Budget 2016: More people with a disability move onto Newstart Allowance, but no action to ensure its adequacy

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As discussed in another article in this edition of the Welfare Rights Review (no.5), this Budget not only fails to take action to increase the rate of Newstart Allowance, it contains what is in effect a cut in payments for new recipients.

This failure to address the adequacy of Newstart Allowance is even more disgraceful, given the increasing flow on impact of the tightening of eligibility requirements for the Disability Support Pension in 2011 and 2012.

This has led to a fall in the absolute number of recipients, despite the impact of an ageing population, to 814,391 in June 2015 (with 773,218 recipients under age pension age), down from a total population of 830,454 in June 2014.[1]  In the experience of our members, many unsuccessful applicants are ending up as long term recipients of Newstart Allowance, as they have significant health problems or disabilities and major barriers to finding sustainable work.  This seems likely to be the explanation for the significant increase of 10% in the number of recipients of Newstart Allowance assessed as having a partial capacity to work.  This group, assessed as unable to work for 30 hours or more per week for at least two years, now make up 21% of Newstart Allowance recipients.  The average length of time on income support has also increased, with over 70% on income support for more than a year.

This trend will be exacerbated by the Budget proposal to conduct a further 90,000 reviews of Disability Support Pension eligibility of existing recipients.[2]  Savings from this measure, resulting from moving recipients onto lower rates of payment or off income support are to be directed to the NDIS Savings Fund, along with savings from abolishing carbon compensation for new recipients (discussed here).  These reviews take place against the much tighter eligibility requirements, regardless of when the recipient first qualified for payment.  A recent round of reviews was targeted at those under 35, with about three quarters of those cancelled ending up on another income support payment and about half on Newstart Allowance.[3]  This proposed measure is not targeted at any particular cohort, and may include recipients who have been in receipt of Disability Support Pension for many years and who are likely to end up suddenly on the much lower Newstart Allowance, threatening their housing, social and community ties and mental and physical health, if a review leads to cancellation of their pension.

[2] Budget 2016-17, Budget Paper No. 2, Budget Measures 2016-17, Part 2: Expense Measures – Social Services (“National Disability Insurance Scheme Savings Fund”), accessible at http://www.budget.gov.au/2016-17/content/bp2/html/bp2_expense-21.htm.