The Prime Minister announced plans on Wednesday to raise part of the $8 billion in annual Commonwealth funds for the National Disability Insurance Scheme through a new 0.5 per cent percentage point increase to the Medicare levy, taking it to 2 per cent of taxable income.
That would see an average earner on $70,000 a year pay an additional $350 in income tax.
The conversion to favour a levy, backed by the disability sector, has shifted the political onus to the opposition, which has consistently backed the idea of national disability scheme, but opposed funding it through increased taxes.
''If the Leader of the Opposition is prepared to support this half-a-per cent increase in the Medicare levy to fund DisabilityCare, then I will bring the legislation into the Parliament immediately,'' Ms Gillard said in Tasmania.
WHAT IS THE NDIS?
A scheme that will guarantee all Australians with a permanent disability individually-tailored care and support, regardless of where they live or how they acquired their disability.
When will it start?
The scheme will start in July in the Barwon region of Victoria, the Hunter region of NSW as well as in Tasmania and South Australia. It will start in the ACT and the Barkly region of the Northern Territory in July 2014.
How much will it cost?
About $15 billion a year once fully operational, or about $8 billion a year on top of what governments currently spend on disability services. The federal government will provide $5.4 billion of this extra money, with the rest to come from states and territories.
How will the levy work?
To help fund the scheme, the Gillard Government is proposing to lift the Medicare levy from 1.5 per cent of taxable income to 2 per cent from July 2014.
Who will pay the levy?
Most taxpayers pay the Medicare levy, but people earning less than $19,404 are exempt, as are blind pensioners, people receiving sickness allowance and holders of a veteran's gold card.
Some seniors and pensioners may be exempt or may pay a reduced levy depending upon their income.
How much money will the change raise?
The government estimates the increase to the levy will raise $3.3 billion in the first year, and $20.4 billion by 2018-19.
How much extra will I pay?
Someone earning $70,000 a year will pay about 96 cents a day as a result of the change.
How will the money be spent?
All money raised by the levy increase will be paid into a special account that will only be drawn on to pay for the scheme. In the first year, 25 per cent of the extra revenue will go to the states
and territories to help them meet their share of costs. They will receive an amount equivalent to this each year.
Who will be eligible for the scheme?
The NDIS will cover a wide range of conditions, including mental illness, autism spectrum disorder as well as physical & intellectual disabilities.
How will it be administered?
People who wish to use the service will be assessed at their Local Disability Care office which will be established in participating states. Staff will work with individuals to work out care needs such as early intervention, respite or home alterations. There will be no annual limit on the funding an individual is eligible to receive.
See what parents are saying about the NDIS funding plan on the Essential Baby Forums.