A cash giveaway to millions of pensioners last year has triggered an outbreak of crook backs. The nation has for years watched on as a growing army of pensioned-off disabled workers, many of them dispirited middle-aged blokes, has emerged.
But it can now be revealed the Rudd Government’s generosity on September 20, 2009 in giving Australians on the Age Pension and Disability Support Pensions a one-off pay rise of to $65 a fortnight had the unintended result of adding tens of thousands of new recruits to the army disabled workers.
Centrelink documents obtained under Freedom of Information laws reveal how in the six months after the pay rise a further 43,117 new Disabled Support Pensioners joined the ranks. In October alone, in the weeks after the pension pay boost, 8,615 applicants were approved.
Recipients on the Newstart allowance, the old dole, were by-passed by the pension pay rise, increasing the income gap between those on Newstart looking for a job and those on the Disability Support Pension (DSP) to as much as $120 a week.
Who can blame anyone among the tens of thousands of former job seekers for being tempted by the cash to give up on searching for work? As well as more money, the DSP has no job activity test or requirement to enter “employment pathways” to get job ready.
It’s not a bungle on the scale of the insulation scheme or the bloated Building the Education Revolution, but the pension pay rise smells like another Rudd Government policy botch.
It has served to exacerbate a DSP growth problem that has spun out of control for both the Howard and Rudd Governments. At the end of December, 2009, 777,725 Australians were on the DSP. Just six months earlier, at June 30, there were 757,118. A decade earlier in June 1999 there were 577,682 on the disability pension.
DSP recipient numbers have streaked past unemployed numbers. The number of unemployed fell to 611,000 in March.
Don’t be tricked by the name of the benefit – not all on the DSP are wheelchair bound, blind, terminally ill or intellectually impaired. Previous analysis of DSP recipients shows almost a third were on the benefit in the broad category of “musculo-skeletal and connective tissue”. Yet another third were there for psychological or psychiatric complaints. A few hundred had reproductive disorders.
Over a period of two decades a pool of experienced workers, essential for keeping Australia’s growth rate ticking, has been allowed to fade away into a world of endless daytime TV, deteriorating self-worth and in some cases obesity.
The system as it now is configured means that doing even part time work may disqualify them from the DSP, so there is no reason to bother.
Both Human Services Minister Chris Bowen and then Families, Housing and Community Services Minister Jenny Macklin did not respond to answers to questions about whether the September pension pay rise – as well-intended as it was – may have caused the latest DSP surge.
Mr Bowen’s office sent through a press release from earlier this month outlining the success of optical surveillance in catching out welfare cheats. There was also a recent closure of a loophole that allowed 71 “fly-in, fly out” disabled pensioners who get the benefit despite maintaining a home overseas. But all this is barely embroidery on a intractable problem.
The nation’s peak welfare group, ACOSS, argues that widening the gap between Newstart benefits and the DSP was unwise and unfair. As well as making the DSP more tempting, it also left those already on the DSP with too much to lose should they start looking for work
In a discussion paper released this week Out of the Maze, ACOSS is calling for all people on income support of working age, whether on Newstart, DSP or other benefit, be paid the same amount for basic expenses, with a disability supplement if needed. Couples would be paid 1.5 times the single rate.
ACOSS senior policy advisor Peter Davidson was one who publicly warned that when Newstart was by-passed by the pension rise it would lead to more people on the DSP.
Mr Davidson said news that 40,000 more people joined the DSP in the six months after the pension rise was the kind of outcome he feared. The figure did need to be compared to the same period the year before for an accurate result, however.
“The pension rise would encourage people to apply for the DSP who might not otherwise”, he said
“However we know from past experience what tends to happen is that a year or two after an economic downturn people with some health difficulty give up looking for a job and opt to take the disability pension,’’ he said.
While the DSP was not easy to get – and required the approval of health professionals - the more individuals that apply the more that are likely to get it.
Mr Davidson said there was less incentive than ever for a group of some 700,000 DSP recipients, grandfathered from tighter qualification rules introduced in 2006, to try to rejoin the workforce.
There is strong speculation that fixing the growing army of disabled pensioners will be a theme in the forthcoming report by Treasury Secretary Ken Henry into the nation’s tax system. That report is expected to be released as soon as next week.
Mr Henry, addressing a conference on economic governance late last November, remarked that his review had been told repeatedly “including by those who are themselves disabled” that the disability pension system did not encourage people to return to work.
He noted that the present income system for the medically disabled was “effectively contingent on them working little or not at all.” A single person with no dependents gets $239 a fortnight more on the DSP than Newstart. Individuals in a couple are also better off by $110.80.
- Kelvin Bissett is Investigations Editor, Nine Network Australia
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