This blog is based on an article in the Journal of Social Policy. Click here to access the article.
One of the defining features of social welfare systems in most industrialised nations is the provision of financial benefits to people with medical conditions and disabilities that completely or partially restrict the ability to engage in work. These benefits are typically very modest, yet they provide a crucial source of income for many millions of people living with disabling conditions.
Over the past half century there has been substantial growth in the number of working age people receiving these disability benefits. This growth has been described as ‘unsustainable’ economically. National governments have responded by introducing policy reforms that seek to reduce access to benefits, in order to control expenditure on disability benefit programmes.
In Australia the main disability welfare benefit is known as the Disability Support Pension or DSP. Australia’s spending on the DSP grew by 250% between the 1980s and the early 21st century. As elsewhere, successive Australian governments have responded by reforming the DSP programme, in ways that have increased conditionality, tightened eligibility and sought to limit growth in expenditure.
Between 2012 and 2018 these reforms were in full swing, with multiple major changes introduced. These included requiring most applicants to demonstrate that they have actively participated in job seeking or training for a period of 18 months before applying; reviewing the eligibility of existing DSP recipients; introducing of a new two-stage eligibility assessment procedure for the vast majority of applicants; and new impairment tables for assessing the degree of work capacity.
We used national quarterly data provided by the Australian Government to characterise trends in access to the DSP during this reform period. We examined three markers of access, including the rate of people receiving the DSP (per 1000 working age residents), the rate of people being granted access to the DSP, and the rate of people receiving the lower unemployment benefit who are assessed as having impaired work capacity. We analyse data by sex and primary medical condition to assess trends in these outcomes amongst different groups of recipients. We hypothesised that reductions in disability support during the reform period would be accompanied by an increase in the rate of disabled people receiving the lower unemployment benefit payment. We used a technique called joinpoint analysis to examine trends in these markers over time, and to identify time periods during which trends change.
We found evidence of substantial changes in DSP access over the reform period. There was an 8.3% reduction in DSP recipients, a 36.8% reduction in the rate of DSP applications granted, and a 121% increase in the rate of people with impaired work capacity receiving unemployment benfits. By June 2018 there were ~68,000 fewer Australians receiving the DSP and ~148,000 more Australians receiving the lower unemployment benefit than in September 2012.
These two benefits differ in important ways. The Australian unemployment benefit is one of the lowest-paying in the OECD and it is estimated that 54.6% of people receiving the NSA are living in poverty, compared with 36.4% of DSP recipients and 13.2% of all Australians. People receiving unemployment benefits also have more extensive job-seeking obligations, including people assessed as having partial capacity to work, and failure to meet these obligations can result in payment suspensions.
We also found evidence that the reforms impacted some groups more than others. People with musculoskeletal or circulatory system disorders had larger declines in DSP receipt and grant rates. The sharpest growth in unemployment benefit receipt was among people with mental health conditions.
The pace of the changes also varied across the reform period. There were periods in which changes accelerated or slowed. In some instances, periods of more rapid change corresponded with the introduction of specific policy reform. For example, there was a rapid decline in DSP grant rates during the 2014 and 2015 calendar years. This corresponds with the introduction of new, more strict eligibility assessment practices.
One feature of the Australian DSP reforms was an increase in conditionality, through the introduction of the requirement for all but the most seriously disabled applicants to participate in an 18-month period of job seeking or training, known as a ‘programmw of support’. Global studies show that conditionality can have adverse health and social consequences for disabled people, for example through the imposition of financial penalties for non-compliance. Although our study did not test this directly, this global evidence base suggests that there will be adverse health consequences of the Australian reforms.
Overall, our study shows that recent policy reform in the Australian social welfare scheme had a significant impact on access to the two major government programs of financial support for working age people with serious medical condition and disabilities, the DSP and unemployment benefits. This has been a deliberate, carefully considered set of policy reforms by successive Australian governments. The reforms appear to have achieved their intended economic objective, although the burden has been distributed unequally.
About the authors
Alex Collie is Professor at Monash University.
Luke Sheehan is Research Officer at Monash University.
Tyler Jane is Research Fellow at Monash University.