Opinion & Commentary
Disability pension reform key to NDIS success
At $22 billion every year once it is fully operational, the National Disability Insurance Scheme will not come cheap. While some might baulk at the annual cost of the scheme, it comes with significant economic benefits: so significant that the Productivity Commission says the benefits outweigh the costs.
In a nutshell, the commission thinks the NDIS (which will provide long-term disability care and support to around 441,000 people) will pay for itself by reducing the 30-percentage-point gap in workforce participation rates by people with a disability (54 per cent) and those without a disability (83 per cent). Deloitte Access Economics estimates that reducing this gap by a third will increase Australia’s gross domestic product by $43 billion over the next decade in real dollar terms.
The commission estimates that by 2050, up to 320,000 people with a disability will be employed because of the additional supports the scheme will provide.
Taking into account the reduced expenditure on income support payments and increased tax revenue from people with a disability in the workforce, the economic and employment benefits will go a long way towards paying for the annual multibillion-dollar cost of the scheme.
However, the NDIS by itself is not enough to maximise these benefits. One of the forgotten recommendations of the commission is to further reform the disability support pension (DSP) alongside the NDIS.
The commission recommended creating a two-tier system for the DSP whereby those with employment prospects receive a “transitional disability benefit” (not a pension) and appropriate incentives to encourage them to enter the workforce. Those who are incapable of working because of their disability would continue to receive the DSP.
Some DSP recipients with less severe disabilities are now required to develop participation plans addressing barriers to work such as drug and alcohol addiction. However, complying with the plan is not compulsory.
This should be reformed so, for example, those with drug and alcohol addictions must attend rehabilitation or have their income support payments suspended.
The DSP should be reformed to require recipients to at least look for work or participate in education and training with the aim of eventually entering the workforce. Changes along these lines would go some way to meeting the ambitious economic and employment goals of the NDIS.
But welfare reform alone is not enough. Governments can add all sorts of workforce participation requirements to the DSP but this will not guarantee people with a disability a job, even with NDIS support.
The all-too-common experience of people with a disability is that they can apply for hundreds of jobs, but despite their skills, education and suitability, they are never hired.
The problem here is not a lack of initiative, work ethic or entrepreneurship on the part of people with a disability. The problem is a culture hostile to their employment.
The hostility may come from prejudice about their ability. It may come from a fear of litigation and “go-away” money; from ignorance about services and supports available to employers of people with a disability; or the false belief that an employee without a disability will always be better than an employee with a disability. This culture has to change, too.
The NDIS will improve the lives of hundreds of thousands of Australians with a disability, their carers and families, and help many enjoy for the first time the social, psychological and financial benefits that come from working.
It will also enhance Australia’s productivity and improve our economy.
However, the NDIS cannot maximise its economic benefits merely through its existence. Welfare reform and cultural change are needed to ensure people with a disability and employers have the right incentives and obligations to successfully transition from welfare to work.
Andrew Baker is a policy analyst at The Centre for Independent Studies and author of “The New Leviathan: A National Disability Insurance Scheme”.
