Federal budget 2017: Government, Opposition face off over Medicare levy increase to fund NDIS

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The Coalition and Labor are staring each other down over the Federal Government's $8 billion increase to the Medicare levy.

Key crossbench senators remain sceptical about the Government's plan to increase the Medicare levy from 2019 in order to fund the National Disability Insurance Scheme (NDIS).

That means the Government may need Labor's backing to pass it through Parliament — but the Opposition has declared it will only support an increase for people in the top two income tax brackets.

Federal Treasurer Scott Morrison was asked this morning whether he would be willing to compromise on the increase to get it through Parliament, and made it clear the Government would not engage in horse-trading.