5 August, 2025
“Building resilience” of the economy must include addressing cost of living issues, including reforming the Disability Support Pension (DSP).
A 2022 Senate Committee review of the Disability Support Pension found “overwhelming evidence that the DSP is inadequate and that people relying solely on their payment are too often living in poverty.” The current structure of the DSP is a disincentive to workforce participation, because recipients earning wages have their payments reduced and over time can lose eligibility for the DSP entirely, which removes it as a safety net in the event of changes in employment.
New research undertaken by Deloitte Access Economics, in consultation with Disability Representative Organisations including Down Syndrome Australia and disability employment peak bodies, highlights the major barriers to employment built into the DSP. These are high financial disincentives to earning a modest salary, fear of losing eligibility to the pension and complex administration and reporting. These act as powerful deterrents for recipients to consider open employment.
The Deloitte modelling recommends reducing the taper rate applied to income earned above the free area of $212 per fortnight—from the current 50 cents in the dollar to 30 cents.
The DSA Consortium also recommends a ‘permanent right of return’ to the DSP, regardless of their employment status. People with disability should be able to remain a DSP recipient even if they are in paid work and receiving no DSP payments. This will provide stability for the person with disability and reduce the use of crisis and emergency supports if an individual’s circumstances change suddenly.