Future growth in DSP receipt—not all bad news

Parliament house flag post

Future growth in DSP receipt—not all bad news

Posted 9/10/2013 by Carol Ey



Image source: Department of Social Services
No doubt one of the priorities of the proposed review of income support payments will be the Disability Support Pension (DSP). DSP numbers have risen substantially in recent decades, despite numerous reforms designed to tighten eligibility and hence restrict growth. However a recent paper suggests that changes made to other income support payments have offset these reforms, and that the story is more positive than previous reports suggest.




The factors behind DSP growth

The paper examines the factors behind the growth in DSP recipient numbers over the last 30 years, which rose from 216,600 in June 1982 to 827,500 in June 2012. Demography accounts for a significant amount, with an estimated 117,000 of the increase due to population growth in the working age population (defined as aged 16-64 years for both men and women). In addition, some 17% of the increase in the proportion of the working age population receiving DSP has been a result of population ageing.

On the other hand, there is evidence of a slight fall in the rate of disability across all age groups, particularly for men aged 45 to 64, who form the bulk of DSP recipients. Labour market factors and the DSP payment rate increasing relative to the minimum wage do not appear to explain much of the remaining growth.

The paper argues that the major driver of increasing DSP receipt is changes to other payments. The authors have used Australian Bureau of Statistics (ABS) data to show that the percentage of the working age population with a disability who are dependent on welfare has declined since 1993, at the same time as the proportion of people in receipt of DSP has risen. What has changed is the income support payments those with a disability receive. For example, the increase in the age at which women can claim the Age Pension is estimated to account for 30% of the growth in the proportion of working age women receiving DSP, as women over 60 with a disability now get DSP whereas they previously claimed the Age Pension. There has also been a significant decline in the numbers receiving Service Pensions, from a peak of 411,800 in 1995 to 211,400 in 2013, some of whom would have been aged under 65 and had a disability which otherwise would have entitled them to DSP.

In addition, the closure of other income support payments such as Mature Age Allowance and Partner Allowance, and tightening of the eligibility for Parenting Payment, means that those with a disability who may previously have claimed these payments are now receiving DSP. The increasing disparity in payment rates between DSP and Newstart Allowance probably means that those with some capacity to work who may previously have registered for Newstart in order to receive greater support to return to the workforce, are more likely to apply for DSP to receive the higher rates of payment and be subject to a more liberal means test.

Does this matter

For the income support system as a whole, many of these shifts are not significant. For example, whether a 62 year-old woman with a disability receives the Age Pension or DSP makes little difference either to her circumstances or the public purse. And while raising the Age Pension age does mean some ‘leakage’ to DSP, many of those who fall under the raised Age Pension age will remain in the workforce, resulting in net reduction in income support recipients and corresponding government expenditure.

However, where the move has been away from payments which are designed to support workforce participation (such as Newstart or Parenting Payment) there are implications both for the likelihood of future employment and, given the relative payment rates and means tests, for budget outlays.

What does this mean for future growth in DSP numbers

Population growth and ageing will continue to put pressure on DSP receipt in the future, increasing numbers by more than 100,000 over the next decade. Increases to the Age Pension receipt age to 67 for both men and women is expected to result in an extra 100,000 or so, meaning that DSP numbers are likely to top one million within the next 10 years.

However, the good news from this analysis is the fall in the disability rates and the decline in the proportion of those of workforce age with a disability who are reliant on income support will reduce the demand for DSP, although the latter trend may depend on a continuing strong labour market. In addition, the Productivity Commission estimated that implementation of the National Disability Insurance Scheme, if combined with DSP reform to encourage greater participation, could lead to an increase in employment of people with a disability of some 220,000 by 2050, which would reinforce this trend.

 


Thank you for your comment. If it does not require moderation, it will appear shortly.

Add your comment

[Click to expand]

We welcome your comments, or additional information which is relevant to a post. These can be added by clicking on the ‘Add your comment’ option above. Please note that the Parliamentary Library will moderate comments, and reserves the right not to publish comments that are inconsistent with the objectives of FlagPost. This includes spam, profanity and personal abuse, as well as comments that are factually incorrect or politically partisan. We will close comments after three months.




Captcha
Generate a new image
Type characters from the image:

Facebook LinkedIn Twitter Add | Email Print

FlagPost

Flagpost is a blog on current issues of interest to members of the Australian Parliament


Parliamentary Library Logo showing Information Analysis & Advice

Archive

Syndication

Tagcloud

Refugees asylum climate change immigration Australian foreign policy parliament social security welfare reform school education welfare policy health financing elections Australian Defence Force emissions trading women higher education private health insurance people trafficking Indigenous Australians illicit drugs gambling health reform federal election 2010 United Nations Employment Asia Middle East Medicare Australian Bureau of Statistics statistics sport health forced labour federal budget Afghanistan Industrial Relations Carbon Pricing Mechanism politics income management dental health United States aid disability child protection environment poker machines Australia in the Asian Century Australian Sports Anti-Doping Agency steroids World Anti-Doping Agency National Disability Insurance Scheme detention aged care 43rd Parliament slavery health system Fair Work Act Australian Public Service governance labour force people smuggling transport debt taxation international relations constitution New Zealand food WADA Australian Crime Commission pharmaceutical benefits scheme public service reform law enforcement children's health Aviation foreign debt gross debt net debt defence capability parliamentary procedure Senate Senators and Members ALP ASADA Australian Federal Police criminal law Newstart Parenting Payment multiculturalism Youth Allowance sea farers federal state relations accountability Papua New Guinea youth paid parental leave pensions same sex relationships corruption coal seam gas customs planning federal election 2013 Australian Electoral Commission doping OECD crime health risks International Women's Day Gonski Review of Funding for Schooling sex slavery Special Rapporteur Northern Territory Emergency Response social policy terrorist groups Australian Security Intelligence Organisation carbon tax mining High Court Higher Education Loan Program HECS military history electoral reform employer employee renewable energy regional unemployment fishing European Union Federal Court family assistance skilled migration banking United Nations Security Council Australian economy forestry food labelling vocational education and training Drugs UK Parliament welfare systems Indonesia social media children Constitutional reform local government codes of conduct terrorist financing homelessness Parliamentary remuneration money laundering Trafficking in Persons Report energy science social inclusion human rights paternalism terrorism World Trade Organization Australia public health China housing affordability bulk billing political parties water productivity health policy Governor-General US economy trade unions domestic violence export liquefied natural gas foreign bribery firearms question time speaker superannuation public housing election results by-election expertise public policy climate Intergovernmental Panel on Climate Change leadership voting Department of Agriculture Fisheries and Forestry regulation Pacific Islands reserved seats research and development new psychoactive substances synthetic drugs UNODC ASIO intelligence community carbon markets animal health middle class welfare ADRV Census Indigenous constitutional recognition of local government referendum consumer laws PISA competition policy royal commission US politics violence against women language education baby bonus Leaders of the Opposition citizen engagement policymaking Australia Greens servitude Trafficking Protocol forced marriage Population rural and regional mental health alcohol entitlements ministries Hung Parliament social citizenship maritime Iran transparency ANZUS regional students school chaplains federal budget 2011-12 salary Medicare Locals primary care Building the Education Revolution smoking plain packaging tobacco cigarettes Asia; Japan; international relations Work Health and Safety Migration; asylum seekers; regional processing China; United States; international relations fiscal policy Racial Discrimination Act; social policy; human rights; indigenous Australians Foreign policy Southeast Asia Israel Palestine asylum refugees immigration political finance donations foreign aid disability employment Economics efficiency human rights; Racial Discrimination Act employment law bullying asylum seekers Animal law; food copyright Australian Law Reform Commission industry peace keeping contracts workplace policies same-sex marriage disorderly conduct integrity retirement Parliament House Australian Secret Intelligence Service welfare standing orders prime ministers election timetable sitting days First speech defence budget submarines workers financial sector Canada Somalia United Kingdom GDP Tasmania world heritage political engagement leave loading Trade; tariffs; safeguards; Anti-dumping public interest disclosure whistleblowing Productivity Commission limitation period universities Ireland cancer gene patents genetic testing suspension of standing and sessional orders live exports infant mortality honorary citizen railways disciplinary tribunals standard of proof World Health Organisation arts international students skilled graduate visas temporary employment visas apologies roads Italy national heritage NHMRC nutrition anti-dumping Rent Assistance obesity evidence law sacrament of confession sexual abuse US presidential election international days DFAT UN General Assembly deregulation Regulation Impact Statements administrative law small business Breaker Morant regional engagement social determinants of health abortion Members suspension workplace health and safety marine reserves hearing TAFE Victoria astronomy resources sector YMCA youth parliament Korea fuel rebate Australian Greens presidential nomination Racial Discrimination Act political parties preselection solar hot water Financial Action Taskforce Horn of Africa peacekeeping piracy Great Barrier Reef Stronger futures political financing political education Social Inclusion Board early childhood National Quality Framework for Early Childhood Education and Care Murray-Darling Basin sanctions Norway hospitals republic President Barack Obama Presidential visits qantas counselling Korean peninsula Work Choices biosecurity hendra environmental law federalism federation preselection therapeutic goods Therapeutic Goods Administration plebiscites computer games pests suicide nuclear COAG Ministerial Councils floods ADHD stimulant medication advertising electricity extradition standards conscience votes poverty preventative health rural health coastal erosion Parliamentary Budget Office NATO work-life balance

Show all
Show less