This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 18 June 1996
Date Introduced: 29 May 1996
House: House of Representatives
Commencement: Apart from Schedule 1 and Schedule 2
the Act commences on the date of Royal Assent. Schedule 1 commences
on 1 July 1996. Schedule 2 commences on 1 July 1997.
The Medicare Levy Amendment Bill 1996 (the Bill) has two
- to increase the rate of Medicare levy for the 1996-97 financial
year in order to fund a firearms buy-back scheme;
- to make certain members of the Defence Force liable to pay part
of the full Medicare levy for the 1996-97 financial year in order
to fund a firearms buy-back scheme.
The Bill and the Income Tax Assessment Amendment Bill 1996 are
part of the Government's response to the killings at Port Arthur,
The Medicare Levy
The universal health insurance scheme known as Medicare was
introduced in February 1984. It is partly funded by a Medicare
levy. 'The Medicare levy is imposed on the taxable income of people
who are residents of Australia for income tax purposes and on
certain trustees. The levy is also payable by some trustees.'(1)
Originally, the Medicare levy was set at 1% of taxable income.
However, the rate of levy has been increased three times - to 1.25%
in 1986; to 1.4% in 1993 and to 1.5% in 1995.
Under the Medicare scheme, the levy is not payable by
individuals whose income falls below a certain level. Above that
level, what are called 'shade-in' ranges apply.
Port Arthur and the Australasian Police Ministers' Council
On 28 April 1996, 35 people were killed at Port Arthur,
Tasmania. Reports of the killing indicate that the suspect was
using high powered semi-automatic rifles with large capacity
magazines.(2) Following this mass killing, a meeting of the
Australasian Police Ministers' Council (APMC) was convened to
discuss the implementation of uniform firearms laws in
On 10 May 1996, following the APMC meeting the Police Ministers
issued a communique detailing the agreement that had been reached
between the Commonwealth, the States and the Territories.(3) At the
meeting, it was agreed that the importation, ownership, sale,
resale, transfer, possession, manufacture and use of:
- military style centre-fire rifles;
- other self-loading centre-fire rifles;
- self-loading and pump-action shotguns; and
- self-loading rim fire rifles
would be banned.(4) Exceptions for a limited range of
occupational and official purposes were agreed to. The meeting also
- a national integrated licence and firearms registration system
to be linked through the National Exchange of Police
- licensing criteria for the ownership of firearms;
- a requirement for completion of an accredited course in safety
training for firearms for all first time applicants;
- uniform standards for the security and storage of
- a requirement that all firearms sales be conducted by licensed
- controls on the mail order sales of firearms;
- a 12 month firearms amnesty; and
- a public education campaign on the firearms amnesty and
Lastly, it was agreed that 'a common basis for fair and proper
compensation, based on the value of each firearm as at March 1996,
be agreed between jurisdictions to prevent gun owners from offering
their firearms to the State/Territory which offers the "best
price."'(5) In other words, it was proposed that gun owners be
compensated for weapons handed in during the amnesty period.
However, the APMC meeting did not agree on how the buy-back scheme
would be funded.
On 14 May 1996, the Prime Minister stated that he was writing to
all Premiers and Chief Ministers to inform them that the
Commonwealth was prepared to fund the direct cost of the buy-back
The Prime Minister's Second Reading Speech for the Bill states
that 'Through a one-off increase of 0.2% in the Medicare levy,
these Bills(7) will raise the necessary funds to re-imburse States
and Territories for the direct costs of payments they will have to
make to relevant gun owners.' He continued, 'The figure of $500
million [which will be raised by the adjustment to the levy]
represents the best advice about the cost States and Territories
could face in meeting the direct cost of "buy back" arrangements.
Any surplus will be returned to taxpayers through the Medicare levy
Schedule 1 - Amendments commencing on 1 July 1996
Item 1 of Schedule 1 of the Bill amends the
rate of Medicare levy payable on taxable income set out in section
6 of the Medicare Levy Act 1986 (the Act) from 1.5% to
1.7% - an increase of 0.2% in the rate of Medicare levy. This
amendment applies to individuals and certain trustees of trust
Items 2 & 3 of Schedule 1 amend subsection
8(2) of the Act to make adjustments to the formula contained in the
Act which relates to married persons or sole parents whose income
is just above the Medicare exemption level. This will ensure that
the 'shading in' of the levy will continue to apply.
Item 4 of Schedule 1 inserts new
section 8A into the Act. The effect of new section
8A will be to make certain members of the Defence Force
and their relatives and associates liable for an amount of Medicare
levy for the 1996-97 financial year. At present, Defence Force
personnel, relatives and associates are exempt from the Medicare
levy as they receive free medical treatment due to their
employment. The Bill imposes a levy on them of 0.2% of the Medicare
levy. According to the Prime Minister's Second Reading Speech,
'This measure puts Defence personnel in the same position as other
Australians required to meet this special community-wide
Item 6 of Schedule 1 provides that the
amendments made by the Schedule apply during the 1996-97 financial
Schedule 2 - Amendments commencing on 1 July 1997
Item 1 of Schedule 2 adjusts the rate of
Medicare levy in section 6 of the Act from 1.7% to 1.5%. In other
words, it returns the rate of levy to the pre-1 July 1996 rate.
Items 2 and 3 of Schedule 2 make adjustments to
the formula for certain income earners whose income is just above
the Medicare exemption level to return the formula to its pre-1
July 1996 state.
Item 4 of Schedule 2 repeals new
section 8A of the Act from 1 July 1997. In other
words, from 1 July 1997, certain members of the Defence Force,
their relatives and associates will once again be totally exempted
from the Medicare levy.
Item 6 of Schedule 2 states that the amendments
made by the Schedule apply for the 1997-98 financial year and for
successive financial years.
(1) Mackey, P & Winter, G 'The Medicare Levy: Rationale and
Revenue,' Parliamentary Research Service, Research Note
No.42. June 1995, p.1.
(2) See Norberry, J; Woolner, D & Magarey, K 'After Port
Arthur - Issues of Gun Control in Australia', Parliamentary
Research Service, Current Issues Brief No.16 1995-95.
(3) Australasian Police Ministers' Council, Special Firearms
Meeting. Resolutions, Canberra, 10 May 1996.
(4) Prime Minister, 'Gun control [and] Australasian Police
Ministers' Council Special Firearms Meeting, Canberra, 10 May 1996:
Resolutions,' Press Release, 10 May 1996.
(5) APMC, op.cit, item 11.
(6) Prime Minister, 'Funding of gun "buy back" scheme,'
Press Release, 14 May 1996.
(7) This is a reference to the Bill and the Income Tax
Assessment Amendment Bill 1996.
Jennifer Norberry ph 06 277 2476
17 June 1996
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
PRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
© Commonwealth of Australia 1996
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Last updated: 24 June 1996
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