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

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.
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 immigration Australian foreign policy Parliament climate change elections women social security Australian Bureau of Statistics Employment indigenous Australians Sport illicit drugs gambling people trafficking taxation Medicare welfare reform Australian Defence Force higher education welfare policy United Nations health financing Asia Middle East criminal law disability Australian Sports Anti-Doping Agency World Anti-Doping Agency United States federal budget school education forced labour aid statistics Australian Electoral Commission WADA income management Industrial Relations emissions trading dental health Australia in the Asian Century steroids detention Private health insurance OECD ASADA labour force transport Law Enforcement Australian Federal Police people smuggling poker machines National Disability Insurance Scheme Australian Crime Commission 43rd Parliament slavery election results Papua New Guinea Australian Public Service constitution International Women's Day corruption Afghanistan Fair Work Act child protection Aviation debt federal election 2013 parliamentary procedure ALP New Zealand Newstart Parenting Payment Census politics High Court skilled migration voting mental health Federal Court terrorist groups Higher Education Loan Program HECS governance youth paid parental leave environment foreign debt gross debt net debt defence capability customs Senate doping health crime health risks multiculturalism aged care Gonski Review of Funding for Schooling sex slavery sea farers Special Rapporteur UK Parliament Electoral reform political parties banking firearms public policy Population violence against women domestic violence China ADRV terrorism science research and development social media pensions welfare ASIO intelligence community Australian Security Intelligence Organisation accountability public service reform Carbon Pricing Mechanism carbon tax mining military history employer employee fishing by-election European Union same sex relationships international relations coal seam gas family assistance planning Senators and Members United Nations Security Council Australian economy food vocational education and training Drugs health reform Indonesia children codes of conduct terrorist financing health system money laundering United Kingdom early childhood education Canada Financial sector national security fuel disability employment Tasmania integrity transparency Australian Secret Intelligence Service sexual abuse federal state relations World Trade Organization Australia housing affordability bulk billing water renewable energy children's health health policy Governor-General US economy export liquefied natural gas foreign bribery question time speaker superannuation expertise climate Intergovernmental Panel on Climate Change leadership Department of Agriculture Fisheries and Forestry food labelling Pacific Islands reserved seats new psychoactive substances synthetic drugs UNODC carbon markets Indigenous constitutional recognition of local government local government consumer laws PISA royal commission US politics language education baby bonus Leaders of the Opposition Parliamentary remuneration Australia Greens federal election 2010 servitude Trafficking Protocol energy forced marriage rural and regional Northern Territory Emergency Response ministries social citizenship human rights emissions reduction fund; climate change child care funding refugees immigration asylum procurement Indigenous health e-voting internet voting nsw state elections 44th Parliament 2015 ABS Age Pension Death penalty capital punishment execution Bali nine Bali bombings Trade EU China soft power education Fiji India Disability Support Pension Antarctica Diplomacy by-elections state and territories workers Bills anti-corruption fraud bribery corporate ownership whistleblower G20 economic reform innovation standards NATO Members of Parliament Scottish referendum Middle East; national security; terrorism social services Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2013 online grooming sexual assault of minors ACT Assembly public health 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 regional unemployment asylum refugees immigration political finance donations foreign aid Economics efficiency productivity human rights; Racial Discrimination Act employment law bullying asylum seekers Animal law; food copyright Australian Law Reform Commission industry peace keeping contracts workplace policies trade unions same-sex marriage disorderly conduct retirement Parliament House standing orders public housing prime ministers election timetable sitting days First speech defence budget submarines Somalia GDP forestry world heritage political engagement leave loading Trade; tariffs; safeguards; Anti-dumping public interest disclosure whistleblowing Productivity Commission regulation limitation period universities Ireland cancer gene patents genetic testing suspension of standing and sessional orders animal health live exports welfare systems infant mortality middle class welfare 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 Constitutional reform referendum Rent Assistance competition policy pharmaceutical benefits scheme obesity evidence law sacrament of confession US presidential election international days DFAT UN General Assembly deregulation Regulation Impact Statements administrative law small business Breaker Morant homelessness regional engagement social determinants of health abortion Youth Allowance Members suspension citizen engagement policymaking workplace health and safety Trafficking in Persons Report marine reserves hearing TAFE Victoria astronomy resources sector YMCA youth parliament alcohol Korea rebate Australian Greens presidential nomination Racial Discrimination Act entitlements political parties preselection solar hot water Financial Action Taskforce Horn of Africa peacekeeping piracy Great Barrier Reef Stronger futures political financing Hung Parliament political education social inclusion Social Inclusion Board maritime early childhood National Quality Framework for Early Childhood Education and Care Murray-Darling Basin Iran sanctions Norway hospitals republic President Barack Obama Presidential visits ANZUS qantas counselling

Show all
Show less
Back to top