Issue Analysis
Defeating Dependency: Moving Disability Support Pensioners Into Jobs
People with disabilities are often among the most disadvantaged in our society. There is widespread support for the idea that as a community, we should provide financial assistance to those who cannot adequately support themselves because of their disability.
However, the huge growth in the number of people relying on Disability Support Pension (DSP) has sparked concern among policymakers from both sides of the political divide. In the mid-1980s, about one in every 40 working-age people relied on DSP; by the mid-2000s, this had doubled to one in 20.
There are now more than 750,000 disability support pensioners in Australia. For most people, a move onto DSP means a lifetime on welfare. The majority of recipients stay on DSP until they die or go onto the Age Pension. Just over 1% leave welfare each year to get a job. And taxpayers spend more than $8.5 billion on DSP each year.
More than half of all disability pensioners come from other welfare payments, and most of these come from unemployment benefits. Many existing disability pensioners are not compelled to ever look for work again, so few do.
There is a growing consensus that simply consigning people with a disability to a life of dependency is damaging for both the individual and the community. It’s a lose-lose situation: individuals are isolated from social and community life, while taxpayers pick up the tab.
The reforms introduced by the Howard government in 2006 tightened eligibility for new recipients and have had some success in slowing the rate of growth in DSP numbers. The Rudd government has also announced changes designed to further restrict eligibility for new applicants that will take effect in July 2010. But as both these reforms target new applicants rather than existing recipients, they will not lower the overall number of disability pensioners or increase the incentive for existing recipients to look for work.
If the government wishes to reduce the number of disability support pensioners, it must embrace strategies to encourage existing recipients back into the workforce.
Two-thirds of DSP recipients have ‘moderate,’ ‘mild’ or ‘less than mild’ limitations, yet less than 10% work. One reason for this is that the definition of ‘able to work’ is inconsistent. DSP recipients who applied after the 2006 reforms are assessed ‘able to work’ if they can manage a job for 15 hours a week, in which case they are moved onto Newstart Allowance and given job search requirements.
But recipients who were on DSP prior to the reforms are not considered ‘able to work’ and do not have to move onto Newstart until they can work for 30 hours.
Subjecting those recipients who were on DSP prior to 2006 to the 15-hour rule would correct this inconsistency and would undoubtedly result in a large number of disability pensioners being reassessed as ‘able to work.’
Further reforms could be modeled on the United Kingdom’s two-track system, where recipients with mild disabilities are subject to ongoing participation requirements, while those with severe and profound disabilities are exempt.
There is a danger that any decrease in DSP numbers will simply lead to an increase in the unemployment rolls. Therefore, reform efforts must also focus on the availability of suitable jobs and on providing adequate assistance for people with disabilities to find and retain work.
There is a large group of disability pensioners who are realistically not able to work regardless of the incentives. Attempts to reduce the number of people on DSP are not an attack on those people with severe disabilities and who are unable to re-enter the workforce. But encouraging those who can work back into the jobs market will pay dividends for both these individuals and the wider community.
Jessica Brown is a Policy Analyst at The Centre for Independent Studies.
