Inequalities In Standards Of Living: Evidence For Improved Income Support For People With Disability

Jinjing LI, Laurie BROWN, Hai Anh LA, Riyana MIRANTI, Yogi VIDYATTAMA

Research output: Book/ReportCommissioned report

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Links between disability and education, employment and income are clearly apparent in Australia. People with disability are at a much higher risk of falling into lower-income groups than persons without disability. This has not only been observed for those of working age but also among the elderly. The financial difficulties faced by people with disability have been recognised by governments around the world who provide cash benefits as income support to individuals and families with disability. In Australia, people who have a disability and are aged between 16 years and the age pension age are eligible for the social security benefit “the Disability Support Pension” (DSP). This is a means-tested payment subject to an individual’s capacity to work assessment. There are approximately 2 million Australians aged between 16 and 64 years who report having a mild to profound disability but only 35% receive the DSP.

In the May 2005 federal budget, the Government announced a measure that people with disability who apply for income support after 1 July 2006 and who can work between 15 and 29 hours a week at award wages would be placed on the Newstart Allowance (NSA) (or Youth Allowance) rather than the DSP. Since 2006, these individuals have become known as the ‘partial capacity to work’ group of beneficiaries. However, the NSA provides a significantly lower benefit and has a more stringent income test. Since 2006, eligibility for the DSP was further tightened in 2012 and 2014-15.

NATSEM modelling of the 2006 budget measure suggested that the living standards of people with disability could be cut by up to 31% compared with the tax and transfer system in 2005. As Soldatic and Sykes (2017) comment, the relationship between disability and poverty is extremely complex but it is clear that a significant number of Australians with disability and their families are now living in poverty.

The United Nations Convention on the Rights of Persons with Disabilities (CRPD) (UN, 2008), and Australia’s National Disability Strategy (NDS) (COAG, 2011) call for income support to be provided to people with disability through policy instruments such as the DSP. The purpose of the CRPD and NDS are to promote an enhanced quality of life for people with disability and their carers including opportunities for people with disability to fully and effectively participate in all aspects of economic, social and political life, opportunities to live independently and actively engage in their communities, as well as families and carers being well supported.

It is now 13 years since the welfare-to-work change to the DSP was first introduced in 2006. While the DSP remains the main social security payment for working-aged individuals with disability, the evidence base on the impact of policy changes to the DSP since 2006 on the financial well-being of many Australian families is lacking. Are households with family members with disability on the DSP (or NSA) at increased risk of financial insecurity, poverty and lower living standards compared with households where no family member has disability? To what extent do current levels of income support protect households reliant on the DSP as their main source of income from financial insecurity and poverty? If there are major gaps in the living standards of households with and without members with disability, then what level of income support is required through the DSP to substantially reduce these inequities? What impact would broadening the eligibility criteria for the DSP e.g. allowing people with disability now on the lower NSA to be included back on the DSP, have on the financial wellbeing of people with disability and their families? This report attempts to answer these key policy issues.

Key findings:
•Households with a member with disability, and receiving either the DSP or NSA, are much more likely to experience financial hardship and insecurity.
•This is compared with all households or households with a member with disability receiving the Age Pension (see Table 1). The number of families with someone receiving the DSP answering ‘yes’ to the 16 questions in Table 1 was at least double that of all Australian households.
•Households with an adult with disability on NSA or Aboriginal and Torres Strait Islander households with a member receiving the DSP are at an even higher risk. The number of NSA households was more than twice all Australian households on 15 of the 16 indicators. Aboriginal and Torres Strait Islander DSP households were more than double.
•An estimated 40.8 per cent of Aboriginal and Torres Strait Islander households with a family member on the DSP said that they had run out of money for basic living expenses in the last 12 months.
•Nearly one-in-four Australian households thought their standard of living was worse than two years ago. Over onethird of households with someone receiving DSP thought their standard of living had dropped. And a staggering 55 per cent of those receiving Newstart thought their standard of living had dropped.
•To have the same standards of living of similar households without a member with disability, households with someone with profound or severe disability needed $173 a week on average more than their 2015–16 income.
•Households with someone with mild or moderate disability needed an extra $87 per week on average (Table 2).
•However, the gap in standard of living was as high as $277 a week for couple households on the DSP and $489 for couple households with an a member with disability on NSA.
Original languageEnglish
Place of PublicationAustralia
PublisherAustralian Federation of Disability Organisations
Commissioning bodyAustralia Federation of Disabilty Organisations
Number of pages65
Publication statusIn preparation - 17 Sept 2019


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