Disability Studies Quarterly
Fall 2005, Volume 25, No. 4
Copyright 2005 by the Society
for Disability Studies

New Paradigms of Disability in Social Security Law and Policy in Australia: Implications for Participation

Sarah Parker
PhD research candidate
Department of Sociology and Social Policy
University of Sydney, Australia
Email: sarah.parker@arts.usyd.edu.au

Professor Bettina Cass
Social Policy Research Centre
University of NSW, Australia
Email: bettina.cass@unsw.edu.au


This paper explores transformations in the form, purpose and administration of income support law and policies for people with disabilities in the Australian social security system. It identifies a paradigm change which has reinforced a medicalized model of the concept and measurement of disability within social security law, effectively removing from policy discourse and practice recognition of the social and economic factors that influence the capacity for labor force participation. We examine the ways in which the current welfare reform agenda of the Federal Government has developed a disability discourse which constructs the individual as the 'problem' within the welfare system. Changes to eligibility criteria and assessment procedures for disability income support are increasingly based on conceptions of an impaired body, while, paradoxically, welfare reform is increasingly focused on the necessity to meet 'mutual obligation' through market participation (the key-words of the 'new welfare'). We explore the extent to which these policy transformations in Australia are likely to facilitate or impede market participation for people of working age with a disability. Wherever appropriate, comparisons are made with disability income support and employment programs in the USA.


A Report by Australia to the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) at the end of the Decade of Disabled Persons states: "Australia has a complex and well-developed social protection system in place that is designed to ensure that people with disabilities can participate fully both socially and economically within the community" (Commonwealth of Australia, 2001, p. 1).

The stated aim of the Federal Government is that people with disabilities should have full inclusion in all aspects of community life, through expansion of the opportunities for independence, access and participation. The Australian disability policy framework is presented as having the following design features: (a) providing assistance to help people with disabilities to participate effectively and fully in social and economic life; (b) ensuring that safety net income support arrangements are in place to support people with disabilities who cannot work; and (c) ensuring all levels of government appropriately assist people with disabilities, their families and their carers (Commonwealth of Australia, 2001).

However, while policy discourse since the early 1990s has reflected more enabling values, questions have been raised about the extent to which policy implementation has embedded these values (Sherry, 2002). To explore one part of this question, this paper outlines and analyses the principles of social security provision and welfare reform implemented and proposed by the Federal government in Australia from 1991, focusing on the Disability Support Pension (DSP). We explore the changing construction of social security law and administration for people with disabilities through the implementation of medical models of impairment as the core of assessment for income support eligibility. While disability welfare reforms over the last 15 years have been characterized as promoting incentives for social and economic participation, the medical assessment model has been accompanied by a systematic disavowal of the significance of social, economic and labor market conditions in providing or constraining opportunities for participation. In addition, the paper shows that changes to disability income support legislation are situated in an overarching welfare discourse, similar to the new politics of welfare in Europe and USA. The 'new welfare' espouses the principle of re-commodification of labor, constituted by a move to policies of workfare, compulsory workforce participation as the eligibility criterion for receipt of benefits, accompanied by the tightening of eligibility rules for income support such that a person's livelihood is increasingly dependent on market participation (Blank and Haskins, 2001; Lodemel and Trickey, 2001; Pierson, 2001; Sainsbury, 2001). Paradoxically, the enforcement of more stringent, medically-constituted criteria for eligibility for disability income support in Australia as well as in the United States may militate against labor force entry and the sustaining of labor force participation.

Situating Australia Internationally

Access to statutory social security provision for people with disabilities affecting their labor force capacity has been established as a social right in a number of countries since the early part of the Twentieth Century and especially during and immediately after World War II. Such programs have been implemented to varying degrees and in different ways, usually shaped by welfare regime models. By the mid-1990s, 163 countries had statutory general disability programs. The types of social security arrangements addressing disability and the extent to which they embed principles of social rights vary, shaped by welfare state institutional patterns, levels of socio-economic development and the prevailing political and social philosophies embedded in welfare regimes (Dixon and Hyde, 2000). In their comparative analysis of social security policies for people with disabilities, Dixon and Hyde (2000) note that most (130) of the 163 countries have a social insurance program characteristic of the European corporatist welfare regimes and the USA, as a liberal welfare regime. Australia is among a minority of countries (with Denmark, South Africa, New Zealand, the Cook Islands and Nauru) having an income-tested, non insurance-type social assistance program. Such a model is consistent with all payments in the Australian social security system, covering the life-course contingencies of old age, disability, severe illness, unemployment, lone parenthood, parenting in low income families where one spouse is unemployed, and constant care-giving for disabled and infirm elderly family members, relatives and close friends (Carney and Hanks, 1994). A social assistance system of this nature, characterized by relatively liberal income and assets-tests to define need and to permit part-time employment while in receipt of benefits, does not require prior paid employment or labor force attachment in order to confer entitlement, and therefore has wider population coverage, especially for women (O'Connor, Orloff and Shaver, 1999).

In contrast to Australia, one of the two avenues to obtain social security support in the United States is predicated upon prior employment history. This is problematic for individuals who have intermittent involvement with the labor market, particularly women and people with an episodic or persistent disability. Income support includes either Supplementary Security Income (SSI) or Disability Insurance (DI). The SSI is similar to Australia's Disability Support Pension in that it is a means tested transfer program targeted to low-income adults with disabilities who meet certain income and assets criteria. However, the DI program is a social insurance program designed to replace the lost wages of adults with disabilities with payments based upon an individual's lifetime average earnings (Wittenburg and Favreault, 2003). Currently, one of the key issues in the United States is that an application for income support sets up a dual process whereby a person has to decide whether to follow a 'disability path' or a 'work path'. David Wittenburg (2003) states that: "On the disability path, as soon as you start applying for SSA (Social Security Administration) disability benefits — either SSI or DI — there are no temporary options for cash support, for health care support, or rehabilitation support; it's an all or nothing proposition". This results in tensions between the disability definition for SSA disability programs and efforts to provide return-to-work services to participants receiving income support due to the eligibility criterion requiring successful applicants to prove an inability to work (Wittenburg and Loprest, undated).

Australia, on the other hand, has a single means-tested program for disability income support which, because it is not predicated on employment based insurance contributions, has more extensive coverage, especially for women, and covers people with disabilities who have had no or little prior work force history. Nevertheless, as will be discussed below, the opportunities for employment while on income support are severely restricted.

To evaluate the various social security programs, Dixon and Hyde (2000) use a design-feature evaluation methodology based on social security dimensions considered by the International Labour Organization (ILO) to constitute a conservative, minimum standard set of statutory social security values or criteria, comprising: (a) universality of coverage; (b) minimal restrictions with regard to categorisation, general qualifying eligibility requirements, and specification of needs-assessment criteria; and (c) provision of periodic cash payments as entitlements that enable recipients to maintain their customary lifestyle, relative to the prevailing community living standards.

According to this evaluation, social democratic and corporatist welfare regimes (including Austria, Denmark, Sweden, Finland, Norway and Portugal) dominate the global disability income support league table, but Australia is deemed to have the best designed disability program (Dixon and Hyde, 2002). We will examine this evaluation in the light of another highly significant criterion not included in the evaluation methodology: the extent to which income support arrangements facilitate or impede labor force participation.

One of the key issues when assessing the effectiveness of disability policy comparatively or within a country is reconciling the twin but potentially contradictory goals of disability policy. This problem is summarized by an OECD Report published in 2003 and entitled Transforming Disability into Ability: policies to promote work and income security for disabled people, which states:

One goal is to ensure that disabled citizens are not excluded: that they are encouraged and empowered to participate as fully as possible in economic and social life, and in particular to engage in gainful employment, and they are not ousted from the labor market too easily or early. The other goal is to ensure that those who are, or who become, disabled have income security: that they are not denied the means to live decently because of disabilities that (may) restrict their earning potential. How to reconcile these twin goals has yet to be resolved (OECD, 2003a, p. 3).

Dixon and Hyde (2000) conclude similarly that there are a number of problems inherent in contemporary social security systems for people with disabilities. These are: (a) the creation of poverty traps because existing social security programs for people with disabilities reinforce benefit dependency since earnings from employment typically fail to compensate for income losses which would result from benefit cessation; (b) inadequate benefits because benefit levels are often insufficient to promote a standard of living that is commensurate with that enjoyed by non-disabled people, particularly if benefit levels do not adequately compensate for the additional costs of disability; (c) unfair discrimination, because disability programs in social insurance welfare regimes privilege the interests of people who have previously been in paid employment, particularly those who have accumulated sufficient contributions to qualify for earnings-related benefits. Such programs discriminate in particular against women with disabilities, who, because of minimum contribution or employment period requirements may be forced to rely on the less generous benefits, which may be provided by social assistance safety net programs; (d) poor targeting, because disability benefits do not vary according to the severity of impairment, as distinct from the earnings loss suffered as a result of disablement, e.g. under a compensation model; and (e) administrative complexity, because disability benefits usually involve a bewildering array of coverage and eligibility criteria, which may prevent some from receiving the benefits to which they are entitled.

Another key problem inherent in social security systems not addressed by Dixon and Hyde is the difficulty for people with disabilities to accumulate assets. Michael Morris (2004) argues that very little attention has been given in the United States to the barriers or facilitators to advance the economic independence of people with disabilities. Compounding this is that disability is usually viewed both in Australia and the USA from the medical model perspective where disability is a 'problem to fix' and therefore the ability for people with disabilities to accumulate assets has not been examined. People with disabilities often have interrupted work histories which affect their asset accumulation and this is evident in their low home ownership rate which sits at under 10 per cent in the United States (the Law, Health Policy and Disability Center [LHPDC], 2003). Comparative figures are not at this stage available for people with disabilities in Australia, but the data on rates of home ownership show the relatively low rate for low-income households, in which category people with disabilities are predominantly situated (Cass, 1998). In addition, analysis of the second main form of asset accumulation in Australia, employment-based superannuation savings for retirement, shows that people with no, or an interrupted labor force history, where incomes are low and predominantly derived from income support, have little or no superannuation entitlement, and are therefore likely to have very low incomes in old age (Shaver, 2001).

Disability policies in Australia currently entail conflicting objectives — social security recipients are encouraged to participate in the labor market while simultaneously having their personal assets and income constrained by a variety of both income support and employment-related mechanisms. The OECD Report (2003a, p. 64) notes that the "inherent dilemma of disability policy" is that in order to become and remain entitled to income support, people have to be officially categorized as disabled ("unable to work"), while policy in most industrial countries is moving towards the valorisation of market work and the delegitimation of income support. In response to this perceived dilemma, a number of countries have tightened access to income support eligibility in order to reduce the numbers of recipients through a more stringent assessment procedure. This policy response has included one or more of the following: (a) a more regulated and standardized medical assessment procedure; (b) use of an abstract, rather than specifically-located labor market criterion; (c) emphasis on granting benefits on a more temporary basis; and (d) reduction in benefit levels (OECD, 2003a, p. 141).

Furthermore, there has been recognition in a number of liberal welfare states of the differences between income support programs and anti-discrimination law, as in Australia where disability income support arrangements are not based on principles of rights and therefore cannot call upon 'rights' to justify eligibility. One of the key problems with disability income support eligibility requirements is the sending of conflicting messages. For example, Wittenburg and Favreault (2003) argue that in the United States the Americans with Disabilities Act (ADA) promotes employment and independence for adults with disabilities while concurrently, eligibility for SSA disability programs requires a person to prove an inability to work to obtain benefits. The same observation is pertinent for Australia.

The OECD Report proposes that the key issue in improving the labor market integration of people with a disability is to transform the very perception of disability, which should no longer be equated automatically with being unable to work in the market. Eight policy objectives are recommended to achieve more equitable integration of people with disabilities: (a) introduce a culture of mutual obligation; (b) recognize the status of disability independently of the work and income situation; (c) design individual work/benefit packages for persons with a disability; (d) promote early intervention; (e) involve employers in the process; (f) restructure benefit systems to remove disincentives to work; (g) reform program administration; and (h) improve coordination of transfer schemes (OECD, 2003a).

While a detailed analysis of each of these objectives is beyond the scope of this paper, it is important to note the prominence which is placed upon the objective of re-commodification: re-defining and re-positioning the person with a disability as a potential market worker. Underpinning the OCED's analysis of disability policy is the valorisation of labor force participation, and it must be noted, a masculine model of labor force participation. Work is equated totally with market work, and no recognition or policy space is given to the modes of work constituted by informal, non-market care-giving in families, extended kin households and community-based voluntary organizations. This re-positioning of people with a disability as potentially market workers is framed within a wider welfare discourse which posits a person with a disability as 'welfare dependent' unless economically active, rendering other forms of social participation invisible and far less important. Use is made of terminology such as 'passive dependency' to describe the effects of current disability policy. This resonates with welfare reform measures in various countries, namely, the trend to re-commodification, with consequent de-legitimating of income support by depicting it as generative of dependency (a dependency which has both financial and moral/psychological overtones), bringing disability policy into line with unemployment policy and policy for lone parents (Sainsbury, 2001; Lodemel and Trickey, 2002; Macintyre, 1999; Brennan and Cass, 2005).

The Australian Labor Market Context

What are the Australian labor market circumstances in which changes to the disability income support regime are located, and in which re-commodification is valorized? Borland, Gregory and Sheehan (2001) identify three inter-related features of economic developments in Australia over the last 25 years and especially in the 1990s: a significant change in the employment structure with a shift from full-time to casual part-time jobs and an increasingly unequal distribution of better paid jobs; increased inequality in earnings in the better paid jobs which are available, and in particular within full-time jobs; the growing polarization of households into 'work rich and work poor', with some households having access to several jobs and working long market hours in total, while an increased proportion of households have no or little paid work.

In keeping with these labor market transformations, there have been substantial impacts on individuals' sources of income, as a greater proportion of the employment-age population has become reliant on social security income support in periods of labor force exclusion or marginality. Since 1966, the proportion of people of workforce age who receive social security payment, service pensions or student assistance, increased from 4 per cent to 12 per cent in 1980 and then to 21 per cent in 2000 (Henman and Perry, 2002). This increase occurred as a result of long-term unemployment, involuntary labor force withdrawal before the normal retirement age, accompanied by increased rates of severe illness and disability and consequent claiming of disability and sickness income support payments, and the joblessness associated with child care responsibilities for lone parents (Saunders, 1994). In addition, increasing numbers of people have come to rely on income support not to replace but to supplement their market earnings, which is permitted, indeed encouraged, within the design of social security income-tests (Landt and Pech, 2000; Henman and Perry, 2002).

It was in the context of a "growing concern about the extent of welfare dependency in Australia", as stated by the Minister at that time responsible for social security, Senator Newman (1999, p. 3), that the Federal Government commissioned the Reference Group on Welfare Reform to examine and address the increased demands on the Australian welfare system. The recommendations in the Final Report of the Reference Group, (often called the McClure Report after its Chairman) have provided some of the legitimating discourse for contemporary welfare reform in Australia, and in particular have placed firmly on the policy agenda the key words of 'mutual obligation' and 'participation' (Reference Group on Welfare Reform, 2000). The recommendations of the Final Report rest on the fundamental premise that the welfare system must assist the social and economic participation of individuals, with priority accorded to market participation (Shaver, 2000). To its credit, the Report acknowledges that there are some people who face structural or systematic barriers to participation, including discrimination and problems with access to appropriate services and support. The Report states: "People with a disability face barriers to economic and social participation due to their impairment but also low expectations of participation by other community members and employers (Reference Group on Welfare Reform, 2000, p. 38). The Report did not explicitly include people with disabilities within the scope of its recommendations for a more rigorous regime of mutual obligation to enforce labor force participation. However, as noted above, the OECD Report Transforming Disability into Ability: policies to promote work and income security for disabled people (2003a) did invoke that principle as potentially effective in constructing 'active' employment and training policies for disabled people, in conjunction with income support.

There is abundant evidence that in Australia and internationally people with a disability have poorer labor market outcomes compared with the overall population of workforce age. Employment disadvantages are constructed not only by the individual's impairment, but also by structural and attitudinal barriers pertaining to employment hiring and staff retention practices and to the organization of workplaces. Analysis of employment rates for disabled people of work force age in selected OECD countries (where data are available) show that the average employment rate for people who report that they have a disability is 27 percentage points lower than for other workers: with employment to population ratios of 44 per cent and 71 per cent respectively (OECD, 2003b). An examination of labor market outcomes for people with disabilities in Australia, compared with outcomes for non-disabled people, reveals that people with disabilities have: Significantly lower rates of employment; a much higher rate of receipt of income support; and a much lower mean income (Wilkins, 2003, p. 24).

The employment rate for men with a disability is 52 per cent compared with 86 per cent for non-disabled men; for women, the figures are 42 per cent and 67 per cent respectively. Also, employed people with a disability are considerably more likely than non-disabled people to be in part-time employment, and thus subject to lower earnings (Wilkins, 2003). Constraints such as difficult access to workplaces, including the additional time and cost of transportation, lack of appropriate arrangements in workplaces (e.g. the lack of opportunity to vary working hours), coupled with prejudices among many employers, co-workers and the general public, may exacerbate an already difficult situation (O'Reilly, 2003). The operation of the labor market and the social organization of employment in each workplace play crucial roles in shaping the category of 'disability' and in determining the response to people with disabilities.

As part of the Australian Federal Government's strategy to increase workforce participation among disability income support recipients, the Department of Employment and Workplace Relations (DEWR) conducted a pilot project between December 2003 and June 2004 to explore ways of increasing the number of Disability Support Pension (DSP) recipients using Job Network services. The Job Network is the dispersed system of not-for-profit and commercial employment agencies funded under Federal Government contracts to provide employment advice and referrals for unemployed people and to monitor their compliance with their mutual obligation agreements. A further responsibility of Job Network agencies is to report on clients' breaches of their agreements to Centrelink, the government authority which oversights the administration of benefit payments and which may impose financial sanctions in respect of agreement breaches (Carney and Ramia, 2002.) At this point, unemployed people in receipt of income support are obliged to use the Job Network services, while people with a disability in receipt of DSP do not have this mandatory obligation, but they may access the Network in a voluntary capacity. The interim results of the pilot project, released in October 2004, showed that the majority of people with disabilities wish to engage in paid employment, but a range of disincentives impact on the realisation of their workforce aspirations, including: (a) fear of losing the DSP and associated benefits, coupled with concerns about ability to retain the pension as a safety net or re-establish eligibility for the DSP if employment cannot be maintained; (b) a lack of awareness of currently available work incentives such as the relatively liberal income test allowing for workforce earnings, the continuing availability of some concessions as market earnings increase; and the pension suspension arrangements which operate when employment is accessed; (c) insufficient guarantees of a return to pension support if the person loses their job; (d) negative experiences with employers and a lack of employer awareness of disability and discrimination issues; and (e) lack of workplace accommodations for the varied circumstances of people with diverse types of disability (DEWR, 2004a).

In response to this pilot study, the president of the peak advocacy body of welfare organizations in Australia, the Australian Council of Social Service (ACOSS) stated that: "This pilot study underlines how hard it is for people with disabilities to find work and the importance of employment assistance. Of the 1,100 voluntary participants who started this pilot only 57 per cent completed it and less than 10 per cent of them obtained a substantial paid job." (ACOSS, 2004)

In their international study, Dixon and Hyde (2000, p. 726) similarly noted that the central problem with disability policies is that at best they ignore, or at worst frustrate, the achievement of economic and social inclusion through the attainment of satisfactory employment.

To address this problem in the United States, the Department of Labor (DOL) and the Social Security Administration Office (SSA) have established a Disability Program Navigator (DPN) initiative to provide comprehensive information resources for people with disabilities about the work support programs available at DOL One-Stop Career Centers. A primary objective of the DPN program is to increase employment and self-sufficiency for people with disabilities through linking them to employers and facilitating access to programs and services for entry or re-entry into the workforce (LHPDC, 2004). The DOL program is the focus of a two-year pilot demonstration project and is designed to: (a) provide seamless and comprehensive services to persons with disabilities in One-Stop Career Centers; (b) increase employment and self-sufficiency for social security beneficiaries and others with disabilities; (c) facilitate access to programs and services; and (d) facilitate linkage to the employer community (LHPDC, 2004).

Analysis of the DPN initiative is currently underway by the Law, Health Policy and Disability Center (LHPDC, 2004b), which states that their evaluation instrument is not an attempt to measure individual outcomes, but rather to understand the process of system capacity building to support job seekers with disabilities.

The OECD Report on disability policies acknowledges the contradictions entailed in achieving an equitable balance between income support on the one hand, and training and employment opportunities on the other (OECD, 2003a). In virtually all OECD countries, disability benefits remain the main source of income for jobless people with a disability, and even for employed persons with a disability, disability benefits comprise half of total income. Further, the additional costs of disability (transportation, healthcare, pharmaceuticals, mobility aids) are rarely taken into account in providing disability benefits. This recognition of the importance of income security for both employed and non-employed people with a disability demonstrates that while integration into the labor force is a worthy and much sought after goal, income support maintains its status as the bedrock of citizenship entitlement.

It is evident that there are dual, potentially contradictory (though not mutually exclusive or necessarily contradictory) aims of social security for people with disabilities: the provision of social protection and the facilitation of labor force integration. How does the Australian system of social security for people with disabilities measure up to these dual objectives?

The Australian Disability Support Regime

The Federal government in Australia began its involvement with income support for people with disabilities with the introduction of Invalid Pension in 1908, in conjunction with the Old Age Pension. These federal social security initiatives were essential components of the nation-building legislation following the federation of the Australian colonies into the Commonwealth, the establishment of a Commonwealth parliament and federal constitution. The social security payments for age and disability were and remain means-tested, non-contributory social assistance payments based on the principle of 'need', and requiring no prior employment or labor force attachment. Their financing is drawn from consolidated revenue. The eligibility criterion embedded in the Invalid Pension was based on the assumption of total and permanent labor force incapacity - pensioners were not expected to be labor force participants. The pension arrangements, subsequently consolidated into the Social Security Act (1947) (in the time of Post-War Reconstruction) were that a means-tested, flat rate payment would be made to men and women (without regard to prior labor force participation) who were assessed as having a permanent incapacity for work, at least half of which had medical origins, and which constituted an 85 per cent incapacity (Carney and Hanks, 1994). These criteria were largely unchanged in social security legislation until 1991. Eligibility hinged on the functional test of permanent inability to obtain a real job in a real labor market, in other words, labor market conditions - in effect local labor market conditions - were to be taken into account in determining eligibility. It was not expected that recipients would be employed, even part-time, and therefore the emphasis was on 'social protection' rather than support for labor force entry and retention of employment.

Carney (2003) argues that the disability support regime in Australia in the new contractual and mutual obligation environment since the 1990s has become considerably more restrictive and mean-spirited. We argue further that the focus on re-commodification in contemporary welfare reform is likely, paradoxically, to deter and restrict labor force participation by people with a disability who seek to retain the 'protection' of disability income support while taking on the risks of employment, and increasing their hours of employment.

The Invalid Pension in place from 1908 to 1991 provided income support for disabled people based on an assessment of their work-related handicap, taking local labor market conditions into account. Since 1991, when the Disability Support Pension (DSP) replaced Invalid Pension, the legislation has contained a medically derived set of Impairment Tables, which shifts the eligibility base for income support to medically measured impairment (Carney, 2003). The legislative test moved from a focus on the social and economic impact of disability to one which gives greatest weight to impairment and pays significantly less attention to the social dimensions of disability. The Disability Support Pension, introduced by the Labor Government in 1991, was part of the Disability Reform Package, which included labor market and training programs and the enactment of the Federal Disability Discrimination Act. The DSP was seen as a complete departure from the Invalid Pension, with an emphasis on providing income support as well as training, and rehabilitation assistance to maximize labor market and social participation. Recipients were permitted employment for up to 30 hours per week, without losing eligibility for income support. Under the pension income-test, employed recipients are eligible for part pension, which serves to augment their earnings, a form of "work in welfare", recognising the constraints imposed by disability. The maximum of 30 hours a week employment test was not considered to be a risk or a matter of concern at the time of introduction of the DSP, since it was considered that for many recipients, DSP would be a temporary payment. To set a limit lower, e.g. 10, 15, or 20 hours a week, might take persons off the pension too quickly as they increased their work capacity/activity (Yeend, 2002). However, it is apparent that the effectiveness of these objectives relies not only on the form of the income support payment (which is a necessary but not sufficient condition), but also on the way in which the payment is articulated with facilitative training, rehabilitation and subsidized employment. Nevertheless, the principle of permitting a disabled person to be employed for up to 30 hours per week embodies recognition of the legitimacy of work and welfare 'packages' in maintaining reasonable income levels and promoting labor market attachment.

The criteria for receipt of DSP is governed by the following key elements of the Social Security legislation:

94. (1) A person is qualified for disability support pension if:
(a) The person has a physical, intellectual or psychiatric impairment; and
(b) The person's impairment is of 20 points or more under the Impairment Tables, and
(c) One of the following applies:
(i) the person has a continuing inability to work;
(ii) or, the person is participating in a specially approved supported wage program, and
(d) The person has turned 16; and
(e) The person meets residential requirements.

The Meaning of Continuing Inability

94. (2) A person has a continuing inability to work because of an impairment if the Secretary (of the relevant department) is satisfied that:
(a) the impairment is of itself sufficient to prevent the person from doing any work within the next 2 years; and
(b) either
(i) the impairment is of itself sufficient to prevent the person from undertaking educational or vocational training or on the job training during the next 2 years; or
(ii) if the impairment does not prevent the person from undertaking educational or vocational training or on the job training, such training is unlikely (because of the impairment) to enable the person to do any work within the next 2 years.

94 (3) In deciding whether or not a person has a continuing inability to work because of an impairment, the Secretary is not (authors' emphasis) to have regard to:
(a) the availability to the person of educational or vocational training or on the job training; or
(b) the availability to the person of work in the person's locally accessible labor market (Carney, 2003).

Moreover, the assessment of an impairment must meet the criterion that the impairment be diagnosed, treated and stabilized before it can attract a rating. It is apparent that the principle of capacity to access employment shifted from the locally accessible labor market to the more generalized concept of the entire labor market. Most importantly, as Carney (2003) notes, the focus of the DSP hinges much more centrally on medical impairment, and much less on whether or not a real job is available in the locally accessible labor market.

The Disability Support Pension under the 'New Welfare'

Under the new welfare characterized by the mutual obligation programs of the Liberal Party and National Party Coalition Government since 1996, an additional significant measure has been introduced to reform the disability income support legislation and its administration. Policy focus has turned to the 30-hour rule, the number of hours that a person with a disability is permitted to work and retain eligibility for disability income support. Currently under the DSP, work is defined as employment for 30 hours a week at award wages - a generous-spirited entitlement evidently based on providing incentives for recipients to maximize their labor force participation without undue anxiety about loss of pension entitlement. As part of the mutual obligation regime currently concerned with increasing labor force participation among various population categories observed to have low participation rates (Department of Family and Community Services [FaCS], 2003), the Coalition Government has proposed two key legislative changes to the DSP qualification criteria: (a) change the continuing inability to work test from a 30 hour a week limit to a 15 hour a week limit; and (b) change the special inability to work test applied to people with a disability aged 55 years and over from one which considers capacity to access jobs in the local labor market to one which considers the labor market generally; to bring the test into line with the one which applies to younger disabled people (Yeend, 2002).

The Disability Reform Bill went to the Senate and was rejected. This occurred because in previous governments until the government formed following the 2004 election, the Coalition had control of the House of Representatives but not of the Senate. The Disability Reform Bill was amended since its original introduction to enable recipients who were granted payment on or before 30 June 2003 to remain under the existing 30 hour per week maximum employment test, while those granted the payment from that date would be subject to the proposed 15 hours per week limit on their employment. The amended Bill was re-introduced to the Senate and rejected again in 2003. In addition, the Government attached a funding offer to the States and Territories for employment services under the Commonwealth/States and Territories Disability Agreement (CSTDA) which was contingent on the proposed DSP amendments being passed by the Senate. This was the first time that funding allocations for employment services to the States and Territories under the CSTDA were made contingent on the Federal Parliament passing DSP amending legislation (Yeend, 2002). This impediment to the funding of disability programs administered by the States and Territories, contingent on the passing of the social security legislation, was subsequently withdrawn and the allocations to the States and Territories were made. The initial government decision to make allocations to the States and Territories to fund disability employment services contingent on the successful enactment of disability reform legislation in the federal parliament met with severe criticism from welfare and disability advocacy groups (ACOSS, 2002).

The Government's intention to reintroduce the Disability Reform Bill, as outlined above, was flagged after the 2004 election. The clear indications are that the Government's majority of the membership in the Senate since July 2005 has established the conditions for the enactment of the Bill. In addition, in the Budget of 2005-6, the Commonwealth Government announced that from July 2006 new applicants for the Disability Support Pension assessed as capable of working more than 15 hours per week would be diverted to the unemployment payment, Newstart Allowance. This Allowance entails payment rates which are considerably lower than disability pension rates; the Allowance does not attract the same level of concessions; the income-test is much more stringent and constructs higher effective marginal tax rates on employment income; and job search is compulsory. In addition, the reduction of the maximum allowable hours of employment from 30 to 15 hours may act as a brake on disabled peoples' hours of employment while in receipt of disability income support. Such an outcome would be contradictory to the stated intention of the social security changes — to increase labor force participation. This is particularly pertinent in light of Australian studies which demonstrate that one of the key determinants of income support recipients' movement from welfare to employment is having employment experience when in receipt of income support. It would appear from the evidence that combinations of work and welfare are effective precursors to movement off welfare and into employment (Shaver et al, 1994; Saunders, 2002; Flatau and Dockery, 2001).

Moving Towards a Post-Welfare State

The research literature on contemporary welfare reform in a number of welfare regimes points to the ways in which income support has been redesigned as conditional and contractual, in contrast with previous principles of social rights and entitlements (Pierson, 2001; Sainsbury, 2001; Macintyre, 1999; Harris, 2000; Moss, 2001; Shaver, 2002). It is argued that the welfare policy shift has led to a repositioning of the social contract between citizen and government, placing predominant obligation on the recipient/citizen, rather than on government investment in institutional capacity-building which would facilitate engagement in education, training and labor force participation (McClelland, 2002). Furthermore, these policy transformations are underpinned by a shift in the moral and political assumptions embedded in the welfare system such that employment is now considered to be the primary gateway to citizenship and dependence upon income support is seen to be incongruent with citizenship (Yeatman, 2000; Moss, 2001). In their comparative analysis of welfare reform in liberal welfare states (USA, the UK and Australia), Pawlick and Stroick (2004) found that the primary goal underpinning reform is moving the individual towards 'self-sufficiency', especially in terms of employability. There is little interest in labor market and employment restructuring so as to increase the supply of appropriate, secure and well remunerated jobs, but rather a strong emphasis on the design of employment-oriented programs concerned with promoting employability.

In Australia, the new welfare paradigm has defined welfare as a problem associated with a dependency culture and has linked reforms to specific social categories, in particular unemployed people, mature age people who 'exit' the labor force before the usual age of retirement, lone parents and people with a disability (Wilson and Turnbull, 2001). Transformations in the governance of the welfare system which encapsulate new political and moral assumptions of the 'post-welfare' state became more evident after the Federal election in 2004. The Government transferred a range of programs and services previously administered through the Department of Family and Community Services (FaCS) (the Federal Department previously responsible for policy development and administration of all income support payments) to the Department of Employment and Workplace Relations (DEWR) (responsible for employment and workforce participation, as well as industrial relations). Open Employment Services for people with a disability; the Personal Support Program; Job Placement, Employment and Training (JPET) and Green Corps, together with most income support payments for people of working-age (e.g. Newstart Allowance, Disability Support Pension, Parenting Payment) were moved from FaCS to DEWR (DEWR, 2004b). This move signals a new era of welfare governance in Australia. Most aspects of citizenship, participation and self-sufficiency for people of workforce age have been re-framed as participation in paid employment.

How have these policy and governance changes been considered in the literature? Galvin (2004) argues that the language used by disability rights advocates to make claims for community participation has been adopted by government to frame welfare reform as consistent with such emancipatory objectives. For disability activists, concepts such as 'independence', 'access' and 'participation' signify social justice and equality; but these are reformulated by government into an individualized, contractual approach to disability law and its administration. Disability activists see issues such as access and participation requiring structural change within social institutions, particularly in access to education, training and employment and the appropriate organization of workplaces, whereas the 'new welfare' infers that access and participation can be achieved through individual behavioral change (Galvin, 2004). Similarly, Davis and Davis (2000) argue that a welfare reform policy which is intended to empower disabled persons (where empowerment is equated with labor force participation) may instead exacerbate social exclusion. 'Welfare to work' policies can empower people only if suitable jobs, including education, training and transportation to jobs are available to them and if the design of the income support system attempts to maximize and support rather than penalize workforce participation. Kinnear, Grant and Oliver (2003) argue that effective 'activation policies' require a steady supply of appropriate and accessible jobs. Similarly, Abello and Chalmers (2002) encapsulate the disability welfare reform dilemma: while consideration of local labor market conditions is missing from the determination of eligibility for benefits and assessments of work capability for people with disabilities; also missing from the reform agenda is the promotion of disability-friendly work practices such as job redesign, flexible hours, workplace modification, adaptive technologies and accessible transportation.

In the United States, polices that are underpinned by ideologies of 'workfare' center around the Ticket to Work program which is designed to promote work by providing SSI and DI recipients with a 'ticket' to purchase rehabilitation from agencies that provide employment and rehabilitation services (Wittenburg and Loprest, undated). However, despite the existence of work incentive programs for SSA disability participants, there has been continued criticism of the degree to which the current disability system actively promotes return-to-work opportunities. It is argued that the Ticket to Work program will be unlikely to offset the work disincentives embedded in both the SSI and DI, which include high effective marginal tax rates on earnings (approximately 50 per cent in the SSI program) and the potential loss of health insurance if earnings exceed a certain threshold (Wittenburg and Favreault, 2003).


Following the dominant government focus in Australia on disability income support and the tightening of its eligibility conditions and administration, attention has more recently turned to an inquiry into constraints on accessing employment by people with disabilities. The federal human rights agency, the Human Rights and Equal Opportunity Commission (HREOC) which oversees the Disability Discrimination Act, is conducting an Inquiry during 2005 on the issues that affect equal opportunity in open employment for people with disabilities. The objectives of the Inquiry are to: (a) identify systemic barriers to equal employment opportunity for people with disabilities; (b) examine data on employment outcomes for people with disabilities including workforce participation, unemployment and income levels; and (c) examine policies, practices, services and special measures implemented to advance equal employment opportunities for people with disabilities (HREOC, 2005).

In preparation for the Inquiry, HREOC, in consultation with the disability advocacy NGO's, has identified some of the main barriers faced by people with disabilities. There is no 'one-stop-shop' for information, advice and ongoing support about how to enter the open workforce, compounded by a lack of coordination between Commonwealth and State services. Another key issue is concern about the financial costs of education, training and employment participation e.g. transportation, health coverage, particularly after cessation of receipt of the Disability Support Pension (DSP) and its associated benefits (HREOC, 2005). The findings of this Inquiry will be of considerable importance in placing disability employment policies on the public policy agenda. However, such findings, focusing on equal employment opportunity, must not be treated as separate from social security policy, where restructuring in keeping with the 'new welfare' has already been implemented or announced, with little or no reference to employment opportunities and employment conditions.

Focusing on ability to participate rather than inability to work

A key policy area for consideration is job retention, rehabilitation and retraining for people with disabilities. Policy debate must focus not only on workforce return but also on the workplace modifications and work regime accommodations necessary for people with disabilities to retain their previous employment. This would require a commitment by both government and employers to develop more comprehensive programs of re-training, rehabilitation and job retention, supported by government-provided subsidies to employers who provide and sustain suitable employment. In the United States, Wittenburg and Loprest (undated) argue that policy makers should focus on placing program participants in their previous occupations, rather than in any job (as is the requirement under the Ticket to Work program). They suggest that this requirement would change the nature of the disability assessment process, as well as the provision of return-to-work services to focus more specifically on the interaction between impairment and a previous work environment. Disability policies in Germany and Sweden have successfully adopted programs of job retention (Wittenburg and Loprest, undated).

Moving beyond subsistence

A key item missing from the research and policy agenda in Australia is the link between disability and asset accumulation. In considering issues of low income and poverty for people with disabilities and other people facing labor market marginality, the primary focus is usually on adequacy of income support and improving market earnings, underpinned by the principle that maintaining human dignity requires the financial resources to participate fully in social and economic life (Whiteford, 2001). While this is a necessary focus, it is not sufficient. In both Australia and the United States research and policy development pertaining to asset accumulation have largely been neglected. Asset accumulation for people with disabilities is currently the subject of research in the United States with the Asset Accumulation and Tax Policy (AATP) project, whose objective is to identify the ways in which current asset accumulation policies overlook or inadvertently exclude people with disabilities (LHPDC, 2003). In Australia, access to the two major forms of asset accumulation, employment-based superannuation and home ownership is severely undermined by lack of opportunities for lifelong, secure and adequately remunerated employment. While the 'new welfare' for people with disabilities in Australia embraces market participation as the dominant goal, little or no consideration is given to the adequacy of remuneration or the opportunity to acquire assets in the form of home ownership and adequate retirement income. Research on this issue is required in Australia.

It is evident from existing research that policy developments are essential to support and facilitate workforce transitions over a significant time period and to 'make work pay' with disability allowances which recognize the additional costs of education, training and employment, including transportation. Also essential is the provision of workplace flexibility with regard to hours of employment and workplace modifications, subsidized by government. Of great importance is the development of transition programs (transition from education and training to employment and transition from income support to employment) which reduce anxiety and fear through retention of health and pharmaceutical benefits; receipt of in-work disability allowances to offset the costs of participation; and eligibility to re-access income support if employment is not sustainable.

People with disabilities, attempting to negotiate the dual objectives of employment entry, maintaining and increasing their hours of employment while also retaining the security of income support, face a particular set of transitions and risks. Disability income support legislation which embeds a medicalized model of impairment as the criterion for eligibility; disregards the circumstances of the local labor market in providing appropriate job opportunities; and where the risk of loss of benefit increases as employment increases, is not likely to achieve the important objective of increasing labor force participation. Without strong and sustained investment in education, training and subsidized employment programs, and without policy action to establish workplace practices which take account of the particular circumstances of employees with disabilities, greater stringency in disability income support law and its administration, including the placement of a substantial proportion of people with disabilities on unemployment rather than disability income support, may exacerbate social and economic exclusion, rather than promote participation.


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