Government scraps crackdown on disability support pensioners

Medical review found only 2% did not meet criteria and scheme would cost more than it saved

The federal government has scrapped a policy to review the medical condition of 90,000 people on the disability support pension (DSP) after less than 2% people were found to be ineligible.

During the 2016-17 budget, the government said plans to conduct a medical review of 30,000 DSP recipients a year for three years would result in 2,300 people having their benefits cancelled each year, with 1,800 moved onto a lower Newstart allowance payment.

The measure was forecast to save the budget $61.2m over five years but amid worse-than-expected initial results a government-controlled parliamentary committee last year said the reviews could end up costing more than it saved.

On Thursday, the Department of Social Services revealed the crackdown had been scrapped – but did not reveal if the review had incurred a net loss.

Officials said of the 30,056 reviews that had begun, 28,784 had been finalised, and only 555 people were found to be no longer eligible for the DSP – a success rate of less than 2%.

“In May, I indicated that the department was monitoring that process … and the government has decided not to continue with that measure,” the department secretary, Kathryn Campbell, told the hearing.

The decision was made earlier this month.

Campbell said assessments were still ongoing that tested DSP recipients’ income and assets.

The number of DSP recipients has fallen dramatically in recent years after the eligibility requirements were tightened under the Gillard government in 2012. In 2011-12, the successful claim rate was 69%. By 2014-15, it had fallen to 40.6%.

Officials said on Thursday that 103,005 DSP claims were made in the 17-18 financial year. The success rate for applicants was 29.8%, up slightly from 28.3% the previous year.

Further policy changes under the Coalition have seen thousands of disability pensioners moved onto the lower Newstart allowance payment. Forcing new claimants under 35 to be assessed by a government-appointed doctor pushed 33,000 people off the DSP, the government has previously said.

Rachel Siewert, the Greens Family and Community Services spokeswoman, was “pleased” the crackdown had been scrapped.

But she accused Labor and the Coalition of trying to make savings from people in need, saying Parliamentary Budget Office figures showed the number of new DSP participants had fallen from almost 89,000 in 2009-10 to around 32,000 in 2016-17.

“People whose conditions have not ‘stabilised’ or who don’t meet the stricter eligibility criteria will be most likely be condemned to the lower Newstart payment,” she said.

“So here we have people with disability, needing medical treatments and support living on payments as low as $38 a day.”

On Wednesday, figures reported to an estimates hearing by the Administrative Appeals Tribunal suggested DSP cases were disproportionately represented among Centrelink appeals cases.

In March of this year, there were 758,634 people on DSP. Annual spending on the payment currently sits at around $17bn.