1.1
The Disability Support Pension (DSP) is the Australian Government’s primary income support payment for people with a permanent physical, intellectual or psychiatric impairment that prevents them from fully engaging in employment.
1.2
Major policy changes to the DSP since 2011 have tightened the eligibility criteria for the payment, reducing the number and rate of successful applications. At the same time, the number of people who receive unemployment payments from the Government, who have a ‘partial capacity to work’ due to disability or illness, has increased.
1.3
The medical and non-medical requirements make the DSP inaccessible for many applicants. The evidence required to make a claim for the DSP can be difficult to obtain and cost-prohibitive, and the process for applying is long, complex, and not well understood by applicants or treating health professionals. The committee heard that the challenges for people with disability navigating this system are varied, and can be exacerbated by their condition, and personal and financial circumstances.
1.4
Some claimants will need to demonstrate that they have undertaken a program of support (POS), aimed at getting them into employment, before they are eligible for the DSP. This involves training or job search activities whilst on an unemployment payment—either JobSeeker or Youth Allowance. Meeting these obligations through a Disability Employment Service or mainstream employment service, therefore, is a key and challenging aspect of the process of applying for the DSP. People with disability also face workplace discrimination and structural barriers to participating in employment.
1.5
For those on the DSP, the rate of payment is affected by a range of factors, including a person’s age, marital status, and the amount of income they earn. People with disability and chronic illness can incur significant medical costs, in addition to the day-to-day expenses and housing costs experienced by people without disability. These pressures impact on DSP recipients’ health, quality of life, and ability to participate in the workforce.
1.6
All of these issues have come to light during this inquiry, and the evidence received by the committee points to serious flaws with the DSP, its underlying policy framework, the way that it is administered, and how applicants are able to access it.
Structure of this report
1.7
This report consists of five chapters, including this introductory chapter:
Chapter 1 (this chapter) provides an overview of the DSP, the eligibility requirements and claims process, as well as the history of changes to DSP policies.
Chapter 2 outlines the significant barriers to accessing the DSP created by the eligibility requirements and claims process.
Chapter 3 discusses how the DSP and its processes detrimentally impact people with disability and chronic illness, including the disproportionate impact on some vulnerable groups.
Chapter 4 explores employment participation and the DSP, including the way the DSP is intended to engage people in the workforce, and the challenges experienced by people with disability obtaining appropriate employment and dealing with employment service providers.
Chapter 5 discusses the adequacy of the rate of the DSP, how the payment interacts with other government payments and supplements, and opportunities for broader reform.
Overview of the Disability Support Pension
1.8
The DSP was introduced in 1991 to replace the Invalid Pension, with the aim of improving rehabilitation and labour market engagement of recipients.
1.9
The DSP is the third largest social security payment, after the Age Pension and Family Tax Benefit, and in 2020–21 Australian Government expenditure on the payment was $18.37 billion.
1.10
The rate of payment for the DSP is dependent on the recipient’s circumstances, including their assessable income and assets, and whether they are single or partnered. For single DSP recipients without children, the maximum payment is $967.50 per fortnight—significantly below the national minimum wage of $1545.20. Of those on the DSP, 86 per cent receive the full rate of payment.
1.11
Most DSP recipients will have spent more than 10 years on some form of income support (71 per cent), with 62 per cent of recipients having received the DSP for more than 10 years. Of those who cease to be on the DSP payment, approximately half transition directly onto the Age Pension. Only a small proportion of DSP recipients exit the income support system entirely, and only three per cent leave the payment to return to the workforce.
Recipients of the Disability Support Pension
1.12
Of the approximately 752 000 people in receipt of the DSP, almost half (48 per cent) are over the age of 55. While men make up the majority of recipients (53 per cent), the proportion of women on the DSP has increased over time.
1.13
The most common primary medical conditions of DSP recipients include psychological or psychiatric conditions (36 per cent) and musculoskeletal or connective tissue conditions (19 per cent).
Workforce participation and the Disability Support Pension
1.14
DSP recipients can engage in paid employment for up to 30 hours per week without suspension or cancellation of their pension, subject to other eligibility criteria. Those who receive income may receive a part-pension dependant on the level of income earned.
1.15
A single person can earn up to $180 a fortnight without their income affecting their DSP rate of payment. For couples, the combined income threshold is $320 per fortnight. After that, a person’s pension will be reduced by 50 cents for every dollar earned over the threshold.
1.16
The percentage of DSP recipients reporting income from employment has declined in recent years, from 8 per cent in 2017–18 to 6.9 per cent in 2019–20.
Eligibility for the Disability Support Pension
1.17
Eligibility for the DSP is largely set out in the Social Security Act 1991 (the Social Security Act). To be eligible for the DSP, a person must:
satisfy specific residency requirements;
meet income and assets tests;
have a physical, intellectual or psychiatric impairment and a total impairment rating of 20 points or more in the impairment tables; and
have a continuing inability to work.
1.18
To maintain eligibility, a recipient of the DSP may be subject to further reviews by Services Australia to assess their level of impairment and continuing inability to work. If they are under the age of 35, they may also have ongoing participation requirements.
Impairment requirement
1.19
A person’s condition and functional impairment must be ‘fully diagnosed, treated and stabilised’ in order for them to be eligible for the DSP.
1.20
Diagnosis must be by a qualified health professional, and some conditions have specific diagnosis requirements. Whether a condition is fully treated and stabilised depends on an assessment of a person’s condition and if it might improve with treatment or rehabilitation in the two years following a DSP claim being made.
1.21
In addition, a person must be able to demonstrate that they have a physical, intellectual or psychiatric impairment with a total impairment rating of 20 points or more as assessed under the DSP impairment tables. A person must score 20 points or more in a single impairment table for their impairment to be considered ‘severe’. A person who attracts twenty points across multiple tables, but not on any single table, is not considered to have a severe impairment for this purpose and must complete a 'program of support', as discussed below.
1.22
The impairment tables are contained in the Social Security (Tables for the Assessment of Work-related Impairment for Disability Support Pension) Determination 2011. There are 15 impairment tables intended to assess impairment in relation to work. Ratings are given depending on the level of impairment on function as it relates to work performance.
Continuing inability to work requirement
1.23
A person must also be able to show they have a continuing inability to work (CITW)—that is, they are unable to work at least 15 hours a week in the next two years. The person must also have the inability to:
work independently of a program of support within the next two years because of their impairment; and
undertake a training activity to prepare for such work within the next two years because of their impairment; or
such an activity is unlikely, because of their impairment/s, to enable the person to work independently of a program of support within the next two years.
Program of support requirement
1.24
To meet the continuing inability to work requirement, a person whose impairment is not ‘severe’ must actively participate in a program of support (POS). As discussed above, a person’s impairment is not considered to be severe if it does not score 20 points or more in a single impairment table.
1.25
The POS is not a support program itself, but rather an eligibility requirement for the DSP that is intended to help a person prepare for, find, or maintain employment. A POS can be completed with a mainstream and disability employment service, or a community development program provider.
1.26
A person must either complete a POS undertaken for 18 months over three years, or be considered unable to complete it due to their impairment. Any time that is not spent completing the POS, including when a person is unwell, results in a pause to the 18-month period. As discussed further in Chapter 2, many claimants rely on the lower paid JobSeeker Payment while completing the POS requirement to become eligible for the DSP.
1.27
A person does not need to complete a POS and is immediately eligible for the DSP if they have a manifest impairment or if their impairment is ‘severe’ and they cannot work more than 15 hours a week. A person has a ‘manifest impairment’ if they:
have category 4 HIV/AIDS;
are permanently blind; or
require nursing home level care.
1.28
A person who has been on the JobSeeker Payment, and actively participating in the activities in their job plan, may meet the POS requirement when they submit a claim for the DSP.
1.29
The committee received significant evidence concerning the POS requirement. As described by one submitter, the POS is ‘unfair, unnecessary, unsuccessful, and holds us back when we are seeking genuine support, both financial and with finding suitable work’. These issues will be discussed further in proceeding chapters.
The claim, assessment, and appeal processes
1.30
The claims and assessment process for the DSP is managed through Services Australia. Claims must be supported by medical and non-medical evidence. Responsibility for providing the supporting medical evidence for a claim rests with the person making the claim.
1.31
DSP claims are initially assessed by a medical assessment team, who identify and ‘fast-track’ claims that involve manifest impairments, such as those made by people with a terminal illness. All other claimants, who do not have a manifest impairment, are required to undertake a job capacity assessment (JCA).
Job capacity assessments
1.32
A JCA is an assessment of how a person’s condition affects their ability to work, any assistance they may need to get a job, and if they are medically eligible for DSP.
1.33
Services Australia assessors are responsible for providing a rating under the impairment tables. They consider a person’s medical condition, barriers to work, rehabilitation, as well as prior participation with an employment services provider and employment history. They can (but are not required to) consult a person’s treating health professionals to confirm medical evidence, or seek expert opinion from a Health Professional Advisory Unit within Services Australia.
1.34
Following a JCA, assessors will identify claims that are likely to be medically eligible and refer them for further assessment by a Government-contracted doctor (see disability medical assessments below). Claims that are rejected without further assessment can include a recommendation about a claimant’s work capacity and a referral to an employment service.
Disability medical assessments
1.35
Disability medical assessments (DMAs) are conducted by Government‑contracted doctors. DMAs involve an independent review of the medical evidence supporting a claim to confirm the person’s conditions are fully diagnosed, treated, and stabilised. DMAs also review the ratings under the impairment tables for these conditions. Government-contracted doctors may also contact a claimant’s treating health professionals to clarify medical evidence, but are not required to.
Appeals
1.36
People who have their claim for the DSP rejected, or whose payment is cancelled following a review, can seek a review of that decision. There are several levels of review available:
initial review by a Subject Matter Expert (SME) within Services Australia who can change the decision if it is found to be incorrect;
review by an Authorised Review Officer (ARO) within Services Australia;
if a person does not agree with the SME or ARO decision, they can appeal to the Administrative Appeals Tribunal (Level 1 and Level 2); and
review by the Federal Court (only for errors of law).
A brief history of policy changes
1.37
Since its introduction, the DSP has undergone several key policy changes that have tightened the eligibility criteria. These are summarised in Table 1.1 and discussed in more detail below.
Table 1.1: Summary of key policy changes
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2006
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Eligibility restricted to people who can work less than 15 hours per week (reduced from 30 hours per week).
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2011–12
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Revised impairment tables introduced.
POS introduced.
Increase in allowable work hours to 30 hours per week.
Participation requirement for recipients under 35 introduced.
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2014–15
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Treating doctor's report removed.
Disability medical assessments by Government-contracted doctors introduced.
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Source: Department of Social Services, Submission 29, p. 4.
Welfare to work reforms (2005)
1.38
In 2005, the work capacity assessment level was reduced for people applying for the DSP from 30 to 15 hours per week. Applicants who could work between 15 and 29 hours per week were classified as having a partial capacity to work. Those with a partial capacity to work:
were not eligible for the DSP, but could apply for an unemployment payment (previously Newstart, now JobSeeker) and have reduced mutual obligation requirements; and
could reapply for the DSP after two years if they could demonstrate they had not been able to work more than 15 hours a week over this period.
1.39
The changes were designed to incentivise people to work where they had some capacity to do so, as well as to reduce the number of people who would receive the higher payment.
Reforms to test future work capacity (from September 2011)
1.40
The 2010–11 Budget announced changes to the way work capacity would be assessed for various income support programs, including the DSP. The changes included a new requirement for those applying for the DSP, who could not provide sufficient evidence of a future work capacity of less than 15 hours a week, to:
be referred to alternative income support payments (for example, Newstart Allowance, now Jobseeker); and
offered employment assistance through Job Services Australia or Disability Employment Services.
1.41
The Social Security Act was subsequently amended to require people to test their future work capacity by participating in training or work-related activities in order to qualify for the DSP. The amendments introduced:
a new requirement for DSP applicants to have ‘actively participated’ in a POS; and
a new definition of ‘severe impairment’ (a person who scores at least 20 points or more under a single impairment table). Those with a ‘severe impairment’ were not required to undertake a POS.
Revised Impairment Tables (2012)
1.42
In January 2012, revised impairment tables came into effect. The previous tables were removed from the Social Security Act, and new tables were introduced by legislative instrument.
1.43
This followed a 2009–10 Budget initiative which set up a review overseen by an advisory committee to provide expert advice. The advisory committee found that the existing impairment tables were no longer consistent with contemporary medical and rehabilitation practice and recommended revised tables.
1.44
The Government stated that the revised impairment tables had a greater focus on functional ability and concentrated on what a person was able to do, rather than what they cannot do, and were consistent with medical and rehabilitation practice at the time.
Revised medical assessment process (2015)
1.45
The 2014–15 Mid-Year Economic and Fiscal Outlook introduced a measure whereby Government-contracted doctors would undertake the medical assessments component of DSP eligibility assessments. This effectively gave government-contracted doctors the responsibility for establishing an applicant’s level of functional impairment, rather than the claimant's treating doctor.
Impact of policy changes
1.46
The reforms to the DSP have been broadly aimed at shifting people with disability with functional capacity into paid work. Similar approaches have been taken overseas and endorsed by the Organisation for Economic Cooperation and Development (OECD).
1.47
Despite this aim, the level of engagement in the workforce for people on the DSP remains low. As noted above, DSP recipients reporting income from employment has declined in recent years, and comprised only 6.9 per cent of all recipients in 2019–20.
1.48
Research from the School of Public Health and Preventive Medicine at Monash University noted that the various reforms have also been aimed at limiting Government expenditure on the DSP:
Since its enactment in 1991 from the prior Invalid Pension, the DSP program has been periodically reformed in ways that have increased conditionality, tightened eligibility and sought to limit growth in expenditure.
1.49
Another recently published research paper submitted that the total number of people receiving the DSP has fallen substantially from 815 251 in April 2011 to 752 274 in April 2021, and the success rate also fell from 63 per cent to 41 per cent during this time.
1.50
Notwithstanding the above, the Department of Social Services (DSS) reported that, overall, the number of people on the DSP has been relatively stable over the past five years. According to DSS, the reason for this is:
In recent years, the proportion of claims granted has increased. This, coupled with the increasing pension age, has contributed to a slowdown in exits, which has resulted in total recipient numbers being relatively stable over the past five years.
1.51
In 2020–21, approximately 96 000 people applied for the DSP; 59.4 per cent (57 000) were rejected and only 40.6 per cent (39 000) were granted the payment.
Interaction with unemployment payments
1.52
As a result of the tightened DSP eligibility requirements, including the POS requirement, people with disability or chronic illness who are unable to get onto the DSP are forced to apply for other income support payments, such as the JobSeeker Payment (or Youth Allowance for people aged between 21 and 24). These payments are for jobseekers and people who are unable to work for a short time due to sickness or injury.
1.53
People on JobSeeker receive a lower rate of payment than people on the DSP. A single person with no children receives a maximum of $629.50 a fortnight on JobSeeker, compared to $967.50 per fortnight on the DSP. In addition, recipients on JobSeeker have mutual obligation requirements which require ongoing reporting and can incur demerits and financial penalties if not met.
1.54
In June 2021, there were 374 367 Jobseeker recipients assessed as having a ‘partial capacity to work’, which is 36.4 per cent of the total number of people receiving JobKeeper. A person with a physical, intellectual or psychiatric impairment has a partial capacity to work if their impairment prevents them from working at least 30 hours per week, independent of a POS, within the next two years.
1.55
The majority of people on JobSeeker with a partial capacity to work (72 per cent) have the capacity to work between 15 to 22 hours per week. Only 16 per cent of those with a partial capacity to work reported earnings from employment.
1.56
In addition, only 17 per cent of those with partial capacity to work have been granted exemptions from mutual obligations. For some people with disability on JobSeeker, the expectations placed on them by Services Australia have exacerbated their illness and/or created secondary impairments. This issue is further explored in chapter 3.
Conduct of the inquiry
1.57
On 13 May 2021, the Senate referred the inquiry into the purpose, intent and adequacy of the Disability Support Pension to the Senate Community Affairs References Committee for inquiry and report by 30 November 2021. On 21 October 2021, the Senate agreed to extend the reporting date to the first sitting week of February 2022.
1.58
The inquiry was advertised on the committee’s website and the committee wrote to stakeholders inviting them to make submissions, to be lodged by 9 July 2021. Submissions continued to be accepted after this date. The committee received 134 submissions which are listed in Appendix 1.
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The committee held four public hearings in Canberra on 6 September 2021; 11 October 2021; 1 November 2021; and 16 November 2021.
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A list of witnesses who gave evidence at the hearings is available in Appendix 2.
Acknowledgement
1.61
The committee thanks all of the individuals and organisations who submitted to the inquiry and appeared as witnesses.
Notes on references
1.62
References to Committee Hansard in this report are to the proof transcripts. Please be aware that page numbers may vary between proof and official transcripts.