Dr Mukesh Haikerwal petitions Vic parliament, calls out premier’s payroll tax on health

Eleven GPs who responded to Healthed’s 22 August survey have reported receiving retrospective payroll tax bills.

The Victorian government has remained eerily silent on the matter, resisting pressure from the RACGP, AMA, the Australian GP Alliance (AGPA) and others to announce some sort of moratorium or amnesty—but advocates are not letting up, and AGPA chair Dr Mukesh Haikerwal has launched a petition to the parliament of Victoria, calling the tax on contractors “regressive, unfair and unjust,” and noting that the cost of compliance will put general practices out of businesses and increase pressure and cost on hospitals.

“The rhetoric from the state government is that nothing has changed. Well it certainly has for these doctors who have received retrospective bills, and others who are going to be investigated or audited,” says Dr Haikerwal, who owns a practice in the Melbourne suburb of Altona North.

“In theory, the law hasn’t changed, but the interpretation as to whether someone is an independent doctor, or an employee, has changed. That interpretation is certainly very different now,” Dr Haikerwal continued.

‘Authorities not providing clear advice.’

“There is no guidance from the state treasurer, or the Minister for Health, or the SRO about what it takes to comply with the requirements to not have to face a payroll tax,” Dr Haikerwal said.

He contrasts that with the process that unfolded when GST came in, where a date was set, warning was given and people in the health sector were educated on how they could comply.

Practices likely to become less organised, and patients will suffer

Dr Haikerwal is particularly concerned about damaging flow-on effects if businesses attempt to change their set-up in some of the ways recommended recently by accounting firms (so as not to meet the current interpretation of a ‘relevant contract’ that would be liable for payroll tax).

“What it looks like is that the organisation and sensible deployment of resources, and how you run a business, are all hampered if you set up in such a way that you would not be liable for payroll tax.”

For example, if you’re deemed an employee because you have a roster, you’ll end up with practices under-staffed and disorganised. “You actually make practices unviable and unsafe.”

A line item on bills…

To cover the cost going forward, practices will likely raise fees by $15 to $20 — and Dr Haikerwal says he plans to add a line in the bill so patients know exactly why they’re paying more.

“We provide a bill that says this is the cost of the service, this is your rebate, your out of pocket is this much—and we will put another line item to say there is an additional cost which is generated by the premier’s premium payroll tax on health— and that will have to be how that part of the service is paid for.”

The death of bulk billing

He says it’s likely to undo the bulk billing incentive.

“All that will go out the window because nobody will bulk bill –because when I put on my bill, I’m going to charge $15 for payroll tax, I can’t bulkbill you and do that.”
“Now the knock on effect is that if practices charge this, patients won’t come so often and they’ll delay their care….The biggest effect is going to be that if practices shut and patients aren’t visiting the doctor and they’re sick, they’re going to end up going to the emergency department.”

And states will end up paying far more than they generate with the payroll tax, he adds.

States need significant time to prepare – a one year pause won’t cut it

“If we’re going to go for general practice, then there should be no retrospective tax– it shouldn’t go back five years if we’re going to make the decision now, and there should be time to prepare the sector to adhere to this interpretation of this payroll taxes.”

He says Victoria should implement some sort of moratorium like other states have announced. “But it should be for relatively reasonable length of time. Three to four years, whilst you get this thing in order.”

Another hit to an already depleted workforce

“The other side of this is that people will say well I’ve got three years to go, five years to go, I really can’t be bothered I’m out now. Those who are contractors, independent doctors, will say it’s all too hard,” Dr Haikerwal says. “So the core people we need to maintain our service while we try and build our numbers at the other end with new graduates and training— we need to keep the retiring cohort in place, we will lose those. And of course, when people see that happening, you won’t get people coming into come back into the sector. So it’s a continuing self-fulfilling prophecy of doom and gloom.”