Academic journal article Australian Journal of Social Issues

The Costs of Disability and the Incidence of Poverty

Academic journal article Australian Journal of Social Issues

The Costs of Disability and the Incidence of Poverty

Article excerpt

1. Introduction (1) (*)

Although both disability and poverty have been subjected to extensive research, relatively few Australian studies have examined the relationship between these two important social issues. One consequence has been that poverty research has had little influence on disability policy, where attention has focused on the growing numbers of Disability Support Pension (DSP) recipients and the low employment rate among people with a disability. These patterns have been examined in several studies, their findings prompting calls for action to cut the growth in benefit recipient numbers. (2) The welfare to work reforms introduced in July 2006 will divert many new DSP applicants onto the lower rate of Newstart Allowance (NSA), depending on their assessed capacity to engage in paid work, yet little is known about the adequacy of either benefit in meeting the costs of disability. A consequence is that the impact of these (and other) reforms on the living standards of those affected by disability is largely unknown. Exploring the association between disability and poverty can contribute to a more balanced debate of policy goals and impact, and this paper contributes to that task.

The paper explores the association between poverty and disability, before and after taking account of the costs of disability. Poverty has been defined in narrow income terms, not because this framework is capable of capturing what it means to be poor in a modern society, but because the focus is on estimating the monetary costs associated with disability and how this affects the relative risk of experiencing low-income. An income approach is appropriate for this task, since the goal is to compare poverty rates between groups rather than make a definitive assessment of how much poverty exists overall--a task that inevitably raises controversial issues about how poverty is defined and measured (Saunders, 2005a). Although the approach focuses on the economic costs of disability and how these affect estimates of economic poverty, there is no suggestion that this is the most important aspect of disability, nor that other aspects do not that warrant separate examination

The paper is organised as follows: Section 2 provides an overview of previous Australian research on the association between disability and poverty and reviews the different methods that have been used to estimate the costs of disability. Section 3 describes the data that have been used to apply these methods to Australia, and Section 4 compares the incomes and poverty rates of households classified by their disability status using the conventional approach that makes no allowance for the costs of disability. Section 5 presents new estimates of the costs of disability, while Section 6 shows that when these are incorporated into how poverty is measured, they make an enormous difference to how the presence of disability affects the risk of poverty. The main conclusions are briefly summarised in Section 7.

2. The Policy and Research Context

The forerunner to the DSP, the invalid pension was introduced in 1909, at the same time (and under the same legislation) as that used to introduce the age pension. Debate at the time focused almost exclusively on the new provisions for the aged, with those for people affected by invalidity 'passed over almost without notice ... [even though the two schemes were] ... closely interwoven ... conjointly administered, and both were financed from general revenue.' (Kewley, 1973: 90). As a consequence, there was no discussion of whether the additional costs associated with invalidity warranted a differential rate of payment. The similarity of treatment was maintained until 1983, when a (tax-free and not income-tested) mobility allowance was introduced 'for severely handicapped persons in employment or undertaking vocational training for employment and unable, because of their disability, to use public transport without substantial assistance' (Department of Social Security, 1983: 54). …

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