There’s been a lot of sturm und drang about the disability support pension at the moment. Rather than wade into the policy debate per se, I thought I’d try to shed a bit of light on pension recipients themselves. First of all, as has been made abundantly clear in the public debate, there is an increasing number of recipients.
But this is hardly surprising: the size of the Australian population has been growing as well. If we look at the number of recipients as a proportion of the population, we’d have a better idea of whether or not growth in DSP numbers is something to worry about.
But what population should we look at? Children under 16 don’t receive the DSP, and only a very small number of people above the pension age do (most people with disabilities over pension age go on to the old age pension, as we’ll see below.)
Well, we could consider the working age population. That’s normally considered to be those between the ages of 16 and 65. The ratio of DSP recipients to this broad definition of the working age population is shown as the orange dashed line below. As you can see, there has been a bit of a ‘bump’ in recent years, although it seems to be heading downwards.
And if we’re considering people between the ages of 16 and 65, then we should probably ignore the small fraction of DSP recipients outside these ages when we’re comparing recipients to the population. The ratio of working age DSP recipients to working age population is shown as the blue dashed line.
But there is another complication: the differing pension eligibility ages for men and women. It used to be that men qualified at 65 while women qualified at 60, but from 1995, the age at which women qualify has slowly been brought into line with the male eligibility age. This can blur analysis of the DSP, since women who would otherwise have transferred from the DSP to the old age pension at 60 must now wait longer. In order to correct for this, I’ve also calculated the DSP recipient-population ratio when the population is between 16 and 65 for men and between 16 and 60 for women. That’s the red line in the graph above. And, as you can see, it’s particularly undramatic.
So who are the people who are qualifying for DSP? How were they surviving before qualifying for DSP? Well, it turns out that there’s been a fairly even split between new entrants to DSP who were previously on another form of government payment — Newstart allowance, say — and those who were not.
When they leave the DSP, where do they go?
It turns out that somewhat more than half go onto another government payment, while slightly under half of exits from DSP are due to deaths or recipients no longer receiving any government income support payments.
Long-term recipients of income support make up a large part of DSP recipients, as you can see in the following graphic, which gives an indication of how long current DSP recipients had been on some variety of income support (whether by staying on the DSP longterm or by moving from the DSP from some other income support programme like Newstart). However, when interpreting this numbers it’s wise to remember that policy changes—for example, the change to the eligibility age for females for the old age pension—contribute to these trends. For example, some of the increase in the number & proportion of long-term income support customers on DSP will no doubt arise from the fact that women who would, before the OAP changes, have moved from DSP to the pension now remain DSP recipients for longer.