THE AUSTRALIAN
NOVEMBER 2, 2015 12:00AM
David Crowe
Social Services Minister Christian Porter said the nation needed ‘pathways’ to get people back into study or work rather than welfare. Picture: Kym Smith
The Disability Support Pension has reached an “unsustainable” point as the $17 billion welfare program outstrips inflation and puts a growing burden on taxpayers, triggering a new vigilance in the federal government to curb the growth.
The spending is growing faster than the Australian population and forcing a greater contribution from those who stay in the workforce, according to government figures that counter claims that the trend presents no threat.
Worried that past reforms will not do enough to fix the problem, the government is warning that payments to more than 800,000 disability support pensioners have grown by 7.6 per cent on average every year for the past decade, far ahead of inflation.
The total annual bill has swollen from $10bn to $17bn over the decade in real terms and continues to rise as a proportion of the working-age population — a sign of the load that workers have to carry to fund the safety net.
The findings inflame a debate over whether the nation has made it too easy for people to “opt out” of the workforce and retire early on the DSP, where they can collect more than they would on unemployment benefits and then eventually move to the Age Pension.
Academic studies have rubbished the “alarm” over the growth of the disability pension, arguing that social shifts and policy changes have driven the increase.
But Social Services Minister Christian Porter said the nation needed “pathways” to get people back into study or work rather than encouraging them to get “stuck on welfare”.
“The Disability Support Pension is an important safety net but there is no doubt that we inherited a situation where the growth in people claiming the DSP stretched the system to an unsustainable point,” he told The Australian.
“DSP spending over the last decade has been growing at a rate considerably faster than inflation and at a considerably greater rate than our population. Suggestions DSP spending is merely increasing in line with population growth are simply wrong.”
Unlike the National Disability Insurance Scheme, which is ramping up to fund health and other services for people with disabilities, the DSP is a form of income support for those with physical, intellectual or psychiatric conditions that prevent them working.
It has grown from 168,784 recipients in 1975 to 814,391 recipients four decades later, outpacing population growth for much of that time.
Mr Porter said the government had already changed the rules to target the help at those with a “permanent and significant” disability, but he made it clear the tougher approach would continue.
“This kind of stringency and targeting is the only way to guarantee the sustainability of the DSP system so it is available into the future for the Australians who need it,” he said. “The DSP shouldn’t be a ‘set and forget’ payment — that’s not in the recipients’ interest and it’s not in taxpayers’ interest.”
Figures from the Department of Social Services show that outlays on the DSP rose by 5.7 per cent on average in real terms every year over the past decade.
The outlays grew by 3 per cent in real terms on average every year when expressed as a share of the working-age population.
The spending also grew by 3 per cent in real terms on average every year in per capita terms, showing the cost was outstripping population growth.
A detailed study last year showed that much of the growth in the DSP had come from the ageing of the population, an increase in the retirement age for women and a major shift in other income support programs.
“From this perspective, alarm over growth in DSP is probably overstated,” wrote Roger Wilkins from the Melbourne Institute of Applied Economic and Social Research and Duncan McVicar from Queen’s University in Belfast in the Australian Economic Review.
This has not convinced the federal government, however, and Mr Porter is promising further scrutiny of the system.
Labor helped to scale back the growth by announcing tougher rules in 2011 to require people younger than 35 to meet new work requirements and encouraging new applicants to try to get back to work before they could receive the income support.
But Labor’s families spokeswoman Jenny Macklin has savaged the Coalition government for making further changes, saying it was “attacking” some of the most vulnerable people in the community.
“The Disability Support Pension is not unsustainable,” Ms Macklin said during the height of the clash over last year’s budget cuts.
The Parliamentary Budget Office predicts that annual real growth in the DSP will sink to 2.1 per cent over the decade to 2023 compared with 5.3 per cent in the previous decade, but this assumes that last year’s stricter new rules have an impact and are not eased in the future.
The Greens have called for $791 million to be spent over four years to reverse Labor’s changes and stop forcing DSP applicants on to Newstart. Greens senator Rachel Siewert has strongly criticised the measures in last year’s budget, including a halt to applicants choosing their own doctors to assess their disability, forcing them to use doctors appointed by the commonwealth instead.
“Forcing people to visit doctors they’ve never met before and who have no idea about their personal circumstances is not an effective way of carrying out assessments,” Senator Siewert said, adding that it was a “witch-hunt” to save money.
An analysis by The Australian shows that both major parties presided over big increases in the DSP in the past but have cracked down on the pension in recent years.
The number of DSP recipients represented 1.43 per cent of the population when Malcolm Fraser left office in 1983.
It was 2.17 per cent when Bob Hawke left office in 1991 and 2.74 per cent when Paul Keating left office in 1996.
It was 3.43 per cent when John Howard left office in 2007 and it was 3.6 per cent when Kevin Rudd left office in 2010.
In the first fall in this metric under any prime minister, the percentage slipped to 3.55 per cent when Julia Gillard left office in 2013. It fell again to 3.43 per cent in June this year, before Tony Abbott lost power.
These falls have not been enough to stop the steady rise in outlays, however, and the government appears to be worried that it remains too easy for people to move on to the DSP permanently when they could eventually return to the workforce.
