Separating fact from fiction in the disability support pension debate

On 9 March 2011 The Australian ran a story titled “No incentive for jobseekers to get off disability pension”. Last week the Press Council held that this headline was an opinion, and not a fact substantiated by evidence. It is also an oxymoron, because somebody who is seeking a job has, by definition, an incentive to stop receiving welfare: a job.

The article, which was about the difference between the payment levels of Newstart and the Disability Support Pension (DSP), was summarised by the newspaper in terms of an assumption that DSP recipients are seeking to avoid employment by receiving a “lucrative” pension. The Press Council also held that the DSP is not lucrative.

It is unfortunately not unusual for the media to make claims that the DSP is “out-of-control,” and to be followed by a torrent of comments about whinging bludgers and “disability-welfare scammers”.

There is a distinct lack of hard data in such debates, and claims like the one above about DSP recipients appear to escape scrutiny, effectively acting as a dogwhistle about the integrity of DSP claimants.

But is the DSP actually increasing at all? Budget Review papers state that “no other income support program has seen this level of sustained increase,” but Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) data disproves this. While the DSP population has increased by 163 per cent since 1995, the Carer Payment population has increased by 580 per cent in the same period.

FaHCSIA statements about slow growth cite four contributing factors: Overall population growth; Australia’s ageing population; the reduction in other social security payments to older women; a growth in the proportion of young people aged 16-17 receiving the payment; and an inaccessibility of services for people with a disability. Others suggest additional factors include: improved identification of disabilities such as mental illness; lower mortality rates after accidents; a decline in number of low-skilled job; a lack of employer support for people with disabilities; incentives for receiving DSP rather than Newstart and economic downturn. In this context, causation is far from clear. What does the data tell us?

Population Growth and ageing

A review of available data reveals the reverse to be true. While the Australian population grew by roughly 13 per cent between 1995 and 2005,the number of recipients of all welfare payments (including aged, disability, parenting, Austudy, Newstart etc.) increased by only 4 per cent.

Australians are less critical of welfare payments if we believe that we could be in the same situation ourselves;it is rare to hear criticisms of the Aged Pension. Over half of DSP recipients are over the age of 50, with the largest increase in those over 55. As Australians live longer, and the population ages, for the majority of older Australians workforce participation has increased, and welfare dependence decreased from 38 per cent to 17 per cent.

For the minority, DSP increases are indicated by a combination of age related factors: the rate of disability increases with age and with older people who are more likely to have one or more activity restricting impairments. The most common reason for ceasing to claim the DSP is death, or transfer to an aged pension.

Older women and social security

More women receive pensions than men, reflecting longevity, interrupted workforce participation, lower incomes and fewer assets. In 1998, the main defining characteristics of DSP recipients were single males who had left school early and had a trade qualification, but the gender balance of the DSP is rapidly changing.

The single largest population increase in DSP recipients is seen among older women, who have been impacted by the closure of Wife and Widow pensions and Partner Allowance, and changes to Age Pension and Parenting Payment eligibility.While interested in working, negative employer attitudes and work capacity assessment issues create barriers. For a single person in rental accommodation approaching age sixty, security of income is paramount to survival. 

Work capacity assessment requires applicants to demonstrate that they are unable to work in order to qualify. An attempt to work, if ultimately unsuccessful, can jeopardise the assessment of inability to work, and future payments. This perverse motivation is a policy issue that will need to be resolved if people with declining abilities are to attempt to learn new skills, enter new areas and improve workforce participation.

Financially secure people with an unresolvable disability aged over 50, with employment history and family support show little desire to work.However, women who have spent their adult lives in caring roles have generally had less relevant work experience and lower workforce attachment, and may not be able to enter or re-enter the workforce as they grow older, especially women who become single at a later age.This is not an argument about incentive so much as ability and policy.

Young disabled people and services

People whose disabilities cause employment or education restrictions are less likely to have family or friends visit,causing many to view social interaction, involvement, and making a contribution to society as a greater incentive to employment than financial gains. Young people with a disability (PWD) are more likely to experience anxiety if they are unable to find work, and view employment as critical,suggesting that for them, incentive not only exists, but also is very high. Young PWD also have a lower level of education, and experience a lower capacity to manage.

They are less likely to have social connection, relevant experience, workplace attachment or other characteristics that will enhance employability. Spending more on training, support services and equipment to provide independence, increases employment participation of people with a disability; those attempting to enter the workforce now will need support to do so.

The OECD Report Transforming Disability into Ability, Policies to Promote Work and Income Security for Disabled People(2003, p29) reports Australia having the lowest average personal income for people with a disability. Reduced access to transport and accommodation exacerbates this situation, and disability itself is often expensive. Failure to address these issues ensures that PWD often survive at a subsistence level, unable to access the community at large. An inability to access medical services, or access appropriate equipment is, in itself, a barrier to employment.

Improved identification of disabilities such as mental illness

People with a severe disability are more likely to have serious health problems, and at an earlier age, and more likely to suffer mental health problems,and the prevalence of DSP claims for psychological/psychiatric disability has been increasing.

Diagnosis does not create unemployment. As noted above, the overall welfare population is actually decreasing overall, suggesting that identification of mental illness simply impacts the type of welfare paid, not whether it is required.

Lower mortality rates after accidents

Lower mortality rates after accidents could be expected to increase the population of DSP recipients with employment experience and education, and who are more likely to return to employment. At the same time, reductions in the road toll and increased workplace safety protections have also reduced the number of accidents occurring. Injured Australians are more likely than those of other OECD countries to transition onto welfare rather than remaining employed, suggesting that structural barriers play a part in preventing a return to employment.

Decline in number of low-skilled jobs and lack of employment for people with disabilities

There is some evidence that the reduced availability of low skilled jobs has impacted DSP numbers.People with a disability face high barriers to employment, including employer reluctance to hire PWD.Prime Minister Gillard has said that there are many thousands of individuals on the DSP who have a capacity to work, yet employment of PWD in the public service has declined from 6.6 per cent (1986) to 3.1 per cent (2010).Clearly someone didn’t get the memo. This is a governmental policy failure according to Federal Disability Commissioner Graeme Innes, who has described the situation as “shameful”.

In fact the public servants at Centrelink, Medicare, FACHSIA, and DHS are unlikely to ever see an employed PWD. In the workplace, stereotyping occurs more frequently when a specific group has not been represented in the employee group before, or when there is a perception that the person does not fit in the category of “people who work here”. The absence of people with a disability employed in any sector will lead to a confirmation bias that people with a disability do not work, and by deduction, do not want to. 

Incentives for applying for DSP rather than Newstart and economic downturn

The “incentives” referred to are a higher payment rate, tax-free status, more generous income and assets testing and absence of job search requirements. This is consistent with overall welfare policy whereby lower allowances are paid to those who are deemed to have a capacity to work, while higher amounts are paid to those not expected to work.

Long-term unemployment is different to short term unemployment. Short-term unemployment payments are stretched to provide for food and mortgage payments, long-term unemployment payments are stretched to purchase a fridge and pay weekly rent.

DSP applicants must demonstrate the requisite impairment and medically certify a continuing inability to work for 15 hours or more a week. DSP applications account for more appeals than any other income support payment,andalmost a quarter of these appeals result in the original decision being set aside (Submission on the Social Security and Other Legislation Amendment Bill 2011 by the National Welfare Rights Network 24 August 2011). 

In order to receive income support while waiting to be assessed for the DSP, Newstart can provide a bridging payment due to faster processing rates. Contrary to assumptions about false claims, the Auditor General’s Audit Report into Centrelink Fraud reports the proportion of cases referred to the Director of Public Prosecutions by payment type.  Cases involving the DSP were second lowest, with only Aged Pension cases less likely to result in prosecution.

Australia rates very poorly on employment rate for PWD. The PWD employment rate is declining even with economic growth, and despite improvements in other countries.While government response has been tightening eligibility, research demonstrates that reducing access to disability pensions simply increases the number of people with a severe disability who live in poverty.

The role of the media is critical in providing informed debate as to how we ensure the availability of employment opportunities for people with a disability, rather than stereotyping DSP recipients as social deviantswho simply do not want to work. The data is available, and it can be accessed. It does not indicate that people with a disability have no incentive to work or that higher payment levels create any such disincentive. 

To the contrary, it evidences two distinctly different groups entering the DSP: those at the beginning and those at the end of their working lives. They have different needs, and different potentials. The best antidote to welfare dependency and exclusion is understanding the reality of these two groups, and responding accordingly.