Updating the Disability Support Pension

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Let people on DSP work more by removing barriers

Australia’s Disability Strategy 2021-2031 launched late last year highlights the importance of employment, career opportunities, and financial security to improving the life chances of people living with disability. Yet current arrangements for the Disability Support Pension (DSP) create barriers to this outcome by disincentivising a person from taking up these opportunities and penalising them if they work too much.

JFA Purple Orange welcomes the stronger focus on Employment and Financial Security as a priority area in the new Strategy. Under 'Policy Priority 3: Strengthen Financial Independence of People with Disability', federal and state governments committed to avoiding barriers and disincentives that discourage people living with disability from gaining employment and increasing the number of hours they work. We believe that acting on this commitment in relation to DSP arrangements is straight-forward, can be implemented immediately, and will make a difference to employment outcomes while having a minimal impact on the budget. We call on all parties and candidates in the federal election to commit to taking this action as a priority when parliament reconvenes.

Currently, a single person can earn up to $180 per fortnight of work income without affecting their DSP payment, while the threshold for couples is $320. Once these income levels are reached, the DSP payment reduces by 50 cents for each dollar earnt. According to the Department of Social Services Annual Report for 2018-19 (last full year before pandemic), 7.8 per cent of people on DSP reported employment income during that financial year. That percentage had declined slightly in the preceding years and fell significantly with the onset of the Covid-19 pandemic. As we emerge from the height of the pandemic and the employment market tightens, there is an opportunity to encourage people on the DSP to take advantage of suitable work opportunities that become available to them by removing disincentives.

The recent report of the Senate Community Affairs Committee’s ‘Inquiry into the Purpose, Intent and Adequacy of the DSP’ underscores the importance of removing the barriers, disincentives, and penalties within the current DSP arrangements. The Committee concluded that employment supports independence, enhances quality of life, improves mental health outcomes, and protects against various forms of vulnerability. People living with disability already face alarming levels of workforce discrimination and are often in precarious employment arrangements; yet these challenges can be exacerbated by additional unnecessary barriers created by DSP arrangements. Both the Committee and the Disability Royal Commission have recently noted that the employment rates for people living with disability in Australia have historically lagged behind other OECD countries.

Further, undertaking a Program of Support (POS) is an eligibility requirement to access the DSP for some people living with disability depending on the result of their assessment against the Impairment Tables. The POS is supposed to assist a person to prepare for, find, and keep employment, thereby diverting them from a potential lifetime of reliance on the DSP. But, in evidence to the Senate Inquiry, the Department acknowledged that the POS has not been evaluated to determine its effectiveness in achieving genuine employment outcomes since its implementation in 2011. Anecdotal evidence suggests that participants gain little benefit from completing a POS and it may act as a barrier to undertaking more worthwhile employment capacity building activities.

In summary, JFA Purple Orange is calling on all political parties and candidates to commit to urgently updating DSP arrangements, including by:

Removing barriers, disincentivises, and penalties for people on the DSP who undertake employment by:
Increasing the income thresholds so people can earn more from employment without impacting their DSP payments
Introducing greater flexibility in income reporting periods so that the inconsistent nature of pay for casual, contract, and other precarious forms of work are better reflected in the rules, for example, by providing options whereby thresholds can be applied to longer periods of time with income averaged across multiple fortnights, and allowing people to adjust the start and end dates of their income reporting periods to match their payslips to avoid additional calculations
Lowering the DSP payment reduction rate after the threshold is reached and implementing a straight-forward tapering mechanism so that the reduction rate no longer acts as a cap on how much work is perceived as worthwhile for a person to undertake
Increasing the period that a person can pause their DSP payments, but remain eligible to restart, from two years to five years and make sure that this rule is promoted and understood by people on DSP, many of whom fear the loss of future access if they work
Abolishing the Program of Support (POS) and replacing it with an alternative high-quality, outcome-orientated model that is designed to genuinely lift a person’s prospects of gaining mainstream employment. Closely monitoring the new model’s impact based on the measurable mainstream employment outcomes achieved and ensuring that there is a strong level of provider accountability for results embedded in contracts
Simplifying and streamlining the administrative burdens of the DSP, including for applying for the payment and reporting income, and ensuring that these processes, and the tools that support them, are genuinely accessible and user-friendly for all
Investing in education and accessible information provision so that DSP arrangements are well understood across the disability community and straight-forward for people to comply with, thereby eliminating common misunderstandings and fear

The DSP provides vital financial support to people living with disability who are unable to work. But it should not create barriers, disincentives, and penalties for those people living with disability who can and want to undertake some suitable work or to transition off the DSP into appropriate authentic mainstream waged employment.

KEY QUESTION:

Do you commit to updating the Disability Support Pension (DSP) arrangements to eliminate
barriers, disincentives, and penalties for people to earn more income from employment?

For further information, please contact Robbi Williams, CEO of JFA Purple Orange, on
(08) 8373 8333 or robbiw@purpleorange.org.au