that allow people over 55 to churn their wages and other income through their super accounts – which reduces their tax rate to 15%. Treasury estimates that $10 billion annually is churned through super accounts in this way.

Media Contact: Clare Cameron, ACOSS – 0419 626 155