Petter Dutton.

13 November 2024

 

IN THE Coalition’s 2014-15 Budget, indexation of the private health insurance income tiers was frozen, creating a bracket creep that saw more Australians eligible to pay higher taxes through the Medicare Levy Surcharge, as their wages rose over time.

 

Minister for Health Mark Butlersaid “When he was Health Minister, Peter Dutton made it so more Australians would be stung by higher taxes each year if they didn’t have private health cover, and their insurance would cost more and more as their rebates got smaller and smaller.

 

“By the time we ended this hidden bracket creep, more than 2 million Australians had been hit with higher taxes or more costly insurance because of Peter Dutton and the Coalition.

 

“We ended Peter Dutton’s health tax grab, because we want every Australian with private health insurance to get value from their policy.”

 

“Because of our change, Australians with hospital cover won’t see their rebate eaten away by bracket creep year after year, d

 

The Medicare Levy Surcharge (MLS) is set at 1.0 per cent to 1.5 per cent of eligible income and is paid by taxpayers with eligible income above certain thresholds, known as the private health insurance income tiers, if those taxpayers do not hold private health insurance hospital cover.

 

As well as determining the rate of the Medicare Levy Surcharge, the income tiers also determine the size of the government rebate a policyholder will receive: the higher a person’s income tier, the lower the rebate they receive.

 

As bracket creep pushed Australians with private health insurance into higher income tiers, they received smaller rebates and so their policies cost more.

 

The indexation freeze that Peter Dutton introduced as Health Minister in 2014 remained throughout the entire time the Coalition was in government, until the indexation resumed in July 2023 under the Albanese Government.

 

According to evidence given before Senate Estimates, departmental estimates based on data held by the Australian Bureau of Statistics show that 2.2 million Australians slipped into a higher income tier over the eight years of the indexation freeze.

 

This means 2.2 million Australians are now either paying higher taxes or paying more for their private health insurance than they otherwise would have, had Peter Dutton not frozen indexation in 2014, when he was Health Minister.

 

Number of adults estimated to be in a higher income tier due to the 2014-15 indexation freeze:

Source: ABS Person Level Integrated Data Asset (PLIDA) project 0121065 - Improving PHI modelling capabilities

 

The evidence was given by officials from the Department of Health and Aged Care in response to questioning by the Community Affairs Legislation Committee during the Budget Supplementary Estimates 2024–25.

 

Minister for Health Mark Butlersaid “When he was Health Minister, Peter Dutton made it so more Australians would be stung by higher taxes each year if they didn’t have private health cover, and their insurance would cost more and more as their rebates got smaller and smaller.

 

“By the time we ended this hidden bracket creep, more than 2 million Australians had been hit with higher taxes or more costly insurance because of Peter Dutton and the Coalition.

 

“We ended Peter Dutton’s health tax grab, because we want every Australian with private health insurance to get value from their policy.”

 

“Because of our change, Australians with hospital cover won’t see their rebate eaten away by bracket creep year after year, delivering important cost of living relief to more than 15 million Australians with private health insurance.”

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