Labor’s $14 billion national disability insurance scheme will be funded in part by a special Medicare-style levy set at 0.5 per cent after Julia Gillard reversed her previous opposition to the special tax option.

The reversal came just one day after the Prime Minister declared all reasonable options were back on the table.

With only days to go before the budget is finalised and printed for delivery on May 14, the government has decided to introduce the special tax, in effect taking the 1.5 per cent Medicare levy to 2 per cent for all taxpayers, after the expenditure review committee met on Tuesday.

It means the national disability insurance scheme, first championed by then parliamentary secretary Bill Shorten, will be a reality, lifting the hopes of 2 million people with a disability.

The decision, likely to be announced within days, means about $3.5 billion a year will be collected towards the Commonwealth’s major share of the scheme. It is expected to begin next year.

But in an appeal to both sides of politics to take a fiscal reality check, former treasurer Peter Costello has called for initiatives such as the disability scheme and Tony Abbott’s paid parental leave scheme to be deferred until the budget is repaired. ‘‘If you can’t pay for what you’re spending, why in your right mind would you spend some more,’’ Mr Costello told the ABC program 7.30.

But while the levy suggests the scheme’s ...

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Christine Milne: Transcript: National Disability Insurance Scheme ... CHRISTINE MILNE: This morning Prime Minister Gillard held what is effectively an election campaign policy launch. It was dressed up as something that was about to be delivered for the nation and that is a National Disability Insurance Scheme. This has been something that campaigners have been working for around the country for a long time. It’s certainly something the Greens support and we think it is critical for Australia to have a National Disability Insurance Scheme to support people living with disability and to give the comfort to everyone that in circumstances which we can’t predict any of us can end up with a major disability and so a National Disability Insurance Scheme is a great idea. I’m very disappointed though that the Prime Minister has made a National Disability Insurance Scheme an at-risk proposition for the federal election. HERE