27 August 2023

Patients to Pay ACT Government’s GP Payroll Tax

The RACGP and AMA ACT have slammed the ACT Government’s decision to impose an additional payroll tax on Canberra’s GPs.

With the viability of general practice in the nation’s capital continuing to come under pressure, GPs will have little option but to pass the additional tax on to patients.

A poll of practices across Australia found only 3% would be able to absorb the costs of the additional payroll tax on independent GPs – 78% would be forced to raise fees.

General practices already pay payroll tax on their employees, including receptionists, GPs in training and nurses. The ACT Government’s additional payroll tax has not previously been applied to GPs because most GPs are independent contractors, leasing rooms from a practice owner and working independently.

RACGP President Dr Nicole Higgins said the ACT Government needs to recognise the devastating impacts of the additional tax on essential general practice services.

“We have consulted with the ACT Government, and their new policy shows they have a limited understand of the way general practice works or the pressure GPs are under in the ACT. They also don’t understand how bulk billing works. It’s designed to ensure that the most vulnerable people in our community can get the care they need – the Federal Government’s tripling of bulk billing incentives is only for people on healthcare cards, pensioners, and children.

The ACT Government has announced a temporary payroll exemption but only for a small minority of practices that are able to bulk at least 65% of services and remain viable.

“Canberra is one of the most expensive places to run a practice, and we have already seen practices forced to close because they simply can’t afford to keep the lights on. It will be absolutely devastating for the community if more of their local practices are forced to close, and GPs leave town. While the ACT Government may collect more payroll tax in the short term, it will cost much more in the long run because it will result in more people going to hospital, which is much more expensive.

“I’m calling on the government to come back to the table to consult with GPs and find a real solution before it’s too late.”

Dr Kerrie Aust, AMA ACT President-Elect and a GP in Waniassa, has echoed these concerns, “The additional payroll tax ignores the precarious state of general practice in Canberra – a city with the lowest number of GPs per head of population of any Australian capital city, a city where GP training positions remain vacant year after year, a city where high quality practices close their doors, a city where, when good GPs retire, they struggle to find someone who is willing to take over their patients.”

“Not only this, but the additional payroll tax threatens better integration of primary care. With GPs working to make general practice the home for wrap-around, linked up care, working closely with nurses and allied health professionals, the additional payroll tax works in precisely the opposite direction. The additional tax will push GPs away from a better integrated model of care and to an increasing focus on maintaining their ability to offer affordable care.”

Dr Martin Leidvogel, GP and practice principal of the Fisher Family Practice, is concerned with the viability of his practice and the risk posed by the additional payroll tax saying, “Ultimately, this is a tax that will be paid by patients as we will have little option but to pass it through.”

Despite the ACT Government’s decision to impose additional payroll tax on GPs, Prof Walter Abhayaratna, AMA ACT President, acknowledged the Government’s decision to rule out retrospective application of the additional tax, “Claims for payment of back taxes would have been devastating for general practice and we acknowledge the steps taken by the ACT Government to avoid these claims prior to 1 July 2023.”

Prof Abhayaratna concluded, “Without general practices that remain viable and thrive in the long-term, it’s unlikely that residents in the National capital will be able to access high-value integrated care.  I agree with the RACGP’s Dr Higgins that it’s time to get back around the table and find a real solution that works for the special circumstances of the ACT.”

RACGP spokesperson Dr Felicity Donaghy said it would not be possible to bulk bill 65% pf patients at her practice in Canberra.

“We try our best to keep our fees low for patients and want to bulk bill, but the costs of providing services keeps increasing due to the same inflationary pressures that everyone is facing,” she said.

“It would not be possible for us to bulk bill 65% of patients and stay financially viable, even with the triple bulk incentives, which are only applied to pensioners, children and healthcare card holders. The ACT Government’s policy is out of step with other jurisdictions and will not encourage GPs to work in the ACT, it will have quite the opposite effect.”

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