Wednesday, 29 May 2024

Bills

Payroll Tax Amendment (Protecting Victorians’ Access to GPs, Dentists and Other Allied Health Practitioners) Bill 2023

Statement of compatibility

Georgie CROZIER (Southern Metropolitan) (09:58): I lay on the table a statement of compatibility with the Charter of Human Rights and Responsibilities Act 2006:

In accordance with the Charter of Human Rights and Responsibilities Act 2006, I table a Statement of Compatibility in relation to the Payroll Tax Amendment (Protecting Victorians’ Access to GPs, Dentists and Other Allied Health Practitioners) Bill 2023.

In my opinion, the Payroll Tax Amendment (Protecting Victorians’ Access to GPs, Dentists and Other Allied Health Practitioners) Bill 2023 (the Bill), as introduced in the Legislative Council, is compatible with the human rights protected by the Charter. I base my opinion on the reasons outlined in this statement.

Overview of the Bill

The main purpose of the Bill is to amend thePayroll Tax Act 2007 to exempt payments made by medical centres to registered medical practitioners from being assessed as liable for payroll tax where those registered medical practitioners provide medical related services at the medical centre.

Human rights issues

1. Human rights protected by the Charter that are relevant to the Bill.

The Bill does not raise any human rights issues, it does not limit any human right and therefore it is not necessary to consider section 7(2) of the Charter.

Conclusion

It is my view that the Bill is compatible with the Charter of Human Rights and Responsibilities because it does not raise a human rights issue.

Georgie Crozier MP

Second reading

Georgie CROZIER (Southern Metropolitan) (09:59): I move:

That the bill be now read a second time.

Purpose

The purpose of the bill is to amend the Payroll Tax Act 2007 to exempt payments made by medical clinics to general practitioners and allied health practitioners from being assessed as liable for payroll tax where those registered medical practitioners provide medical-related services at the medical centre.

The bill effectively reverses the State Revenue Office’s (SRO) ruling PTA-041 and provides that certain contracts are not relevant contracts for payroll tax purposes.

Background

Labor’s health tax: the State Revenue Office ruling

There are currently around 1500 GP clinics in Victoria, which already pay payroll tax for employees, e.g., reception staff, nurses, and trainee doctors. The historical tax position was that tenant general practitioners (GPs) (also known as contractor doctors) who lease rooms from a practice were not treated as employees and were therefore exempt from payroll tax.

On 11 August 2023, the State Revenue Office (SRO) ruled that tenant GPs in medical clinics are employees of a practice rather than independent contractors for the purposes of payroll tax obligations, as outlined in division 7 of part 3 of the Payroll Tax Act 2007 (Vic).

The SRO is relying on this ruling to impose payroll tax liability on medical practices with contracted GPs.

The SRO ruling incorporates court decisions in NSW and Victoria – Thomas and Naaz Pty Ltd v. Chief Commissioner of State Revenue [2021] and Commissioner of State Revenue (Vic) v. The Optical Superstore Pty Ltd [2019].

As well as GP clinics, this new interpretation applies to other practices that operate on the business model of tenant practitioners on the premises, such as dentists and allied health practitioners.

The retrospective application of the ruling has resulted in audits of medical practices, creating unexpected payroll tax liabilities in the hundreds of thousands of dollars, including penalties and interest; placing the viability of these businesses at risk.

In turn, this affects access to primary health care in Victoria, as practices risk closure or are seeking to cover their increased payroll tax obligations by charging patients higher out-of-pocket costs. This means reduced access to bulk-billing and further strain on public hospital emergency departments across the state, as patients delay or forgo GP visits due to cost.

Other jurisdictions

In other jurisdictions, public pressure from strong advocacy by stakeholder bodies and state oppositions has resulted in governments introducing amnesties, concessions, or ruling out the tax.

The government’s change in position

For more than a year, the Treasurer has insisted there has been no change to the law or interpretation of the law when determining liability for payroll tax, and that the SRO makes assessments on a case-by-case basis.

Meanwhile, GPs and bodies including the Royal Australian College of General Practitioners, the AMA and the Primary Care Business Council were loudly voicing their concerns about the looming threat to the viability of their businesses and the impact of passing on additional costs to patients on both those individuals and the health system.

Even the Labor federal health minister, Mark Butler, expressed concern at the Victorian government’s approach as potentially undermining the Commonwealth’s Medicare incentives:

‘Payroll tax is a matter for states but I am very worried that the historic investments we’ve put into Medicare, in response to calls from state governments, will be lost to increase payroll tax obligations by general practices,’ Mr Butler said.

Despite repeated assertions from the Victorian government that nothing had changed and so there was no need for any relief, just last week in a remarkable backdown, the Treasurer announced that GP businesses will be granted a 12-month exemption from payroll tax for payments to contractor GPs to June 2025, and from 1 July 2025, the government will provide payroll tax exemption for payments to contractor GPs and employee GPs for providing bulk-billed consultations.

Why do we need this bill?

The exemptions do not go far enough and will leave many medical practices still facing the prospect of high payroll tax bills.

Limiting the exemption to bulk-billing also creates a divide between clinics in communities with higher bulk-billing rates and practices providing consultations that are not bulk-billed.

Medical clinics that have limited or no bulk-billing will continue to be under threat of closing, thousands of patients will still be faced with hikes to co-payments, with a flow-on effect on emergency departments.

Over the last 12 months, the opposition has engaged extensively with key stakeholders, including the Royal Australian College of General Practitioners (RACGP), the Australian Medical Association (AMA), the Australian General Practice Alliance (AGPA), the Primary Care Business Council, booking platform HotDoc, and individual medical practice owners.

All stakeholders consulted have called for the immediate reversal of the SRO ruling to end Labor’s unfair payroll tax treatment of medical clinics.

Stakeholders have warned that some clinics will be forced to close, bulk-billing will disappear, and there will be more pressure on already strained emergency departments as patients delay treatment because of increasing barriers to accessing GP services.

A survey by health booking platform HotDoc found:

– 95 per cent of clinics in Victoria would increase patient fees in response to additional payroll tax obligations, with the average increase around $12 per standard consultation, bringing out-of-pocket costs up to around $52.

28 per cent of patients would make fewer visits to their GP if fees increased and 7 per cent would stop going altogether.

Summary

Access to affordable and timely primary care is the cornerstone of our health system.

This bill provides certainty for medical practices in relation to their payroll tax liability, preservation of bulk-billing, protection for patients against higher consultation fees and prevents additional stress on the hospital system.

I commend the bill to the house.

Lee TARLAMIS (South-Eastern Metropolitan) (10:05): I move:

That debate on this bill be adjourned for two weeks.

Motion agreed to and debate adjourned for two weeks.

The PRESIDENT: Before I get to the next item, Mr Davis’s short-form documents motion, I have a bit of a concern that we may be in breach of the anticipation of debate rule given that Mr Davis’s motion for later this morning relates to the same topic as far as the federal government’s Future Gas Strategy goes. I know Mr Davis is asking two different questions. If this debate is tight about the documents and the reason for the documents, and other speakers stick to that, I do not think we will be offending the anticipation rule.