The Productivity Commission has released its draft report on a National Disability Insurance Scheme. The Commission has found that the current system is “underfunded, unfair, fragmented and inefficient, and gives people with a disability little choice and no certainty of access to appropriate supports.”
The draft report recommends a new Scheme, funded directly out of consolidated revenue, or the use of a tax levy as a “second-best option.”
The Commission will continue to examine the proposal in coming months and issue a final report in July. The draft is an important contribution to the national discussion about disability, especially for around 360,000 people with severe lifetime disability. It deserves close attention, predicated on a belief that comprehensive assistance for those people who require lifetime care and support for catastrophic injuries is an important national objective. Having seen my parents-in-law cope with a son disabled from birth, I know first-hand the emotional, financial and family challenges involved.
.However, it is only one aspect of the broader challenge of disability in Australia.
Last December, Australia’s social security chief, Jeff Harmer, urged the national government to do more to tackle the burgeoning number of people on welfare.
Dr Harmer, the Secretary of the Department of Families, Housing, Community Service and Indigenous Affairs, said the government must explore policies to encourage disabled people, women and older Australians into work, lift participation and productivity.
He said the out-of-control Disability Support Pension was the biggest social policy dilemma facing the country over the next few years.
About 800,000 people are on the DSP, at a cost of $10 - 13 billion per year. This represents about five per cent of all Australians of working age.
Julia Gillard says she wants to tackle the issue. However, Labor has a poor track record on welfare reform. In the early years of last decade, attempts by the Howard government to reform welfare were stymied by Labor. It wasn’t until the Coalition gained a majority in the Senate in 2004 that welfare reform occurred - in the face of Labor resistance.
Australians wish to be secure in the knowledge that a safety net and social support system will always be available to them if it is genuinely needed. However, at a time of strong jobs growth and emerging labor and skill shortages during the late 1990s and early 2000s, the number of working-age people in receipt of income support grew to over 20 percent of all working-age Australians, or more than 2.7 million people.
Only a small percentage of this number had participation requirements tied to their income support. 700,000 were on the Disability Support Pension (DSP), and 618,000 received a Parenting Payment. Both of these payments were more generous than the Newstart Allowance received by the unemployed. There were more people receiving the DSP than there were on unemployment benefits.
What this highlighted was that people with disabilities, in particular, had a very low rate of participation in the workforce. Less than 10 per cent of people receiving DSP undertook any work, including many people who had significant work capacity.
Participation requirements that were placed on sole parents were very low by international standards. Sole parents were on income support for an average of 12 years; however, many did engage in some form of workforce participation during this time. Figures from June 2002 showed that around 41 percent of Parenting Payment (Single) recipients were working, and 42 percent of those not working wanted to work. Not surprisingly, the incidence of work and the preference for work was higher for those with older children.
While these figures were encouraging, they also demonstrated that sole parents faced very real barriers to participation. In order to continue to boost the participation rates of sole parents, there were a number of issues that needed to be addressed. These included the provision of more family-friendly workplaces, availability of affordable before- and after-school child care, and timely payment of child support.
Two major changes were made to Australian welfare in 2005. First, sole parents were required to seek work and to move from Parenting Payments to the unemployed benefit when their youngest child turned six.
Second, if people with a disability had the capacity to work between 15 and up to 30 hours per week without ongoing support in the open labor market, then they would not be eligible to claim the disability support pension. They have to apply for another payment, typically Newstart, and are required to look for work. A person’s work capacity is assessed by a new Comprehensive Work Capacity Assessment service. However, people who were receiving the disability support pension on May 10, 2005, were not be affected by these changes.
The results of these changes are startling. The number of recipients of the Parenting Payment has declined by a quarter from 618,000 in 2005 to 458,000 in 2010.
Conversely, the number of people in receipt of the Disability Support Pension has grown by 12 per cent over the same period, from 712,000 in 2005 to almost 800,000 by the end of 2010.
As the Parliamentary Library observed, “in some instances, the reforms may have merely encouraged a shift into Disability Support Pension, the only remaining non-activity tested payment.”
The Library Paper added: “If overall working age participation is to be increased, reforms in areas that would help to increase the participation of people with disabilities and carers may be required.”
Many people on income support were reluctant to move into employment and lose access to not only their benefits, but also other forms of special assistance. The importance of the pensioner concession card (PCC), mobility allowance, and home help, for example, could not be underestimated. People wanted to be secure in the knowledge that we understood that if their employment did not work out, they should not be left worse off.
In my discussions about welfare reform, including the representatives of those who are facing barriers to greater participation in the workforce, such as people with disabilities, they have made it clear that they wanted to contribute and participate in the social and economic life of our nation. We needed to assure people that if they had a go and it didn’t work out, they would not be left worse off. We needed to reassure them that they would be given the opportunity to have another go if their initial foray into the workforce wasn’t successful.
Approximately one quarter of all DSP recipients in Australia suffer from a psychological/psychiatric condition. Such conditions are often episodic, and due regard had to be given to how we could more appropriately deal with the situations that many of these people find themselves in when they have an episode that leaves them unfit for work.
There are substantial barriers which prevent people with disabilities from participating both in the workforce and in everyday life. They include physical barriers, such as access to transport, and mental and psychological challenges. Whatever shape or form they come in, these barriers have been unfortunately reinforced by negative community attitudes and a low expectation of people with disabilities. This has contributed to many people with disabilities feeling a sense of disempowerment.
Governments, business, and the disabled themselves must work together and set about removing these barriers and negative stereotypes.
Increasing participation is not just a matter of moving more people into the workforce. We must also address the demand for their services. Business needs to be educated about the benefits of employing people with disabilities. We can learn from companies such as Westpac, McDonald’s, Telstra, and IBM who can see the benefits for themselves and their employees.
There is also a role for the Commonwealth to play, given the declining number of people with disabilities in the public service. The Australian government can do more by taking the lead and making a commitment to increasing employment of people with a disability in the public service.
People with disabilities acknowledged that they wanted to be more economically active. The Disability Support Pension should not be a dead-end payment, as many see it today.
The principal object of reform, therefore, should be to encourage and assist more and more people to contribute and participate positively.
The Henry Report has laid out one approach to welfare reform.
If the government only deals with funding a scheme, and does not tackle the more important issue of getting people back into the workforce, it will not resolve the problem.
Julia Gillard talks about addressing the issue, just like she said in 2009 that getting people into work was her priority. It remains to be seen whether this is just another empty promise from the Labor government.
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