Health Minister urges states to follow Queensland’s payroll tax lead

Federal Health and Aged Care Minister Mark Butler has told reporters he would like to see payroll tax consistency across Australia, after new figures revealed the potential damage its imposition could wreak on access to general practice care.
 
Data released earlier this week by HotDoc suggest out-of-pocket costs could rise on average by $12 for a standard consultation, should states like Victoria and New South Wales push ahead with plans that consider tenant doctors as employees with regards to payroll tax.
 
Such an increase would require most patients to spend $52 for a level B consultation at a time when the Federal Government is attempting to reign in cost-of-living expenses, including via a $5.7 billion commitment to general practice in last year’s Budget.
 
‘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,’ Minister Butler told the Herald Sun.
 
‘I’ll again urge the Victorian Government to look very closely at that model and see whether we can get a level of national consistency around those arrangements that will allow us to focus on the strengthening Medicare reforms that we’ve put in place.’
 
He also referenced the stance adopted in Queensland, which last year ruled that general practice services would not be subject to payroll tax following extended negotiations with the RACGP, saying it had given the sector ‘confidence and stability’.
 
‘I’ve strongly urged state treasurers, premiers, and health ministers to listen closely to general practice organisations like the [RACGP] in their states about ways in which they can work through this,’ he said.
 
The HotDoc survey suggests the vast majority of practices in Victoria and New South Wales (95%) would need to pass on the costs of any new tax to patients via increased fees, with hundreds of clinics already at risk of closure due to thin margins and concerns around business sustainability.
 
In August last year, the NSW Government announced a 12-month pause on general practice payroll tax audits to allow for further consultation with the RACGP and AMA.
 
But with those negotiations still ongoing, Finance Minister Courtney Houssos has refused to comment on whether general practice could potentially be hit with retrospective tax bills, as has already happened in Victoria.
 
‘We understand families, households and businesses across NSW are feeling the pinch of a once-in-a-generation cost-of-living crisis,’ Minister Houssos told the Daily Telegraph.
 
‘Since August I have met with a number of GPs and their representatives to understand the challenges they’re facing.
 
‘When we announced the pause in August 2023, we said we wanted to see the impact of the Federal Government’s changes to the bulk-billing incentive. It’s clear those effects are starting to flow through to practices to ease cost pressures on GP practices and patients.’
 
However, RACGP NSW&ACT Chair Dr Rebekah Hoffman, who runs a clinic in Sydney, told the same publication that her business would be forced to pass on any payroll tax-related costs to patients despite the additional Federal Government support, estimating an additional charge of $15 per standard appointment.

‘Most GP clinics are small businesses and we don’t have large business margins to buffer additional amounts,’ she said.
 
‘With the extra costs we still wouldn’t be able to bulk bill any of our customers, even with the incentives.
 
‘We still don’t even know if we would retrospectively accrue payroll tax – if most clinics get a bill of five years back pay, they would have to close.’
 
According to HotDoc, 360 of NSW’s 2187 clinics could face closure as a result of the new tax, while in Victoria, 256 of the state’s 1553 practices are likewise at risk.
 
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