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The head of the Treasury has declared war on Australia's growing reliance on disability support benefits saying "it's hard to believe that an ever-increasing number of people dependent on income support is the best we can do".
Addressing a conference on economic governance Dr Henry said his Tax Review had been told repeatedly "including by those who are themselves disabled" that the present system did not adequately recognise the desirability of people on benefits back to work, with their income "effectively contingent on them working little or not at all".
He presented Treasury calculations that appeared to show that around 1 in every 20 Australians of working age was on a disability pension.
"For many years now there have been more people receiving disability support pensions than unemployment benefits," he told the conference.
While social security and welfare payments had jumped from less than 4 per cent of GDP in the early 1970s to more than 10 per cent today, the proportion of recipients getting the aged pension had "actually fallen"...
The big drivers were sole parent and disability pensions.
The Treasury Secretary said he was concerned about far more than the budgetary impact.
Quoting the Nobel prize winning economist Amartya Sen he said the true measure of human development was "the capabilities that an individual has to choose a life they have reason to value."
He asked whether Australia's system of payments to people with a disability was "making it more or less likely that they are choosing a kind of life that they have reason to value".
Australian National University economist Bob Gregory backed Dr Henry telling the Herald/Age the rules governing disability pensions made it almost impossible for the people on them to improve their lives by seeking work.
"As we have tightened up the rules, people on the benefits have come to realise that taking any part-time work weakens their case for keeping them," he said.
"The benefits are a one-way street. Half of the people get there from unemployment, not from work. When they get there - unless they are very young - they rarely return to the workforce."
An Australian who gets onto the disability pension in his or her 40s is unlikely to leave it until he or she becomes eligible for the pension at around 65 years of age.
Women have replaced men as the drivers of growth in disability pensions, moving on to them in increasing numbers as their eligibility for the old-age pension has been pushed out.
Until the 1980s most of the claimed disabilities were skeletal. Since then the growth has been in mental disabilities which are harder to define.
"It could be because work is getting more stressful," said Professor Gregory. "But we shouldn't be making it hard for Australians who are disabled to return to work."
Dr Henry will present his report to Treasurer Wayne Swan next month. Mr Swan expects to release it early next year.
Published in today's SMH and Age
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