Rethinking Income Limits for Disability Pension Recipients

Today’s post by Brandon Maki was commissioned by the Antipoverty Centre. Brandon is on the Disability Support Pension (DSP) in Australia and has written about the income free area and the focus of pushing people into work.

Introduction

During budget-time, Liberal leader Peter Dutton suggested that JobSeeker recipients should be allowed to work more without losing part of their payment due to ‘income testing’. While Dutton’s comments ultimately come from an anti-welfare perspective, his presentation of the seldom-discussed issue of income testing presents me with an opportunity to discuss the profound impact it has had on my life as a Disability Support Pension (DSP) recipient.

Income testing refers to the thresholds for how much a person can earn before their Centrelink payment is cut off or limited. While Dutton was focused on JobSeeker recipients, the detriments of income testing extend to all Centrelink recipients. In this article, I argue especially for the removal of income testing for Disability Support Pension (DSP) recipients due to disabled peoples’ increased economic and social marginalisation. However, this emphasis on the DSP should not be misconstrued as diminishing the importance of addressing income testing for other welfare recipients.

Disabled people are more likely to be long-term unemployed, face multiple health issues and associated costs, and be socially isolated. Since access to formal employment can improve outcomes in these areas, the employment-deterring effect of income testing is actively harmful to DSP recipients in particular.

As I’ll elaborate, removing or alleviating the income tests would not only benefit DSP recipients but also the wider community economically and socially.

 Welfare traps and government hoops

Governments have been trying ever since the DSP was established to cut costs by forcing disabled people to jump through hoops and putting strict requirements on their pensions. Yet hoops used for Centrelink payments like mandatory engagement with employment services are ineffective and detrimental to well-being. Combined with these hoops, restrictions like the income test create a ‘welfare trap’ for those who want to look for formal paid work.

The welfare trap idea is simple – if income restrictions mean people on DSP will not benefit enough from working compared to the added hardships they will face, they are disincentivised to find work. Many DSP recipients have some degree of work capacity and would like to work despite the many barriers. However, if they find work then they will lose part of their pension; after earning $190 in a fortnight, they lose fifty cents from every further dollar earned.

This is a clear example of a welfare trap and a huge disincentive for those looking to work. The barriers to working for disabled people are already hard enough, like many I struggle to push through the pain of multiple physical and mental disabilities, on top of discrimination at work and in the hiring process, and government-imposed hurdles. The situation is exacerbated by the low-income testing threshold, as my payment would start to be cut after working just one day at almost any legally paying job. It’s easy to see why someone might say it’s simply not worth fighting these barriers to finally earn the prize of a job that takes away 50 cents for every dollar you earn.

The income tests are just one of the government-imposed hurdles faced by people on the DSP. Among other issues, people on the DSP are not allowed to study full-time (which could enable more accessible work opportunities), have limits on how much they can work without affecting their partner’s or carer’s payments, face re-assessment and revocation of their pension if they report that they are working, and they can only work 30 hours a week before their payment is cancelled. All these barriers make it very difficult for a person on the DSP to join in the many social benefits that the working world brings.

Benefits of work

Disabled people should have the right to the social benefits of fair, meaningful and equitable work. For the average person, work provides a huge amount of meaning, occupation, and social fulfilment in their lives. Work is not just what takes them out of poverty, it is their social life, a source of self-esteem, their impact on the world, their legacy, and their reason to get out of bed in the morning.

Ideally, all these things would not be tied up in formal work; there would be ample time and space for community outside of work, and non-working people would not be shamed. However, when society is built around everyone being in formal work most of the day, it’s very hard to build alternative forms of community and find other paths to fulfilment. Lack of work leads to depression, poverty, social isolation, higher rates of mental illness, and poorer overall health. As such, it is necessary to ensure that all those who want to work can do so, so that they can have access to these social necessities of life.

Nevertheless, one should be aware that these issues are often used as reasons to further oppress non-workers and disabled people. On both the Labour and Liberal sides the arguments for the ‘benefits of work’ have been used as an excuse to kick people off Centrelink, force unpaid Work for the Dole, and enact a system whereby disabled people can be paid less than $2.50 an hour.

The economic argument

A large number of studies show the economic benefits of unconditional pensions and basic income. The benefits of providing a DSP without an income test could significantly outweigh the costs. While the state would pay out more in pensions to disabled workers, they would receive more in taxes, enable upward mobility, cut administrative costs, and allow many productive workers to enter the economy. As such, it seems very likely that any initial cost would be overshadowed by the economic benefits.

Conclusion

The government has a responsibility to ensure that its disabled citizens can access the social and economic benefits of formal employment. As disabled people, we have felt the effects of constant government messaging that disabled people must be forced into formal work. The answer has been staring them in the face for a long time – if you want people to work, let them do so. There are enough barriers to employment for disabled people as it is without income tests and other hurdles placed in front of us.

Finally, while I have argued that DSP recipients need urgent consideration on the issue of income testing, it is also important that concurrent action is taken to address the fact that nearly half of JobSeeker recipients are disabled. Disabled people on JobSeeker face even greater hardship as they are excluded from the higher pay rate of the DSP. Introducing changes to income testing only for DSP recipients would increase the arbitrary divide between DSP recipients and disabled JobSeekers. As such, action must be taken to move disabled JobSeekers onto a reformed DSP and to create an equitable solution to the income testing problem for all. Rather than setting up an expensive and invasive system of investigation into who is ‘disabled enough’ to ‘deserve’ exemption from income testing, the best answer may be the complete removal of income testing for Centrelink recipients.

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Note: The Antipoverty Centre raises funds independently to pay people on low incomes to write about their experiences, participate as event speakers, and attend parliamentary hearings and other activities. The link to donate to the Centre’s Admin Fund, which includes a dedicated writers’ fund, is here. Posts commissioned by the Antipoverty Centre are collated here.

Content moderator: Sue Olney