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Issue #1520      28 September 2011

Disability Support Pension changes untested, unfair and unacceptable

The National Welfare Rights Network (NWRN) responded with dismay to the release of the Senate Community Affairs Committee inquiry’s proposals for revised Impairment Tables to determine eligibility for the Disability Support Pension (DSP).

“The proposals before Parliament will potentially deny 38 percent of future claims for DSP. People currently on DSP will be assessed against the new Tables when they are due for a medical review. If each person denied the DSP gained a job, then we would not have this level of concern. However, if they do not gain a job they will be moved to the Newstart Allowance. This poverty-level payment is $131 per week less than the DSP,” said Maree O’Halloran, director of the Welfare Rights Centre.

“Government modelling suggests after the start of these tougher assessments four in ten people (38 percent) who would have been medically assessed as unfit to work currently will not be eligible. A single person with significant impairments risks being moved onto Newstart Allowance. A person with a disability on Newstart will also face waiting periods of up to 13 weeks, a strict assets test and will also lose more of their meagre Centrelink allowance if they manage to find work.

The stricter rules will apply to around 18,000 existing DSP recipients selected for a medical review each year. This could result in almost 7,000 existing Disability Support Pensioners being moved onto Newstart. A person who has been on the pension for a decade or more may see their incomes slashed by a third overnight. Welfare Rights had called for this group of people to be “grandfathered” from the changes in the way that people were when “welfare to work” requirements came into place in July 2006.

The revised tables were tested on just 215 people and for some medical conditions a mere two people were sampled. The Impairment Table score ratings are under-rated for people with lesser but significant multiple disabilities. This means that people with mental illnesses and some physical disabilities will be badly affected.

“We welcome the fact that the Minister’s Department has engaged on specific problems raised by representatives of people with intellectual disability and pain management groups,” said Ms O’Halloran. “With so little time for genuine consultation over the revised tables, it is certain that other major deficiencies will be found if the government rushes these changes through Parliament.

“These changes will result in a costly surge in appeals against cancelled payments. In 2010-11, 37,000 DSP claims were rejected on medical grounds. DSP appeals to Centrelink and the Social Security Appeals Tribunal cost in excess of $2 million each year.

“We call on the Parliament to delay the passage of this legislation to allow further consultation on the Tables, a “grandfathering” provision, further guaranteed investment to support people into jobs and commitments from large public and private sector employers to employ more people with disabilities. We welcome the dissenting report of the Greens Senator Rachel Siewert.”

Newstart’s poverty level

New social security payment rates from September 20 illustrate that one million Australians have fallen deeper into poverty.

“It is critical that the Tax Forum in October considers the Henry Tax and Transfer Review recommendation to lift the rate of the unemployment benefit (known as Newstart Allowance). This is a practical and real change which could be advanced at the Forum,” said Maree O’Halloran.

Australia’s 3.4 million age, carer and disability support pensioners will get a much needed boost of up to $9.75 a week from September 20, but unfair indexation increases will mean that unemployed people will receive just $5.95 a week increase. The increase for 38,000 parents on Newstart Allowance is just $6.40 a week. 327,000 single parents on Parenting Payment will receive a maximum increase of just $7.80 a week.

The twice-yearly indexation of most social security payments shows an alarming and widening gap in payment rates between people on pensions and people on unemployment benefits, student allowances and parenting payments.

Pensions will rise to $374.40 a week and Newstart Allowance to $243.40 a week, increasing the “poverty gap” to $131 a week.

Welfare Rights’ analysis of the figures shows that in just two years since the $32 increase to the base rate of the pension, single parent pensioners on Parenting Payment Single have missed out on increases which now total $53 a week.

Single parents forced onto the Newstart Allowance by the former Coalition government’s “welfare to work” policies have fared even worse, and are up to $111 a week worse off as a result of the combined pension increases and welfare changes that have taken place since 2006.

The more favourable pension indexation arrangement is making the Australian social security system increasingly unfair and unsustainable. According to the 2010 Henry Tax and Transfer Review, the rate of Newstart Allowance is expected to shrink to just a third of the pension by 2050 if the rules are not changed.

The Organisation for Economic Co-operation and Development reported in 2009 that Australia’s unemployment payments provided the lowest relative levels of income support of all developed nations. In 2010 it warned that the single rate of Newstart had fallen below the poverty line and questioned its “effectiveness” in “enabling someone to look for a suitable job”.

Welfare Rights says as an initial step to reducing the payment poverty gap the federal government should increase Newstart Allowance by $50 per week and fix the indexation anomalies.  

Next article – Fighting for quality education in public schools

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