Chapter 1

Social Security and Other Legislation Amendment Bill 2011–Schedule 3 (Impairment Tables for disability support pension)

The inquiry

1.1        On 7 July 2011, on the recommendation of the Selection of Bills Committee, the Senate referred Schedule 3 of the Social Security and Other Legislation Amendment Bill 2011 (the Bill) to the Community Affairs Legislation Committee for inquiry and report by 15 September 2011.

1.2        In accordance with usual practice, the inquiry was advertised in The Australian and on the internet. The committee also wrote to numerous organisations inviting submissions to the inquiry. The committee received 10 submissions, listed at Appendix 1.

1.3        The committee held a public hearing in Canberra on 6 September 2011. The witnesses are listed at Appendix 2. 

1.4        The committee notes the short period of time between referral of the Bill and the deadline for lodgement of submissions. The committee appreciates the effort required to meet this timeframe, and thanks those organisations and individuals that made contributions to the committee's inquiry.

Background

Government review of the impairment tables for the disability support pension

1.5        As part of a 2009-10 federal budget measure, the Commonwealth Government undertook to review and update the impairment tables used to assess an individual's capacity to work and therefore their eligibility for the disability support pension (DSP). The goal of the review was to ensure the impairment tables 'are consistent with contemporary medical and rehabilitation practice'.[1]

1.6        An advisory committee was established to oversee the review. Membership of the advisory committee comprised:

...a mix of medical and allied health professionals as well as representatives of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), Centrelink, CRS Australia, Department of Education, Employment and Workplace Relations (DEEWR), Department of Veterans' Affairs (DVA) and disability peak organisations.[2]

1.7        The terms of reference for the review were as follows:

The review will:

(a)          update the DSP Impairment Tables to make sure they are consistent with contemporary medical and rehabilitation practice

(b)          introduce consistent consideration of the use of aids and equipment in the measurement of impairment in the DSP Impairment Tables

(c)          reassess the appropriateness of definitions contained in the Introduction to the DSP Impairment Tables, with particular regard to the assessment of people with intermittent psychiatric conditions

(d)         re-examine the descriptors in the DSP Impairment Tables to ensure that a score of 20 points aligns with an inability to work 15 or more hours per week in the open-labour market at or above award wages without the need for on-going support

(e)          redesign the DSP Impairment Tables to focus more on ability and

(f)           ensure that the DSP Impairment Tables can be used by both Allied Health Professionals and Medical Officers.[3]

1.8        In its final report, dated 30 June 2011 and released publicly on 1 August 2011, the advisory committee made 12 recommendations:

(a)          The draft revised Impairment Tables shown at Appendix F to this report should replace the current Work‐related Impairment Tables for Disability Support Pension.

(b)          Feedback should be sought regarding the draft revised Impairment Tables from organisations listed in Appendix B of this report prior to introduction of the revised Impairment Tables.

(c)          Centrelink and CRS Australia assessors should receive appropriate training in the use of the revised Impairment Tables prior to implementation of the revised Impairment Tables. [Health Professional Advisory Unit] professionals should also receive orientation to the revised Tables.

(d)         FaHCSIA and the Department of Human Services should monitor the initial implementation of the revised Impairment Tables and undertake a comprehensive evaluation of the results over the first 18 months following implementation. The Impairment Tables should be reviewed regularly thereafter, i.e. at least every five years.

(e)          In determining a total impairment rating, 5 point ratings should be included to reflect the total impact of functional impairment and maintain the integrity of the rating scale.

(f)           The assessment of the impairment rating and the assessment of work capacity need to be maintained as two separate but equally weighted tests. The need to undertake two separate tests should be emphasised with Job Capacity Assessors and highlighted in any training and assessment materials.

(g)          The Treating Doctor’s Report (Medical Report) form should be reviewed to ensure that adequate evidence of the claimant’s medical diagnosis and functional impairment is available to assessors.

(h)          The ability to generate the Treating Doctor’s Report form data from medical practice software should be investigated and implemented.

(i)            FaHCSIA should liaise with the relevant specialist medical colleges to inform and educate medical practitioners about the overall assessment process for Disability Support Pension, the health and social benefits of participation in work and any revisions to the Treating Doctor’s Report form.

(j)            FaHCSIA should aim to implement Impairment Tables that are fully functionally‐based within the next decade, i.e. a further revision of the Impairment Tables so that the all of the tables reflect key functions/activities required for participation in work or training.

(k)          The HPAU should monitor and report on the advice sought and utilisation of HPAU by Job Capacity Assessors in applying the revised Impairment Tables. The HPAU should ensure that this information is provided as feedback to FaHCSIA and the Department of Human Services so that the information can be reflected in procedures and training for assessors.

(l)            FaHCSIA should ensure that the revisions to the Impairment Tables for Disability Support Pension are considered in any Government response to the Productivity Commission Inquiry into a National Disability Insurance Scheme.[4]

1.9        The advisory committee also released draft revised impairment tables.[5]

Inquiry into the Family Assistance and Other Legislation Amendment Bill 2011

1.10      In June 2011, the Community Affairs Legislation Committee conducted an inquiry into the Family Assistance and Other Legislation Amendment Bill 2011.

1.11      One of the changes introduced in the Family Assistance and Other Legislation Amendment Bill 2011 was the requirement that people must provide evidence that they have tested their future capacity by participating in training or work-related activities in order to qualify for the DSP.[6] The new requirement to have actively participated in a program of support to find employment would not apply to people with a "severe impairment". A severe impairment was defined as an impairment 'of 20 points or more under the Impairment Tables, of which 20 points or more are under a single Impairment Table'.[7]

1.12      During the course of that inquiry, submitters and witnesses raised concerns regarding changes to the future work capacity assessment for the DSP. Much of this concern was related to the definition of "severe impairment" and the difficulty people with a disability and disability advocacy groups faced when considering the potential impact of this definition given the impairment tables were under review and the revised tables not yet publicly available.[8]

1.13      Other submitters questioned the different implementation dates for the new work capacity arrangements in the Family Assistance and Other Legislation Amendment Bill 2011 and the updated impairment tables.[9] In response to the incongruence between the introduction of the new work capacity arrangements and the release of the updated impairment tables, the committee was of the view:

...the release of the draft impairment tables sooner rather than later, and preferably prior to 3 September 2011, would be beneficial. The public release of the draft impairment tables prior to the implementation date for schedule 3 of the Bill would address uncertainty among some stakeholders regarding the impact of the Bill on people with a severe disability.[10]

The Bill

1.14      On 6 July 2011, the Social Security and Other Legislation Amendment Bill 2011 (the Bill) was introduced into the Parliament. 

Outline

1.15      Schedule 3 of the Bill seeks to implement part of the Disability Support Pension—Better and Fairer Assessments 2009–10 budget measure.[11] The schedule seeks to remove the existing impairment tables from 1 January 2012 and enable the minister to introduce new impairment tables by a legislative instrument to the Social Security Act 1991.[12]

Main provisions of the Bill

1.16      Schedule 3 would change the definition of "impairment tables" by repealing the existing definition and defining impairment tables as 'the tables determined by an instrument under subsection 26(1)'.[13]

1.17      Subsection 26 of the Bill would enable the minister to determine 'tables relating to the assessment of work-related impairment for disability support pension' by legislative instrument.[14] The minister may also determine, via legislative instrument, the rules by which the impairment tables would be applied.[15]

1.18      The application of the impairment tables to a person's claim for the DSP is outlined in section 27. Subsections 27(3) and (4) provide for review of a person's qualification for the DSP.

1.19      Item 4 of the schedule seeks to repeal schedule 1B of the Social Security Act 1991 (the Act). At present, the DSP impairment tables are found in schedule 1B of the Act.

1.20      Item 5 explains the application of new impairment tables before and after the proposed implementation date of 1 January 2012. Subitem 5(1) provides that the new impairment tables must be used after 1 January 2012 to determine a person's qualification for the DSP.[16] However, subitem 5(2) provides that if a claim for the DSP has been made before 1 January 2012 and the claim has not been determined by 1 January 2012, the amendments in schedule 3 do not apply in relation to determining that person's qualification for the DSP in respect of days occurring on or before the day on which the claim is determined.[17]

Financial impact

1.21      The measures proposed in Schedule 3 of the Bill are estimated to have a cost of $13.9 million in 2009-10 and $19.1 million in 2010-11. The measure is then expected to result in savings of $4.8 million in 2011-12 and $35.4 million in 2012‑2013.[18]

Issues regarding the Bill

1.22      Some submitters were supportive[19] of the intent of Schedule 3 of the Bill to 'ensure that [the impairment tables] are consistent with contemporary medical and rehabilitation practice'.[20] Anglicare stated:

...the core principles in developing any kind of policy or initiative concerning disability ought to be: a person-centred approach, flexibility and individualised support. The use of impairment tables has come to be an accepted part of the Disability Support Pension (DSP) with these tables utilised to determine a person's eligibility for that payment through the assessment of an individual’s capacity, or previously, their incapacity, to participate in work. The tables recently released by Government have shifted the focus from a deficit approach—substantiating incapacity—to a model of functionality, looking at what a person is able to do. It demonstrates the Government’s ability to shift in its perceptions of population groups and how they fit into the overall Australian picture. This is a brave step out of the dark by Government towards a more inclusive person-centred approach and as such it should be commended.[21]

1.23      The Mental Health Council of Australia's (MHCA) view was typical of those who supported the review:

...the review of the tables is a really welcome and important reform—it is a long time since the tables have been adequately reviewed—and, in particular, to welcome the direction of those reforms, which talk much more now about functional impairment rather than a particular diagnosis. I think that is the right kind of philosophical approach to the review of the tables and is to be welcomed.[22]

1.24      However, various concerns were raised during the inquiry regarding the:

• consultation process both during the advisory committee's review of the impairment tables and consultation following the release of the draft revised impairment tables;
• testing of the draft revised impairment tables, including the adequacy and results of the testing;
• treatment of intellectual disability in the draft revised impairment tables;
• importance of family and community support structures to those with a disability;
• ongoing monitoring of the impacts of the revised tables;
• capacity and ability of people with a disability living in regional areas to access work;
• availability and capacity of employers in smaller regional economies to provide access to work for people with a disability and support these people in work; and
• capacity of the job network to accommodate people with a disability.

1.25      These concerns are discussed in the following chapters of the report. 

Single benefit payment

1.26      A recurring theme, in submissions to both this inquiry and to the previous bill (the Family Assistance and Other Legislation Amendment Bill), has been that inequities arise, and pressures are placed on pension recipients, because of the differences between different pensions and allowances. This is an issue that is far broader than the impairment tables, or indeed disability support, but the committee wishes to address it, as it is a matter of significant policy importance.

1.27      Submitters criticised aspects of the Family Assistance and Other Legislation Amendment Bill because of their concerns about inequities between recipients of different allowances. The Australian Council of Social Service (ACOSS) observed:

It is the $128 per week difference between the DSP and Newstart Allowance rather than the proposed requirement to undertake a 'program of support' that is the source of this inequity. This underscores the need for reform of the social security system to restore equity between payments and reduce financial incentives for people to remain on the DSP for fear of dropping down to Newstart Allowance if they obtain employment and then lose the job.[23]

1.28      The Welfare Rights Centre considered that previous attempts to improve the support for people with disabilities to enter or re-enter the workforce 'have failed to provide little more than shifting persons from a pension to an allowance'.[24] The National Welfare Rights Network similarly observed:

Previous attempts at "welfare reform" since 2006 for people with disabilities have meant in practice shifting 92,000 people with disabilities onto a lower paying Newstart Allowance, and 4,000 onto the even lower paying Youth Allowance.[25]

1.29      Many support payments are currently at the same or similar levels, such as the aged pension and the DSP. Maintaining such parity was endorsed by the government's 2009 review of the aged pension:

Finding 1: The Review finds that the Age Pension, Disability Support Pension and Carer Payment should be paid at the same basic rate.

Finding 2: The Review finds that the specific costs associated with health and disability are best responded to by targeted services rather than generalised differences in base rates of payments or financial supplements.[26]

1.30      However, broader reform of pensions and allowances is also regularly recommended. The 2000 McClure report observed:

Pension / allowance divide causes difficult life transitions and creates unintended incentive and disincentive effects.

The Reference Group suggested that an integrated payment for all adult people of workforce age would simplify income support arrangements significantly. The most radical approach to reform would be to do away with the current income support categories and have one integrated payment structure for people below age pension age.[27]

1.31      Ten years later, ACOSS released its paper, Out of the Maze: A Better Social Security System for People of Working Age, which argued for a complete redesign of the social security system, suggesting that levels of payment are arbitrary and there are serious anomalies between payments.[28]

1.32      The Organisation for Economic Co-operation and Development (OECD) has argued in favour of moving to a single working-age benefit, 'with the ultimate objective to abolish the strict differentiation between different contingencies and to replace the array of available working-age benefits by just one such payment'. The OECD recognised that it would be hard to make this change, and that no country had done so, but reasoned that it would:

first, stop the frequent transfers of jobless people across different income-support schemes and, secondly, apply the very same process to all jobless people of working age—including early identification, profiling, capacity assessment, assessment of support needs and, if needed, referral to the most appropriate service.[29]

1.33      The committee recognises that reducing the disparity between payments should only be undertaken as part of broader social security system improvements, examples of which include the recent changes to DSP and the updating of the impairment tables. Payments must be accurately targeted towards those who need them, and supplements and allowances must deal with the differing financial needs of people on pensions and allowances. For example, the recent Pension Review Report noted that 'there is strong evidence that many pensioners in private rental housing face particularly high costs and have poor outcomes',[30] and that this needed to be addressed through a combination of social housing and Rent Assistance payments.

1.34      Any change of such a nature would require significant research and consultation, and involve issues that have been recognised, ongoing social policy challenges for successive governments.

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