Bills Digest 104 1995-96 Medicare Levy Amendment Bill 1996

Numerical Index | Alphabetical Index

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


Passage History

Date Introduced: 29 May 1996
House: House of Representatives
Portfolio: Treasury
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 purposes:

  • 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, Tasmania.


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 Resolutions

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 Australia.

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 agreed on:

  • a national integrated licence and firearms registration system to be linked through the National Exchange of Police Information;
  • 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 firearms;
  • a requirement that all firearms sales be conducted by licensed firearms dealers,
  • controls on the mail order sales of firearms;
  • a 12 month firearms amnesty; and
  • a public education campaign on the firearms amnesty and compensation program.

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 scheme.(6)

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 system.'

Main Provisions

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 estates.

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 impost.'

Item 6 of Schedule 1 provides that the amendments made by the Schedule apply during the 1996-97 financial year.

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.

Contact Officer and Copyright Details

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 amendments.

PRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1323-9032
© Commonwealth of Australia 1996

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Published by the Department of the Parliamentary Library, 1996.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 24 June 1996

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