Disability Support Pension – 2GB Breakfast with Chris Smith
E&OE
CHRIS SMITH
Now do you know someone on a disability pension who you’re convinced shouldn’t be getting it? It does leave a bad taste in taxpayers’ mouths. Well this Christmas might be the last one they get to live with that kind of support and for some who are rorting the system, that kind of bludge off taxpayers’ money, with news the Federal Government is going to put disability pension holders under the microscope. Now it’s a review which comes at the cost to taxpayers, which has ballooned to more than $15 billion, that’s for the Disability Support Pension. Each and every year $15 billion, with more than a million people now on a disability pension.
Social Services Minister Kevin Andrews is the man on Tony Abbott’s team who’s come up with a new two-tier system to stop people rorting the system. We’ll find out all about it right now. Minister, good morning.
KEVIN ANDREWS
Good morning Chris.
CHRIS SMITH
Been so many decades since we’ve spoken. It seems like that, but you’ve been around for decades and I appreciate your time this morning.
KEVIN ANDREWS
My pleasure.
CHRIS SMITH
How did the number of DSP recipients reach such extraordinary levels? That’s a big number, to think that one million people have access to a disability pension.
KEVIN ANDREWS
It’s not quite a million Chris, but the reality is it’s been growing over the years. In the last decade alone it’s grown by about 22 per cent. So it’s a very large number of people who are of working age, who are not working, not on unemployment benefits, but pretty much parked with a dead end payment.
CHRIS SMITH
Is that because, and you’re probably getting feedback from those in the department, is that because people don’t want to go through the rigours required to be on a Newstart Allowance or an unemployment benefit, but the disability pension is a simple process to go through for a similar benefit?
KEVIN ANDREWS
Well there’s a perverse incentive for people to get onto the Disability Support Pension because it’s indexed at a higher rate than the unemployment benefit.
CHRIS SMITH
Aha.
KEVIN ANDREWS
That gap between the two has been growing year by year. It pays about $133 more than the Newstart Allowance, the unemployment benefit, and as I said, that then provides a perverse incentive for people to get onto the DSP, rather than be on an unemployment benefit and searching for work.
CHRIS SMITH
Yeah. So how will your new system work and why are you introducing a new system, because this is costing you too much? Is it a matter of money or a matter of fairness?
I think I might have lost the Social Services Minister. That phone went totally dead didn’t it? Have I got you Kevin Andrews? No. Sam, we’ll try and get the minister back on the line if we can, because we’ve lost him completely. It just went completely dead, which is extraordinary. We’ll grab a quick break and try and get back with Kevin Andrews.
I’ve got the minister back, the Social Services Minister. I don’t really know what happened there Mr Andrews.
KEVIN ANDREWS
I’m sorry about that Chris, the line just went dead.
CHRIS SMITH
No that’s okay. Now, how will your two-tier system work and are you doing this to save money or is it a matter of principle here?
KEVIN ANDREWS
This is primarily a matter of principle. It arises from a concern that if the numbers continue to balloon the way they are, then it’s going to become unsustainable in another ten years to provide the welfare system we’ve got. I believe that welfare should be provided, it should be a safety net and it should be for people who are in disadvantaged circumstances and can’t get a job or through genuine illness are unable to work. So this is about actually trying to ensure that into the future, particularly with a rapidly ageing population, we have a sustainable welfare system.
Secondly, when we did welfare back in the – about 2005, when I was the Employment Minister in the then Howard government, we did some welfare reform then. We tried some things to change disability support, but didn’t have much effect. But we did make some changes to the sole parent pension. That cost us about $3 billion at that stage to do the welfare reform. Any savings are in the medium to long term, not the short term.
CHRIS SMITH
Right. So how will it work? There is a component here that would limit new entrants to payments if their disability was not permanent.
KEVIN ANDREWS
Well what – we haven’t made any decisions yet and to put it in context, I have a group working on this. I have Pat McClure, the former head of Mission Australia, who did a major report on employment and unemployment for the Howard government, as part of that review. And they’re working on it at the moment and they’ll continue for a few more months yet. There’s a number of proposals around, one is that instead of putting people permanently onto the DSP we put any new entrants onto it for a limited period of time, maybe three years or five years et cetera and look at how we might be able to work with them to get them off the DSP and into work, rather than just putting them onto the DSP and more or less forgetting them.
CHRIS SMITH
Right.
KEVIN ANDREWS
So that’s one of the proposals at the moment. That would therefore create what we’ve called a two-tiered system, where people who have a temporary incapacity, or regarded as a temporary incapacity, might be on that for a period of time but not just on it forever. We also know that there’s a growing group of people who have, what I might call, episodic chronic illness. That is they’ve got an illness which is ongoing but it is…
CHRIS SMITH
Sporadic.
KEVIN ANDREWS
Sporadic. Episodic is the word I think the practitioners use.
CHRIS SMITH
Right.
KEVIN ANDREWS
So for those group of people, if they’ve got an episodic illness, then obviously sometimes they’re capable of working and sometimes they’re not. And so we want to explore whether or not there is a way in which those people can work when they’re capable of working but not work obviously when they can’t.
CHRIS SMITH
Yeah. Now I was interested to read the fact that one third of DSP recipients now argue they could not work based on psychological problems, including depression.
KEVIN ANDREWS
Well the – about 250,000, quarter of a million people, whose primary medical condition is psychological or psychiatric. There’s another 100,000 people who have an intellectual condition or a learning problem. And then you’ve got about 214,000 who have got muscular skeletal injuries.
CHRIS SMITH
So would you direct those sorts of people to the proper medication, to the proper medical people to get them on the mend and get them back into work?
KEVIN ANDREWS
That obviously should be part of our focus.
CHRIS SMITH
Yeah.
KEVIN ANDREWS
I mean we should have a capacity focus or an ability focus rather than an incapacity or disability focus. And obviously that therefore means that we have to look at what assistance would be needed for those people if we can get them into work. But as a said earlier, we’ve got a rapidly ageing population in Australia. The number of people aged 65 and over will be double what it is now in abut 2030. We also know that the [indistinct] in the workforce is contracting very rapidly. So that we’re going to have less people of working age who will need to support a larger cohort of people who are largely older.
Now that puts enormous pressure on our system. That’s why the Government also is having the Commission of Audit at the present time, because we’ve got to be able to work out, how, for the next generation in particular, we can pay for things that we want.
CHRIS SMITH
Yeah, not an easy task. Thank you very much for your time. Have a great Christmas and all the best for 2014 too.
KEVIN ANDREWS
Yeah, you too Chris.
CHRIS SMITH
Good on you, thank you. Social Services Minister Kevin Andrews.