There has been much commentary recently on the `surge‘ in the numbers of Disability Support Pensioners (DSP). The number of DSP recipients was 832,000 as of December last year, up 10,000 from June. Commonwealth outlays on DSP have increased from $6.9 billion to $15 billion over the last decade – an increase of $6 billion in real terms.
It is in this context that the Abbott government is undertaking a review into Newstart and DSP, headed by Patick McClure AO. McClure is a former chief executive of Mission Australia who headed a broader review into the welfare system for the Howard government in 2000.
There is currently a clear distinction between pensions such as the DSP and allowances like Newstart. Those on DSP receive a higher payment, their eligibility is not contingent upon whether they are looking for work, and the incomes of employed recipients are subject to a more generous means test.
Under current policy settings, DSP claimants who are assessed to be without the capacity to work at least 15 hours a week receive DSP while those who can are moved onto Newstart. The lack of a middle ground provides an incentive for those with disabilities who have some capacity to work to try and claim DSP over Newstart.
In his previous review McClure proposed a base rate of payment for those of working age with additional supplements that would consider individual circumstances like disability. He argued that this was `a simpler approach [compared to] the current pension / allowance divide’ – a divide that has been growing due to differences in the indexation of pensions and allowances.
Social Services Minister Kevin Andrews has indicated to The Australian that the review will look into the possibility of creating a universal payment that combines Newstart and DSP but would not necessarily involve a single payment structure. While details are yet to emerge it would appear that the government is considering a more ‘tiered‘ approach to these payments consistent with McClure’s earlier proposal.
It is debatable as to whether the approach proposed by McClure in 2000 is simpler when compared to current policy but it may have merit. To provide a supplement to a Newstart recipient with a disability who is working the same hours as one who is able bodied may seem inequitable. On the other hand, the able bodied recipient is capable of working longer hours whereas the disabled who are currently on Newstart have been assessed as not having this capacity, so perhaps a supplement that recognises that fact is not unfair.
The challenge for income support policy is providing payment adequacy that reflects the work capacities of those with a disability in such a way that does not encourage them to opt out of participation and onto DSP. This is the challenge facing the review.
Matthew Taylor is a Research Fellow at The Centre for Independent Studies.
Home > Commentary > Opinion > DSP: The not so universal payment
DSP: The not so universal payment
It is in this context that the Abbott government is undertaking a review into Newstart and DSP, headed by Patick McClure AO. McClure is a former chief executive of Mission Australia who headed a broader review into the welfare system for the Howard government in 2000.
There is currently a clear distinction between pensions such as the DSP and allowances like Newstart. Those on DSP receive a higher payment, their eligibility is not contingent upon whether they are looking for work, and the incomes of employed recipients are subject to a more generous means test.
Under current policy settings, DSP claimants who are assessed to be without the capacity to work at least 15 hours a week receive DSP while those who can are moved onto Newstart. The lack of a middle ground provides an incentive for those with disabilities who have some capacity to work to try and claim DSP over Newstart.
In his previous review McClure proposed a base rate of payment for those of working age with additional supplements that would consider individual circumstances like disability. He argued that this was `a simpler approach [compared to] the current pension / allowance divide’ – a divide that has been growing due to differences in the indexation of pensions and allowances.
Social Services Minister Kevin Andrews has indicated to The Australian that the review will look into the possibility of creating a universal payment that combines Newstart and DSP but would not necessarily involve a single payment structure. While details are yet to emerge it would appear that the government is considering a more ‘tiered‘ approach to these payments consistent with McClure’s earlier proposal.
It is debatable as to whether the approach proposed by McClure in 2000 is simpler when compared to current policy but it may have merit. To provide a supplement to a Newstart recipient with a disability who is working the same hours as one who is able bodied may seem inequitable. On the other hand, the able bodied recipient is capable of working longer hours whereas the disabled who are currently on Newstart have been assessed as not having this capacity, so perhaps a supplement that recognises that fact is not unfair.
The challenge for income support policy is providing payment adequacy that reflects the work capacities of those with a disability in such a way that does not encourage them to opt out of participation and onto DSP. This is the challenge facing the review.
Matthew Taylor is a Research Fellow at The Centre for Independent Studies.
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