Next week, the Canberra Liberals will introduce a bill to exempt clinics from a new interpretation of payroll tax that considers tenant GPs as employees rather than as contractors, and to reverse any retrospective application of the tax, opposition leader Elizabeth Lee announced this morning.

But the ACT Government has dismissed the Liberals’ motion as a stunt and a scare campaign; Chief Minister Andrew Barr will speak on the issue next week.

The Royal Australian College of General Practitioners (RACGP) and the AMA ACT raised concerns earlier this year that Canberra doctors could be forced to charge patients more (perhaps by up to $20 a consultation) or close their clinics if the ACT Government introduces such a payroll tax.

“Whilst Canberrans are going through a cost-of-living crisis with some of the worst conditions in 20 years, Andrew Barr is going to make seeing your GP even more expensive,” Ms Lee said.

Ms Lee’s proposed legislation would amend the Payroll Tax Act 2011 to state that “wages are exempt [from payroll tax] if they are paid or payable to a general practitioner under a relevant contract”.

While the opposition would normally introduce the measure as a bill, they have decided to make a legislative change to give certainty to GPs, clinics, and concerned patients, Ms Lee said. Shadow minister Leanne Castley had moved in May for the government to exempt general practices from the payroll tax; Mr Barr negatived the motion, on the grounds that the application of the contractor provisions had not changed; all employers pay payroll tax on employees, and payments to contractors are considered taxable wages.

This follows an NSW Civil and Administrative Tribunal determination in 2021 – with which other states have since agreed – that medical practices must pay a payroll tax on tenant GPs (doctors working from medical centres), classifying them as employees – which, in the RACGP’s opinion, they are not. Doctors lease rooms from a practice owner and work under independent agreements. The RACGP said that only 3 per cent of ACT clinics could absorb the costs associated with a payroll tax, and 78 per cent would be forced to raise fees.

“The Royal Australian College of GPs is working with state and territory governments to save practices at risk of closure due to a new application of payroll tax,” an RACGP spokesperson said. “This new tax on GPS is putting pressure on practices is resulting being targeted for retrospective tax collection in a number of states.

“Unless governments step in and get behind our GPs and practice teams, clinics in the ACT, and across Australia, will have little choice but to increase patient fees or shut up shop for good.

“The best long-term solution to secure the future of general practice care, and ensure no patients are left behind, is to make independently contracted GPs exempt from additional payroll tax. 

“We have been lobbying the ACT Government to support general practice and are hopeful Chief Minister Barr is listening closely to the concerns of GPs, practice teams, and patients, who are warning this harmful ‘Patient Tax’ could significantly compromise timely and affordable access to high-quality general practice care.”

“We’ve heard from the GP clinics that they cannot afford to absorb this tax, that it will send them over the line,” Ms Castley said. “So if we lose one of these clinics, that will impact thousands of Canberrans.”

Increased fees for a consultation, Ms Lee said, would be “passed on to patients, especially some of the most vulnerable Canberrans, who can least afford it”. That, Ms Castley said, could result in more people in hospital, where emergency department waiting times were the worst in the country.

“Canberrans should not be forced to choose between putting food on the table or accessing essential health care,” Ms Lee said. “And that is the reality that is facing so many Canberrans.”

Canberra already has the highest average out of pocket costs ($49.11) to see a GP, and the lowest bulk billing rates (5. 5 per cent, 30 per cent below the national average) in the country. It also has the second lowest number of GPs per capita, Ms Castley noted.

But health minister Rachel Stephen-Smith said that the Canberra Liberals could not introduce such a bill; only a minister could introduce legislation that affected a tax or duty.

The government, she continued, had talked to the RACGP, the AMA ACT, and GP clinics about the ruling and its potential implications. Mr Barr would report back to the Legislative Assembly next week about the outcomes of the conversations and any steps the government would take.

“This is clearly a stunt from the Canberra Liberals to pre-empt that announcement from the Chief Minister about our approach,” Ms Stephen-Smith said.

Moreover, Ms Stephen-Smith said, the implications had been “grossly exaggerated”. The revenue office had not raised debts for past accrual of potential payroll tax obligations, as had occurred in other jurisdictions, nor would it do so. Any increases to bills would be “a fraction” of the $15 to $20 the RACGP and the opposition had stated; they would be “vastly lower”.

“There is no scenario under which the types of additional payments for people attending GPs that have been talked about by the opposition could possibly be justified. It is a complete misunderstanding apparently of the way payroll tax works in the ACT and particularly the $2 million tax-free threshold for payroll tax…

“The opposition is now mounting a scare campaign on the basis of information that they know to be false.”

Only 10 or fewer practices that were large corporates would be affected by the ruling, Ms Stephen-Smith stated. But, the Liberals argue, even 10 is too many.

“How many patients does that equate to?” Ms Lee asked. “Thousands of Canberrans are going to be impacted. So it’s not good enough for Andrew Barr to try and downplay this. In fact, if … only 10 clinics are affected, why apply [the ruling] at all? We’re talking about essential healthcare, and this is going to have a huge impact in terms of the ACT’s ability to attract GPs.”

The Canberra Liberals may take the issue to the election, Ms Lee indicated. “A Canberra Liberals-led government will provide an exemption for this tax on GPs if Andrew Barr does not, because families, students, seniors, and some of the most vulnerable Canberrans should not have to pay more for essential healthcare.”