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Picking on disability support, a favourite past time of policymakers

When unemployment drops to low levels, two instincts seem to kick in among commentators and and politicians. One is to demand industrial relations reform, out of fear that high demand for workers might drive wages up — a normal market response, but anathema to many people who are normally big fans of free markets.

The other is welfare reform, designed to ensure no one who can work chooses not to.

It’s been a fixation of policymakers for centuries. Early modern European civic leaders railed at “sturdy beggars”. The Dutch even devised a primitive form of “work for the dole” — cells that would fill with water unless the sturdy beggar, who would otherwise drown, pumped it out, thereby inculcating the habit of physical labour. It’s said they abandoned it after one participant, perhaps unconvinced by the philosophy of reciprocal obligation, preferred to drown rather than pump.

The Disability Support Pension is a particular fixation of policymakers, partly because it has been expanding rapidly for more than two decades; but also, one feels, because, when it comes to welfare clichés, someone fraudulently claiming disability is considered even worse than the stereotypical dole bludger or single mother.

The Howard Government had a go at disability reform in 2006, with some big bang changes meant to end the expansion of the DSP. They had little long-term impact. This year the DSP will cost taxpayers over $13b. And in fact the DSP itself was the product of reforms by the Hawke Government in 1991, which significantly tightened eligibility and removed non-medical factors from assessments for claimants. They were similarly unsuccessful in curbing growth.

In between, commentators and economists have lamented its remorseless rise as evidence of a particularly Australian malaise of workshyness.

In early February, the prime minister announced further reforms aimed at increasing workforce participation, including reforms to the DSP. The coming budget is likely to be loaded with welfare reforms. Today, Tony Abbott has joined in, urging reforms to the DSP and to further “incentivise” the unemployed to join the workforce. Just over a year ago, Abbott was the victim of an internal leak about his plans for a package of get-tough welfare measures, including making one-third of disability support recipients sit an annual assessment, designed to force 24,000 DSP recipients back into work. The annual assessments would have cost nearly $700m. A number of the measures didn’t make the Coalition’s election platform.

The policy imperative is correct. Even if you don’t buy the link between self-worth and employment, we need all the workers we can and we need to overhaul the tax and transfer payments system to maximise participation.

Only problem is, as the potted history I’ve just given suggests, when it comes to the DSP, no government has yet devised a way to address the problem.

That’s mostly because, as Peter Martin pointed out in an excellent piece on Ms Gillard’s ambitions, the relentless expansion of the DSP is the perverse product of a miserly attitude toward unemployment benefits — these days known as Newstart. Newstart is now so low that there’s a strong incentive to switch to the DSP, which is indexed at a higher rate.

Ken Henry’s tax review pointed this out. “…Decisions to target payment increases to particular groups has increased incentives for some people to remain on and for others to seek to qualify for higher-rate, non-activity tested payments, such as Disability Support Pension.”

These decisions are, the report noted elsewhere, inherently political. “Categorical distinctions — such as single parenthood, disability or unemployment — assist in targeting support to those with varying need and capacity to support themselves. Such distinctions also give effect to various social judgements about who should receive assistance.”

The report went on to explore, in great detail, how such “categorical distinctions” combine to produce all sorts of skewed outcomes that defy policymakers’ intent.

As IR expert Prof Mark Wooden pointed out at the time in response to the prime minister’s statements, the only really effective means of addressing the increase in the DSP is by cutting it, so there’s less incentive to switch from Newstart, and that’s unlikely to be very popular. Tony Abbott’s idea to further tighten eligibility will be no more successful than previous “tightenings”.

There’s another context for the sudden interest of our politicians in welfare reform.

The DSP will cost over $13b this year, and in the last budget was forecast to rise to over $14b in 2013-14.

But Family Tax Benefit A will also cost over $13b this year. The government actually expanded Family Tax Benefit A as part of its election pitch, via the education rebate. Family Tax Benefit B will cost $4.5b. The baby bonus will cost just under $1b, even after eligibility for it was tightened up. And the private health insurance rebate will cost over $3.5b even after it, too, was tightened up. The savings from overhauling middle-class welfare will be considerably larger than savings from tightening the DSP yet again — even if a way could be found of actually curbing its growth.

It’s odd that “welfare reform” never seems to focus on middle-class welfare. It’s all about “incentivising” the unemployed and getting people with disabilities into the workforce, and never about ending payments going to households earning over $100,000 a year. Welfare for the unemployed and the disabled is the subject of rigorous focus on whether it is achieving desired policy outcomes.

Middle-class welfare doesn’t even have a policy outcome, beyond fostering the great Australian sense of entitlement.

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  • 1
    Karen Churchill
    Posted Thursday, 31 March 2011 at 1:51 pm | Permalink

    Dreamer that I am, I still expect a Labor government to look after vulnerable people - even if they may lose a few votes or come second in the competition with the Liberals as to who can be the meanest and “toughest”.

    As this dream appears unlikely to come true, perhaps a more useful and more human approach would be to take a good hard look at the way employment is defined in the context of entitlement to a Disability Pension (DSP). This is how it is - if you work more than 15 hours a week you are defined as being employed and you lose your pension. The problem with this is that many people on a DSP cannot work more than 15 hours per week (and of course many cannot work at all) and neither can they live on what they would earn in 15 hours a week. So, if they try to participate in the workforce, they face the choice of not being able to pay rent and buy food on what they can earn or becoming unwell again if they try to work full-time. Little wonder people stay on the DSP for long periods of time.

    Can’t we as a society find a way around this no win situation instead of picking on vulnerable people.

  • 2
    illywhacker
    Posted Thursday, 31 March 2011 at 2:10 pm | Permalink

    Spot on about FTB and middle-class welfare Bernard. I used to work at Centrelink in family payments and the amount of times I heard people on household incomes over $100k complaining about not getting enough help from the government made me want to scream (instead I usually gave them a sarcastic response). The Australian sense of entitlement combined with our widespread downward envy has always been there, but it has been made significantly worse by Howard’s overhaul of family assistance.

  • 3
    Michael James
    Posted Thursday, 31 March 2011 at 2:25 pm | Permalink

    It’s odd that “welfare reform” never seems to focus on middle-class welfare.”

    That’s because, for all the perniciousness of ‘middle class welfare’ as you describe it, those people are earning enough to deliver taxable income to the Government.

    Many recipients of the DSP are completely entitled to it, and struggle with the consequences of their disability. Equally you have people who get onto the DSP and stay there, because they can’t be botherered chasing a job.

    I personally know two individuals, both males, one in his fortys, the other in his thirtys, who claim the DSP.

    Both of them presented to their doctors claiming to be proundly depressed, unable to hold a job and that their depression had led to them losing their jobs. Both were immediately disgnosed by their GP and specialist as depressed and placed on medication, together with the DSP. Both now spend their day (and most of the night) sitting in front of their computer playing on-line games.

    When I asked one of them how his medication was helping, he looked at me, laughed and said “That crap? I flush it down the toilet, I don’t need it”.

    Those are the people who should be booted off the DSP and returned to work.

  • 4
    Posted Thursday, 31 March 2011 at 3:21 pm | Permalink

    Picking on the poor more like it.

  • 5
    Posted Thursday, 31 March 2011 at 3:22 pm | Permalink

    Reminder that even the unemployed pay tax.

  • 6
    stephen bartos
    Posted Thursday, 31 March 2011 at 3:56 pm | Permalink

    this has to be looked at also in the context of the Productivity Commission report on disability. If a comprehensive disability insurance scheme were to be put in place that dealt with the impacts of disability (a separate issue from income support, as the PC makes clear) there would be a better chance of people with a disability being able to return to work.

    There are very positive reasons for moving people off disability support pension into paid employment, in terms of self respect and value. The pity is that avenues for this are much diminished, as is the support required in many others ways that has to go along with provision of a job.

    It is a more complex issue than simply differentials between Newstart and DSP. There are though undoubtedly cases where the incentive effects encourage people to remain on DSP when they ought not, and these also need to be addressed. Ideally, both ought to be examined together.

  • 7
    Paul
    Posted Thursday, 31 March 2011 at 5:24 pm | Permalink

    Thank you, but I loved the article in the Oz, return of the “old” Abbott. Praising his positive movement into the past, with the implied hope that more of the Libs past policies will resurface. Wow what a way to enter the future - by going backwards.
    The other spin by most media (Crikey I love you) is that this is Abbott showing his positive side - so targeting the poor and disadvantaged is now considered to be positive, even by the ABC.
    I was home early and watched him on ABC24, listened to positive Tony rail against Gillard, attack the poor and back to Gillard, and then listened to his speech described as positive.
    Actually complaining about Gillard making positive changes.
    I have thought the ABC should have its funding cut until it achieves intelligent balance, now I think it should be sold off, if it wants to live with the bottom dwellers then let it, but let us stop funding it.

  • 8
    JamesG
    Posted Thursday, 31 March 2011 at 6:26 pm | Permalink

    It’s all very well to criticise Abbott - god knows the man is a fool, but every person on the DSP is not only not working and contributing to the economy but you are working several hours a week to support them. And even if you are on the DSP yourself for entirely genuine reasons you are getting paid less than you would if so many people weren’t rorting the system. So we all pay, able and disabled alike - to support these scum.

  • 9
    arty
    Posted Thursday, 31 March 2011 at 7:02 pm | Permalink

    Leave the poors’ welfare alone until you clean up middle class welfare.

  • 10
    Liz45
    Posted Thursday, 31 March 2011 at 11:38 pm | Permalink

    @JAMESG - and any others who want to bash people on DSP over the head!

    Let’s just take a look at the people who are on DSP, how they get ‘on it’ and how they stay ‘on it’?
    Some are people whose disability is plain to see - they’re in a wheelchair or due to their intellectual disability, some time in their company will prove, that they are leading a challenged life.

    Then there’s people like me. To look at me I look just like any other person - I’m not in a wheelchair; I look presentable as in, I dress OK(usually in clothes that I’ve made), I even wear heels and stockings etc. I’m one of the ‘if I can’t see it(disability) then you haven’t got it brigade’? I’ve been in acute/chronic pain since the end of 1983, due to a preventable workplace injury/disease which has the umbrella term, RSI (repititive strain injury).

    Unbeknowns to me, my employer(NSW Dept of Education) knew that the type or work I was doing was dangerous, and could lead to a disabling lifetime condition due to overuse combined with equipment that was unsuitable and or in need of maintenance or replacement.

    After I was diagnosed and told that I was eligible to claim workers compensation(of which I knew nought) I was appalled by the manner in which I was treated from the day I filled out that form and submitted it. I was made to feel like the worst kind of bludger, even though I’d worked in that job for almost ten years, and had been praised for being a hard worker etc.

    Twenty 7+ years later, I’m still in chronic to acute pain every day(depends what I’ve done or do), I take slow release morphine twice daily in order to look after my needs/housework, shopping, driving, potting some plants or doing some sewing. I submitted a medical certificate to my employer for light duties for many years, but gave up after too many rejections - they wanted to get rid of me and stay rid of me.

    Now, tell me what could I do or have done for an employer that didn’t require the use of my arms and upper body? (no, not that, as it’s not recognised by CentreLink as a ‘proper job’?)

    If I told a future employer the truth, that I’m being treated for a work related injury/disease involving my upper limbs, neck, shoudlers etc, who the hell is going to want to employ me - the risk of aggravating a known medical condition turns them off every time - and I can understand that!

    Newstart is now so low that there’s a strong incentive to switch to the DSP, which is indexed at a higher rate. This is so much bull shit. People don’t just go on to DSP. You have to be recommended and then you see a Commonwealth Medical Officer who can or not agree (I know because I’ve been knocked back??) and then when you are, you’re reassessed every two years. Let’s get rid of this total bullshit rubbish that makes out that it’s just a matter of requesting a change from Newstart to DSP and the person at Centrelink says, ‘fine Liz, just fill out these forms - the cheque is in the mail’?

    For god’s sake Bernard, if you’re going to write an article about this, make sure that you know the truth about DSP - what’s required, who’s eligible, who makes the decision and why, what about medical reports etc - don’t help Abbott spread his crap without challenging it.

    I’ve had people say to me(while wearing a spint for example) ‘are you still wearing that thing’? Or people in supermarkets sighing because I’m all thumbs trying to get money out of my wallet, or even one of my siblings years ago commenting, ‘it can’t be that bad’ when I asked her not to bump my arm - after the 20th time?

    There’s an attitude in the community re disabilities - “If I can’t see it, you haven’t got it”? If only!

    If it’s money Abbott’s after, tell him to ask the Taxation Dept to go after the billions $$$$$$ that the wealthy individuals and businesses owe the rest of us - they either don’t pay any tax, or they don’t pay all that they should. Then we’ll know who the real bludgers are - not the overwhelming number of people who are suffering awful pain and/or disability every day!

    Just because it’s not physically obvious does not mean it doesn’t exist. You can’t see peoples’ cancers either, but it would be a real insensivite bastard who was callous to those people!

  • 11
    Smithieh
    Posted Wednesday, 6 April 2011 at 3:49 am | Permalink

    Well said LIZ45. People are too easily taken in by the political rhetoric and fail to see the lesson only actual experience gives. - There but for the grace of god go I.

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