The interim report of the Review of Australia’s Welfare System led by Patrick McClure was released on 29 June 2014. The report contains proposals for significant reforms to the Disability Support Pension (DSP). The reforms would see the DSP reserved for people with a permanent impairment and no capacity to work. Those people with a partial capacity to work would be placed on a lower tiered working age payment and provided with support to improve their employment capacity.

The proposals represent an attempt to deal with the perverse incentive for income support claimants to apply for DSP, which has a higher rate of payment and reduced activity testing, rather than allowance payments like Newstart. The changes would also be in keeping with the principle that welfare policy should focus on people’s ability to participate in paid employment, rather than on their disability.

The report makes reference to the changing composition of the DSP population. Over the past decade or so, the proportion of recipients with a musculo-skeletal and connective tissue primary medical condition has been falling while the proportion of recipients with a psychological/psychiatric or intellectual/learning condition has been rising. As at March 2014, 31.7% of all DSP recipients’ primary medical condition was psychological/psychiatric, 25.6% had a musculo-skeletal and connective tissue condition, and 12.5% had an intellectual/learning condition.

The report has argued that many psychological/psychiatric impairments ‘are episodic in nature’ and that ‘with appropriate interventions and flexible participation requirements’ people with these impairments can be supported ‘in ways that enable them to gain and maintain ongoing employment’. In a recent speech Minister Kevin Andrews has similarly referred to the changing composition of the DSP population before going on to state that ‘the DSP is a payment we should be reserving for people with severe and persistent incapacity who may never have the option of self-reliance through work’.

However, a number of organisations have taken issue with the unqualified characterisation of mental illness as an episodic condition.

SANE Australia has observed that ‘the episodic nature of mental illnesses is not binary; it is not a matter of going between clear periods of wellness and illness. Rather, individuals with mental illness often live with a shifting degree of disability, dependent almost day-to-day on treatment and support levels, stress, and other environmental factors including stigma’.

As such, the degree to which people with mental illness are able to work, or not, will be heavily dependent on the level of clinical and non-clinical support that is available to them—both in and out of the workplace—as well as the extent of the inherent barriers to employment that they typically face. Thus, while people with mental illness may want to work, they may potentially experience their condition as totally disabling, due to forces beyond their control.

One of the most significant barriers to employment for people with mental illness may be the nature of Australia’s labour market itself. Over recent decades there has been a structural shift in the labour market which has seen a relative decline in employment in production industries and corresponding growth in service industries. Typically, these industries require high levels of social interaction and well-developed communication and interpersonal skills, a demand that many people experiencing mental illness may at times struggle to meet.

A number of commentators have also questioned the notion that a clear distinction can be drawn between permanent and non-permanent impairments where it comes to mental illnesses.

The Mental Health Council of Australia (MHCA) has argued that ‘while permanency may be a meaningful concept for some types of disability, for people with disability arising from severe and persistent mental illness it is far less clear. This is because the symptoms of mental illness are often (but not always) episodic and unpredictable, with someone’s functional impairments changing markedly over time’. Further, for someone with mental illness, ‘‘permanency’ may be assessed very differently depending on when and how the assessment is made and who makes it’.

Given the variability and lack of clarity that is associated with the concept of ‘permanency’, the MHCA maintains that it should be dispensed with as a basis for qualification for DSP. Indeed, in its view, to reserve the DSP for people with a permanent impairment and no capacity to work would be to essentially preserve the current arrangements ‘in which some people with disabilities receive a higher payment but little support to enter the workforce, while others (who are assessed as having a lower level of disability at a particular point in time) receive a lower payment and must meet stringent work participation conditions’.

If the DSP is to be reformed in such a way as to improve the employment participation of people with mental illness, policies will need to be based on a clear understanding of the nature of mental illness and accompanied by significant ongoing support and assistance.