The majority report from the Labor Senators is careful to quote several comments from Peter Costello in his second reading speech back in 1996 and the explanatory memorandum in order to demonstrate that its stated purpose was to provide an incentive only to higher income earners. However, the grounds for defending the levy have shifted, reflecting over a decade of Howard era support for the private health industry. We’re now told that it would have a catastrophic impact on health funds. These concerns are largely dispelled by evidence from health policy experts and health economists cited in the report. There’s scepticism that the much heralded exodus from private health will actually take place, for two reasons – that the life time cover provisions are likely to provide the stronger disincentive, and that those who actually value private health won’t leave. In addition, the best estimate is that the costs to the public sector would be around 1.6% of inpatient expenditure, an increase relatively easy to absorb.

In effect, no one is disagreeing that the policy measures in place represent a subsidy to private insurers – of massive proportions. Using figures from the Productivity Commission and other sources, the report discloses that the 30% rebate alone cost $980 million in 2006-7, dwarfing the value of tax concessions available to primary producers – $192 million – and mining – $130 million and even surpassing the dizzy heights of assistance to the manufacturing industry – valued at $963 million. Yet the financial press, all the commentators and economists routinely decry such “industry assistance” as “business welfare” (with reason). Somehow the specious argument that the private health industry provides a public good isn’t held to anything like the same standard of rigorous assessment, though that case is made in this report by Greens Senator Rachel Siewert in her dissent.

Given that the evidence from independent experts suggests that the arguments of the industry and the opposition are gross exaggerations, it seems undeniable that the bill should be passed as a matter of equity. It will be interesting to see what Senators Xenophon and Fielding think.