Should bulk billing be tied to payroll tax exemptions?

General practices in the ACT will receive payroll tax amnesty until June 2025 provided they bulk bill nearly two-thirds of their patients, according to a new policy position announced by Chief Minister Andrew Barr over the weekend.
 
The move is the latest in a series of payroll tax announcements from different jurisdictions in the past few weeks. But unlike those revealed in New South Wales, South Australia and Queensland, the ACT’s approach has drawn widespread dismay from the general practice profession.  
 
Under the policy, GP clinics will be required to bulk bill 65% of their patients, as well as register with MyMedicare and the ACT Revenue office by February 2024, in order to be exempt from payroll tax.
 
RACGP President Dr Nicole Higgins told newsGP that the college was not consulted prior to the policy being announced and said it threatens the viability of general practices at a time when they are already under immense pressure.
 
‘Minister Barr and the ACT Government clearly do not understand the business of general practice or the implications that such a policy would have on general practice businesses,’ she said.
 
‘The Medicare rebate has not kept up with the cost of delivering care due to freezes and poor indexation by successive governments.
 
‘To link bulk billing with payroll tax will destroy general practice. There won’t be businesses. We’ve already heard that people will leave the ACT and we won’t be able to recruit GPs into the ACT.’
 
Dr Mel Deery, a GP and practice owner based in the territory, says it is an incredibly difficult time for GPs and registrars in the area and confirmed that many are considering working or training elsewhere.
 
‘When I first heard the news that the ACT was taking a different approach to other states and that there was going to be a hardline to payroll tax I just felt really quite sick in my stomach, just thinking where can we possibly get this money from?’ she told newsGP.
 
‘We’re really stuck either way. We cannot afford to be bulk billing at the rate that has been mandated. And we also cannot afford to pay the tax because the tax is greater than our profits.’
 
Bulk billing rates continue to plummet across the country, with Canberra having the lowest bulk billing rate of any capital city. Meanwhile, the fact that ACT also has the highest payroll tax rate in the country at 6.85% further complicates the issue.
 
Aside from the business sustainability concerns, there are growing fears that bulk billing mandates put pressure on GPs to see more patients in less time, which is out of keeping with current trends in practice and further contributes to gender inequity.
 
‘Through the Health of the Nation Report we know that that GPs are spending longer with their patients as their patients are becoming more complex,’ Dr Higgins said.
 
‘This model that Minister Barr has proposed supports corporate, high throughput medicine. It doesn’t support the delivery of quality, general practice.
 
‘This disadvantages women particularly, who we know provide longer consultations and deal with particularly complex mental health and medical problems. Who we already know are disadvantaged with remuneration.
 
‘It will further increase the gender pay gap in general practice in the ACT.’
 
In a recent newsGP poll, 94% of respondents said the imposition of payroll tax would lead to an increase in the fees charged for a standard GP consultation, with 56% saying the increase would be $20 or more.
 
Another issue with the plan is that practices are not able to direct independent practitioners how to bill or how to work.
 
‘Our GPs are independent; we can’t be directing them to be hitting bulk billing targets,’ Dr Deery said.
 
‘They are practising in the way that they choose to practise and billing in the way they choose to bill, and that’s just not the nature of our relationship for us to be instructing them how to bill and what percentage to bulk bill.
 
‘Even if we were to do that, we as a clinic would not be financially viable bulk billing at [65%].’
 
In response to the weekend announcement, Dr Higgins has urged policymakers to consider the downstream impacts of payroll tax impositions on general practices and to ensure adequate consultation with RACGP is considered.
 
‘Work with us, talk with us first,’ she said. ‘There are too many unintended consequences [stemming from] a simplistic solution. We need to be building up general practice not breaking it down.’
 
Dr Deery agrees, saying the impacts of a bulk billing mandate that is linked to a payroll tax exemption will end up being a costly endeavour.
 
‘It’s already expensive to see a GP and this is going to make seeing a GP more expensive, less accessible, and drive people towards not looking after their health,’ she said.
 
‘It will then have huge consequences for their health down the track, which we know is much more expensive.
 
‘Putting up our fees again to cover payroll tax – it’s really the patients that are going to be hurting in this situation.
 
‘At the end of the day, we want to run a clinic that focuses on patient care, excellence and quality and we have to think instead about how can we survive.
 
‘This is not the focus that we want to be having.’
 
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ACT bulk billing payroll tax