Reforms to Disability Support Pension: Why and how and why?

Touted substantial reforms to the Disability Support Pension (DSP) have apparently been “hosed down” by the PM’s office in the last few days after a late December float by Finance Minister Mathias Cormann and Social Services Minister Kevin Andrews.

I’d really wonder what is the wisdom in releasing the outline of a policy as Cormann and Andrews did on December 22 if you were going to go soft on it after bugger-all response (for obvious reasons) a week later. Isn’t the idea to drop the bomb when no one’s looking so you can get away with it? They’ve got plenty of reason to be hesitant, Abbott himself is on video on Insiders on the Sunday before the 2013 election saying there will be “no changes to pensions”.

But this possible backdown is far from a firm one. Only David Ellery from the Canberra Times has reported this backing off, but in the softest terms known to science:

There is a review currently under way but there are no recommendations before the government to make changes to the [disability support] pension at this time… When recommendations are made [by the reviewers] the government will respond to them … but it will be keeping all of its [election] commitments.

Decisive! Looks like another handball to the Commission of Audit, which is looking more and more like some semi-official window dressing to shove through budget cuts.

Onto the meat of the issue, but I want to make clear I’m going to be very careful here not to make this piece a soft one about a lack of compassion. If you want to read an article about how governments are heartless for considering cutting welfare, there are others out there. This isn’t one of those.

The policy change on the table, although still fuzzy, is separating DSP recipients into two groups, ‘long-term’ and ‘short-term/young’.

Currently, DSP is the opposite of NewStart, in that it is very difficult to get on but very easy to stay on. People in the long-term group would continue to receive the DSP as normal with almost no auditing, but younger recipients (probably <40) and those with more temporary conditions would be subject to more frequent reassessments with the aim to shift them off DSP and back into work.

Note: short-term in this context is almost certainly misleading. With the current rules, you can’t even get on the DSP unless your condition won’t change for two years. In an income support context, that’s not short-term. But moving on.

The concern is not necessarily over categorising DSP recipients, but how the government is supposed to save money by doing it. Treasurer Joe Hockey, Andrews and Cormann have all individually expressed disappointment not at levels of workforce participation of people with disabilities, but at the sheer number of people receiving DSP or the cost of paying for it. Alarm bells should be gently echoing at the very least.

This is Hockey, in an interview on 2GB, flatly stating how many people there are on the DSP as an argument to reconsider sustainability.

And Andrews on as reported in The Australian:

It’s a matter of ensuring we have a system of welfare that is sustainable and fair.

This is Cormann on Sky News:

[DSP is] one of the fast growing areas of government expenditure

Cormann’s troubles me the most; it’s the whack-a-mole approach to budgeting.

Let’s take a step back. Is the list of DSP recipients growing and if so, why?

It’s definitely growing, and fast. This is the trend graph, courtesy of the Department of Social Services:

The green growth line is confusing. Focus on the growth of recipients. Between 2002 and 2012 growth was just shy of 20%. Wow! But while our population was growing by 13%. That’s still quite a large increase. Why?

Well, sidebar. Blog is a dirty word, but the government’s Parliamentary Library blog FlagPost is excellent. I’m trying not to use their web design as a measure of their legitimacy, but hey, those who live in glass houses shouldn’t write stones. Unfortunately the Australian Economic Review report they are summarising is not publicly available, but if I find a copy and need to edit this, I will.

The main drivers are familiar ones. Growing population and ageing population. Oh. Ho hum.

I think there may be a secondary (tertiary?) argument that we are seeing increasing acceptance of mental illness as a form of disability. The category finally overtook muscular-skeletal disability as the most common disability among DSP recipients in 2011, and presuming static rates of mental illness, either growing diagnoses or growing acceptance in DSP applications seem likely. But my evidence for this point is pretty limited.

A point to remember is that just because we are seeing growth, doesn’t mean we’re seeing too much growth. It is very easy to say “the number of DSP recipients is growing too fast, we must be making it too easy”. But your starting point isn’t inherently ‘right’ or ‘balanced’.

The aim of welfare reform is always the same: move people off social security and into work. Great aim. But do you do it with carrots or sticks? Or in this context, with case managers or audits?

The Gillard Government introduced a case manager-type scheme specifically to target DSP recipients under 35, in 2012.  It introduced “participation plans” for young DSP recipients with a high work capacity (compared to other DSP recipients), of infrequent but regular progress meetings if they were not in any study, training or work. Unfortunately, the scheme has only been in place for 18 months, too soon to be able to judge the data. Critics would call it a fiddle. That’s probably fair. But we may be about to see how audits will work.

To finish, I want to reiterate the persuasive argument for trying to improve workforce participation rates among people with disabilities is there, just not being made to justify the Coalition’s plan. And that makes me deeply suspicious that it is not their focus.

Hats off to Paul Donoghue for finding the real issue in a timely piece for the ABC in early December:

About 18 per cent of Australians have a disability, but Australia ranks almost at the bottom for workforce participation of the disabled among OECD nations…

A 2011 study by Access Economics found that closing the gap in labour market participation between people with a disability and those without by a third would add $43 billion to the nation’s GDP over the next decade.

I’d love a conversation with the starting point of these two stats. Too bad we’re not having one.