Budget Review 2010-11

Budget Review 2010-11 Index

Budget 2010–11: Welfare

Job Capacity Assessment

Matthew Thomas

In the context of the 2010–11 Budget, the Government has two main, related objectives with regard to disability policy. The first of these is to reduce the number of people in receipt of the Disability Support Pension (DSP). The second is to increase the workforce participation of people with disabilities. In keeping with these objectives, the Government has introduced changes to the Job Capacity Assessment (JCA) and the work capacity assessment process more generally. These changes are based upon the principle that work capacity assessments (and disability employment policy as a whole) should focus on people’s ability to participate in paid employment, rather than on their disability.

The JCA was introduced by the Howard Government on 1 July 2006 as a part of its Welfare to Work reforms. Essentially, as its title implies, the JCA is an evaluation and streaming tool that is used to identify a person’s ability to work and any barriers that they may face in gaining employment. As such, the JCA serves a dual purpose. Firstly, it is used to determine whether a person with disability should be in supported (Disability Employment Services) or open (Job Services Australia) employment services. And, secondly, the JCA is used to assess whether or not a person has the capacity to work 15 hours or more per week and, thus, whether or not they qualify for the DSP. The assessment is made using the Impairment Tables, which are calculated to assist in measuring how a person’s impairment affects their ability to work. At present, JCAs are conducted by Centrelink, Commonwealth Rehabilitation Service Australia (CRS) and Health Services Australia Group (HSA), all of which are Human Services Portfolio agencies. Until 1 July 2009, the JCA program was managed by the Department of Human Services. Responsibility for the program’s management was then shifted to the Department of Education, Employment and Workplace Relations (DEEWR).

Under the Budget reforms,

  • from 1 July 2010, JCAs will not be conducted for job seekers in receipt of Newstart Allowance (NSA) or Youth Allowance (other)(YA(o)) who require a temporary exemption from participation requirements due to a medical condition. Instead, these determinations will be made by Centrelink staff.
  • from 1 July 2011, job seekers requiring a work capacity assessment will be appraised through a revised assessment, which will be conducted by an allied health professional within Centrelink. From the same date, all JCAs will be conducted by Centrelink, with the assistance of Commonwealth Rehabilitation Service Australia (CRS).
  • from 1 January 2012, in the most significant change, JCAs will be based on substantially revised  Impairment Tables—ones that ‘focus more on ability’. New applicants for DSP who do not have evidence of an inability to work more than 15 hours per week may be referred to NSA or YA(o) and offered employment assistance through Disability Employment Services or Job Services Australia. The Government anticipates that through their participation in these services, job seekers will develop skills that will enable them to gain employment of over 15 hours per week, thereby precluding them from DSP qualification. Alternatively, they will gain evidence for their inability to work for more than 15 hours per week, and thus the basis for another DSP claim. See the Disability Support Pension brief in this publication for analysis of this reform.

The above reforms are likely to achieve the Government’s twin objectives in the immediate to short-term. In doing so, they will save a substantial amount of tax payers’ money. However, it has been argued that if the Government is to achieve its objectives over the longer term, then this demands more substantive reform in two key areas.

The first of these is the removal of perverse incentives that encourage disadvantaged people to strive for DSP qualification and its associated ‘disabled’ status. These incentives include the DSP’s: higher rate of payment, its indexation according to Male Total Average Weekly Earnings rather than the CPI, its absence of activity test requirements and other benefits such as the mobility allowance. So long as these inducements remain, many of those would-be DSP claimants who lack evidence of an inability to work for more than 15 hours per week will attempt to achieve just this. As Australian Council of Social Service Chief Executive Officer, Clare Martin puts it:

... the $120 weekly gap between pensions and allowances has caused disincentives for people on disability support payments to move into work. If these payments were equalised, there would be less need for measures such as the push to restrict access to the disability support pension.[1]

Following similar lines, Sydney Morning Herald columnist and reporter, Adele Horin has made the point that in the absence of changes to NSA—namely, an increase in its level of payment and/or a loosening of its income test—many people moved off DSP and onto NSA could end up unemployed, underemployed or in poverty.[2]

The second area is the provision of sufficient support and services to ensure that disadvantaged people are able to meaningfully participate in the workforce. This means support in post-school education and training as well as in employment itself. Based on the most recent available data on the level of unmet demand for disability employment services (and for disability services more generally) it would appear that there is still scope for improvement in this area.[3]

It should be noted that there has been a decline in unmet demand for disability employment services in recent years.[4] This decline should continue with the Government’s recent (1 March 2010) removal of the cap on supported employment services. Nevertheless, because of the general policy shift towards encouraging people with disabilities to move into the labour market, overall demand for disability employment services has increased and is likely to continue to do so in the future.

[1].    J Massola, ‘Tightening of rules to save $383m’, Canberra Times, 12 May 2010, p. 7, http://parlinfo/parlInfo/download/media/pressclp/QCOW6/upload_binary/qcow60.pdf;fileType=application/pdf#search=%22tightening%20of%20rules%20to%20save%20$383m%22

[2].    A Horin, ‘Labor turns the screw on the disabled’, Sydney Morning Herald, 12 May 2010, p. 12,  http://parlinfo/parlInfo/download/media/pressclp/B1OW6/upload_binary/b1ow60.pdf;fileType=application/pdf#search=%22labor%20turns%20the%20screw%20on%20the%20disabled%22

       Horin’s observations find support in International Labour Organisation (ILO) analyses and findings: ‘In the world of work, persons with disabilities tend to experience high unemployment and have lower earnings than persons without disabilities. They are often relegated to low-level, low-paid jobs with little social and legal security, or segregated from the mainstream labour market. Many are underemployed. This affects their self confidence. Many become discouraged and drop out.’ International Labour Organisation (ILO), Facts on disability in the world of work, ILO, Geneva, 2007, http://www.ilo.org/global/About_the_ILO/Media_and_public_information/Factsheets/lang--en/docName--WCMS_087707/index.htm

[3].    The Australian Institute of Health and Welfare (AIHW) has conducted four studies of the level of unmet demand for services provided under the Commonwealth State/Territory Disability Agreement (CSTDA). The latest of these studies assessed unmet demand in 2005. While the AIHW noted that unmet demand for specialist disability employment services in 2005 was relatively low, it emphasised that the estimate of around 1700 people should be regarded as conservative. Australian Institute of Health and Welfare (AIHW), Current and future demand for specialist disability services, AIHW, Canberra, 2007, viewed 17 May 2010, http://www.aihw.gov.au/publications/dis/cafdfsds/cafdfsds.pdf

[4].    The decline in unmet demand is due to two main factors. The first of these is that government expenditure on disability employment services has increased in real terms since 2003–04. Australian Institute of Health and Welfare (AIHW), Disability support services 2007–08: national data on services provided under the Commonwealth State/Territory Disability Agreement, AIHW, Canberra, 2009, viewed 17 May 2010, http://www.aihw.gov.au/publications/index.cfm/title/10751 The second is that, with the introduction of the Welfare to Work reforms in the 2005–06 Budget, an additional 21 000 demand driven disability employment places was made available over four years.

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