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Medical Health Aged Care

Victorian Government’s ‘$10 million bandaid’ won’t save general practice care or help with cost-of-living

RACGP PCBC AGPA 3 mins read

Peak general practice groups say the Victorian Government’s $10 million to support GPs is welcome recognition of the devastating impact of the state’s Patient Tax, but it won’t save general practice care or help Victorians with the cost-of-living crisis. 

The Victorian Budget delivered today includes $10 million to support GPs through a co-designed grant program. 

The Royal Australian College of General Practitioners (RACGP), Primary Care Business Council (PCBC), and Australian GP Alliance (AGPA) have repeatedly urged Victoria’s Premier to intervene in the state’s GP payroll tax fiasco. 

Survey data from HotDoc has shown practices will have to raise fees by 30% to cover the extra tax, and 4% of patients will go to hospital rather than a GP if they have to pay more. This will blow out the State Budget and worsen the logjam in in Victoria’s hospitals. Just last week a patient died waiting for a bed when the emergency department was reportedly standing room only at Maroondah Hospital.  

RACGP, PCBC and AGPA are calling for: 

  • no retrospective collection of payroll tax liabilities, which will cause practice bankruptcies and closures 

  • Victoria to follow Queensland and provide a new tax ruling, clarifying that patients' fees paid directly to a GP for their services won’t be subject to payroll tax 

  • a compliance period to allow practices to adjust to the new ruling so they don’t have to pass the tax on 

 RACGP Victoria Chair Dr Anita Munoz said: “While any investment in general practice care is always welcome, the Victorian Government’s $10 million to support GPs will not save us from the Patient Tax – it’s like putting a bandaid on a patient who’s lost both their legs. 

 “This State Budget will worsen the cost-of-living crisis for Victorians and is a huge disappointment to GPs, practice teams and our patients. The Government knows practices can’t afford the state’s extra payroll tax, and neither can their patients. 

 “General practice helps people stay healthy – everyone needs a GP. Victoria’s Patient Tax will be devastating for our health system. When people can’t afford care, they get sicker, and we'll see more Victorians forced into the state’s overflowing hospitals, which will rapidly blow out the State Budget.” 

“This was a golden chance for the Victorian Government to send a message to the community that they were doing all they can to address cost of living pressures – instead they’ve ensured going to the doctor will get more expensive, if you can find a local GP with the doors still open,” said PCBC President Dr Ged Foley. 

“Victorians should be prepared for further crowding at hospitals and local GPs to be at breaking point.” 

AGPA Deputy Chair Mukesh Haikerwal said: “Victoria has the highest government debt per household across Australia – amounting to over $10 million a day in interest alone – and the limited yield of the Patient Health Tax will damage our heath system and blowout the health and overall State Budget further.”   

Background 

General practices pay payroll tax on their employees, including receptionists, GPs in training and nurses, but it never applied to GPs because most are not employees, they work as independent practitioners under independent agreements. The landscape changed after a final ruling by the NSW Court of Appeal in 2023 deemed independent practitioners as employees for payroll tax purposes. 

Most states and territories have provided a “pause” in audits to prevent practices having to close or increase fees due to the new interpretation of the law. In September 2023, the Queensland Government announced a new Revenue Office ruling clarifying that patients' fees paid directly to a GP for their services will not be subject to payroll tax. 

RACGP surveys found only 3% of practices would be able to absorb the costs of extra payroll tax on independent GPs, 78% would have to raise fees, and 35% would consider moving interstate for favourable payroll tax settings. 

 


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