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Economist Says Strong Budget Position Driven By Disability Cuts

27 April 2018 at 4:12 pm
Luke Michael
A leading economist believes Australia’s stronger budget position has been built on the back of cuts to welfare payments including the Disability Support Pension, potentially driving increased homelessness.

Luke Michael | 27 April 2018 at 4:12 pm


Economist Says Strong Budget Position Driven By Disability Cuts
27 April 2018 at 4:12 pm

A leading economist believes Australia’s stronger budget position has been built on the back of cuts to welfare payments including the Disability Support Pension, potentially driving increased homelessness.

Stephen Anthony is Industry Super Australia’s (ISA) chief economist, and has worked as a senior policy officer at the Federal Treasury and Department of Finance.

Speaking at a ISA budget preview forum hosted in Melbourne on Thursday, Anthony credited the improved federal budget position mainly to business revenue increases and cuts to welfare payments like the Disability Support Pension (DSP).

Anthony told Pro Bono News that it was likely the budget position was stronger than previously advertised by about five or six billion dollars a year.

“In the budget year 2018-19, the drivers of that fiscal improvement are primarily business revenue increases… but also, almost a billion dollars in lower transfer payments including Disability Support Pensions,” Anthony said.

“And this comes from a compliance crackdown by the relevant government agencies including the tax office.

“The Disability Support Pension is really being reined in now with the eligibility criteria really tightened up. Therefore, the growth in the payment profile has really flattened.”

In February, the Parliamentary Budget Office (PBO) released a report examining the factors underlying a recent decline in DSP expenditure, with new DSP participants declining from a peak of almost 89,000 in 2009-10 to about 32,000 in 2016-17.

The Department of Human Services also revealed that almost 75 per cent of claims for the scheme were rejected in 2016-17.

Australian Council of Social Service CEO Dr Cassandra Goldie stated at the time that the decline of successful DSP applications resulted in many people with a disability being forced onto the Newstart Allowance, receiving $170 per week less.

“Almost one third of people on Newstart Allowance have a partial capacity to work,” Goldie said.

“A partial capacity means a person, because of illness or disability, is defined by Centrelink as only able to work between zero and 30 hours per week. Yet they are forced onto Newstart Allowance, a lower rate of payment than DSP, and must compete with other jobseekers who have full capacity to work.”

Anthony said he believed the tightening of DSP eligibility could be driving homelessness in Australia, which has risen by almost 14 per cent in five years.

“Now we think – and this is anecdotally because we can’t prove this – that part of the story of homelessness in Sydney, Melbourne and elsewhere in Australia is due to this compliance crackdown,” he said.

“In the past, procedural justice suggested that you wouldn’t hold back a payment unless you had contacted the taxpayer and had a long discussion with them about their eligibility and so on and so forth.

“Now there is just more default cancellation occurring. And that’s all well and good, but you would want to be right because these people depend on those payments and if you take them away you put them onto the streets.”

The ISA chief economist said there was a better way for the government to deal with welfare payments.

“A procedurally more just way to deal with this is to deal with each case individually and to establish the facts in each case and determine them, so you can make a judgment call before you cancel the benefits,” he said.

Greens Senator Rachel Siewert told Pro Bono News that she agreed with Anthony’s comments.

“We know that many people who are not successful in applying for the DSP have been pushed onto Newstart, a payment that is far too low for anyone, let alone someone with disability who clearly needs extra supports,” Siewert said.

“The government has been constantly targeting the income support system in their efforts to ‘restore the budget line’, [increasing] poverty for single parents and denying access to/pushing people with disability off the DSP. To be frank, they should be ashamed of themselves.

“There are a myriad of other ways to restore the budget bottom line with plenty of revenue raising measures but that would mean taking on their mates in big business. I urge the government to rethink their approach in the lead up to the next budget and reset their approach to income support.”

Anthony also said the Turnbull government’s decision to scrap raising the Medicare levy to fully fund the National Disability Insurance Scheme was not “prudent budgeting”, echoing disability groups’ concerns that it created NDIS funding uncertainty.

“[The NDIS is] a permanent annual program and one of the larger programs that the Commonwealth administers,” he said.

“However the economy and revenues that are there to offset that in spending, fluctuate from year to year, depending on our terms of trade and our real GDP gross.

“And so to bank one permanent structural program against transitory revenue flows does not sound like prudent budgeting to me.”  


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Luke Michael  |  Journalist  |  @luke_michael96

Luke Michael is a journalist at Pro Bono News covering the social sector.

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