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Social security issues

The big problems that people can end up with are either not getting paid, having their payment cancelled because they can’t comply, not getting granted it in the first place because they can’t get through all the paperwork, or ending up with a significant debt and not dealing with it.¹³⁰

Australia-wide, 21% of people receiving the disability support pension (DSP) have a psychological or psychiatric disability, and these conditions are among those which may satisfy the necessary “impairment rating” needed for qualification for this payment.¹³¹ However, people with a mental illness will frequently be on other benefits, such as Newstart payment for people who are unemployed. A recent study on the prevalence of mental illness among social security income recipients found that almost one in three income support recipients had a diagnosable mental illness in any 12-month period.¹³²

In our study, nearly every participant reported receiving social security benefits: 23 participants were on the DSP, 3 participants were on the sole parent pension, 1 was on the age pension and another was on Newstart. Only 2 people were working, and 1 person’s status was unknown.

DSP eligibility

Consultations suggested that one of the main legal issues relating to social security for people with a mental illness is proving eligibility for the DSP.¹³³ Problems with proving eligibility for the DSP may mean that many people receive other social security benefits, which are paid on less generous terms (both in the base rate and the generosity of the ‘taper’ for any non-pension income) and have much stricter compliance obligations attached to them. Claimants for the DSP have to establish that they have not been able to work or retrain for the last two years because of their disability.¹³⁴ A person’s disability must also attract an impairment rating of at least 20 points on Centrelink’s impairment tables.¹³⁵

Proving the seriousness of mental illness

According to a case manager from the Sydney Welfare Rights Centre (WRC), people have problems proving that their psychiatric disability is serious enough to warrant receiving the DSP, particularly if they suffer from episodic mental illness:

The DSP rules are difficult for people with episodic disability because they might see the government doctor and be assessed on a good day and have periods where they have the capacity to work.¹³⁶

The MHCC has written that application forms for the DSP do not necessarily pick up on a person’s past history of illness or the severity of their illness.¹³⁷ Furthermore, as part of the 2005 Budget, from 1 July 2006 people applying for the DSP will have to prove that they are unable to work a 30-hour week instead of a 15-hour week. Those people who are able to work between 15 and 30 hours a week will have to apply for Newstart.¹³⁸ These new requirements may make it harder for people with a mental illness to prove that they are eligible for the DSP.

One participant interviewed for this study said that she had been concerned that she wouldn’t be able to prove her eligibility for the DSP when she went to see a new doctor:

I had problems … I was up for review, and I was a bit worried that I wouldn’t be able to get the pension again because I got a GP who didn’t know me as well as the psychiatrist.¹³⁹

Failure to identify the mental illness

Another issue relating to eligibility is where either people fail to disclose that they have a mental illness (because they are unaware of it, or because they do not want to disclose this information), or where Centrelink staff fail to identify or pick up that people have a mental illness.¹⁴⁰ As a result, the DSP may not be provided as an option for that particular person. In consultation for this study a Centrelink manager acknowledged that Centrelink officers can have problems identifying whether a person has a mental illness but that when they do, they try to “identify which is the most prominent [mental] illness when going through the process of eligibility”.¹⁴¹ However, he also said that “many people will develop other illnesses while on payments because of changes in life which aren’t necessarily disclosed to Centrelink”.¹⁴²

The exclusion of particular categories of applicants

A case manager from the WRC reported that many people on temporary protection visas (TPVs) suffer from mental illness, often as a result of a traumatic past as a refugee.¹⁴³ However, they are not eligible for any type of social security benefit other than special benefits and family assistance.¹⁴⁴

People who have received compensation for an injury (including payment from damages in respect of lost earnings or capacity to earn¹⁴⁵) were also identified by this case manager as not being eligible to receive social security.¹⁴⁶ People who have received a compensation payment settlement will have a “preclusion period” prohibiting them from getting social security for a particular period of time, regardless of whether they spend their lump sum before the expiration of the preclusion period.¹⁴⁷ For a lump sum settlement made after 9 February 1988, 50% of the amount paid by way of compensation is deemed to be the “compensation part” of the payment and is used to calculate the preclusion period.¹⁴⁸ This case manager was of the opinion that people often spend their money before the expiration of the preclusion period.¹⁴⁹ A case study was provided by a community worker regarding a woman with a mental illness who had received a lump sum compensation payment and was unable to receive any benefits:

This woman who was injured at work some years ago was granted $200 000 of compensation for a severe neck injury … The legal firm that represented her took $52 000 because she was non-union. Her husband squandered away most of what was left. Her medical expenses are extreme. She has absolutely no income because the Centrelink exclusion period continues until 2006.¹⁵⁰

Preclusion periods can be set aside in special circumstances; however, the gateway is a narrow one, with financial hardship alone not usually enough to qualify.¹⁵¹ Normally, a combination of factors including financial hardship, ill-health, and impact on dependents, among other factors, must be considered.¹⁵² The case manager from the WRC also felt that applying to have the period set aside can be arduous for someone with a psychiatric disability.¹⁵³

Hence, consultations for this study and literature suggest that there is a whole group of people with a mental illness who are not able to prove that they are eligible to receive the DSP, but who may be on other social security benefits.

Breaching and debt

All social security recipients are required to notify Centrelink of any income they receive (there is a cap on the amount of income people are allowed to earn on top of their payment), any change in assets, and changes in other circumstances (such as change in address, or whether a person has moved in with a partner).¹⁵⁴ Where people fail to declare their income on other pensions and benefits, or fail to notify Centrelink of a change in their circumstances that would have affected their payment—such as when a student fails to notify Centrelink that they are not studying anymore—that person may incur a debt.¹⁵⁵ All debts are presumptively recoverable, including by deductions from ongoing payments, or garnishment.¹⁵⁶ Debts can also be waived under s1237AAD of the Social Security Act 1991 (Cth) where the debt did not arise from a person knowingly making a false statement or if there are special circumstances other than financial hardship alone.¹⁵⁷

Where a person incurs a significant debt (generally over $5000) as the result of deliberately “making a false statement and representation to Centrelink”, the matter may be referred to the DPP for criminal prosecution. This can ultimately lead to a person being convicted on criminal charges and sentenced accordingly.¹⁵⁸

In addition, there are a number of requirements that people receiving Newstart and Youth Allowance have to fulfil as part of receiving their benefit. Recipients of Newstart and Youth Allowance (those who are not full-time students) may be required to look for work, participate in courses or voluntary work, or participate in the work-for-the dole program. If they do not fulfil these requirements they may be “breached”. Breaching involves a temporary period of rate reduction (of 13 or 26 weeks) or non-payment (for 8 weeks).¹⁵⁹

DSP

Only two participants receiving the DSP interviewed for this study reported having experienced any problems with their benefits once in receipt of them. Both had incurred a debt as a result of changes to their circumstances:

They made a mistake. I did a course at my church and I told them about it but I was also doing a part-time course at uni. They told me that they only thought I was doing the church course. So they told me that I have to pay back all the pension education supplement. They are taking that out of my wage, at a rate of $40 a fortnight.¹⁶⁰

I am with the OPC, and they know that I never find out how much I have got for the fortnight until I receive a payslip, which is four days after. I have tried sorting that out with them, but they keep cutting off my pension.¹⁶¹

A manager from Centrelink acknowledged that people with a mental illness who are on the DSP may have problems complying with information requests, or informing Centrelink of changes to their circumstances.¹⁶² However, he said that if Centrelink knows that the person has a mental illness, they will investigate whether that person was experiencing problems at the time the debt was incurred:

If there is a situation being investigated, especially with our mental illness customers, we have to involve our psychologists or disability officers to look at the history, what influence we might have had, interview them or the carer and look at compliance ability. If any doubt, we don’t penalise people.¹⁶³

Job seekers

We regularly advocate for clients who are clearly suffering from a firmly entrenched mental illness due to which they cannot comply with their obligations on Newstart or Youth Allowance (a payment which requires recipients to undertake an “activity test”), and who should be on disability support pension (which is not currently activity tested). Such clients face endless interruptions to payments.¹⁶⁴

Consultations revealed that job seekers with a mental illness who are on Newstart Allowance or Youth Allowance are very vulnerable to incurring breaches and debt. Pearce et al. note that these are

job seekers whose personal circumstances make them especially vulnerable to particular difficulties in receiving, understanding or being able to comply with official communications about obligations such as attending interviews or returning forms.¹⁶⁵

That people with a mental illness can find it hard to comply with social security requirements was reported by a number of service providers:

People with mental illness for practical and personal reasons can find it very hard to comply … People are required to make written applications for 10 jobs a fortnight. This is difficult for anyone but for someone with an underlying problem or an episodic problem it can be very very difficult … they end up being suspended or breached and their payment is reduced or stopped.¹⁶⁶

It’s hard enough for any sane, rational or well-educated person to sort it out [but] for a young person, particularly a young person with a mental illness, it’s virtually impossible to negotiate your way through. And it’s not uncommon in my experience … to discover that somebody has been cut off because they haven’t responded to anything … They see the envelope and they just throw it [away] because they know they can’t interpret it.¹⁶⁷

One participant interviewed for this study talked about some of the difficulties he had experienced in complying with his Newstart requirements:

They’d call you in for an interview [but] I wouldn’t get the letter, because I had been moving around the place. And then they breach you and they fine you. You tell them, “Oh, I didn’t get the letter,” and they would say “ we’ll have a look into it.” And then you call them back a couple of months later, and they’re like, “Oh, it’s too late now”. And you’re living off, like, not enough to eat.¹⁶⁸

The new social security compliance framework, introduced as part of the 2005–06 Budget and commencing in mid-2006, will also impose stricter participation requirements on job seekers. If a job seeker does not meet a participation requirement (such as attending a job interview), their payment will be suspended until they do so. For repeated and more serious breaches, job seekers will be suspended without payment for eight weeks.¹⁶⁹ Although the government did announce that there would be an at-risk list of vulnerable people for whom the Job Network agencies would not have to suspend payments,¹⁷⁰ this does not recognise those people who may not, as discussed above, be identified as particularly vulnerable. Therefore, these changes may have an effect on those people with a mental illness who are not eligible for the DSP, but who have difficulties in complying with their Newstart or Youth Allowance requirements.

A director from the Social Security Appeals Tribunal (SSAT) did note that Centrelink has adopted an internal procedural policy in response to breaching: if a person is breached two or three times, they will be referred to a Centrelink social worker or personal adviser. Commencing in June 2001, the Centrelink “Third Breach Alert” states that when a person is breached for the third time, they will be referred to a social worker or psychologist to determine whether the customer has any special needs.¹⁷¹ A director from the SSAT was of the opinion that this had resulted in the number of breaches being reduced.¹⁷² People can also be granted a temporary exemption from an activity test if they get a medical certificate from a doctor stating that they are unable to work for a certain period of time. They are then paid Newstart allowance on sickness allowance conditions.¹⁷³ However, a case manager from the WRC was of the opinion that Centrelink are being increasingly strict in terms of whether they accept medical certificates.¹⁷⁴

Sole parents and students

Butterworth’s study on mental health and social security found that the prevalence of anxiety and depressive disorders was highest among un-partnered women with children, on the parenting payment (single).¹⁷⁵ The convener of the National Council of Single Mothers and their Children argued that the high number of women with mental illness on the parenting payment (45.3% compared to 33.7% of people on unemployment benefits)¹⁷⁶ raises concern over the ability of recipients with mental illness to comply with the requirements of the parenting payment.¹⁷⁷

Recent changes to the parenting payment, announced under the 2005–06 Budget are also set to start from 1 July 2006. From 1 July 2006, those on existing parenting payments will remain on the parenting payment until their child is 16. Parents applying for the parenting payment after 1 July 2006 can do so until their youngest child turns six, at which point they will be transferred to the Newstart Allowance.¹⁷⁸ Once parents are placed on Newstart Allowance they will be required to seek at least 15 hours part-time paid work.¹⁷⁹ This has the potential to seriously impact on parents with a mental illness, who may have difficulty in complying with the new requirements.

A couple of service providers were of the opinion that students who have a mental illness who are on Austudy or Youth Allowance (student) can experience problems complying with the requirements¹⁸⁰ of their benefit:

For people who, say, during semester one start fading away, intending to study, intend re-enrolling in semester two, but by that stage [they] are in the depths of depression or it’s the first episode of schizophrenia, [or they are] just not coping thinking that they will be better next week but it goes on and on. You can end up with students who haven’t attended study from March through to the end of year with a debt that is quite significant—$6000 or $7000.¹⁸¹

We’ve got a few where they drop out of school and they often don’t think to tell [Centrelink] … and then they get cut off and hit with a debt repayment because they didn’t notify [Centrelink] that they weren’t at school.¹⁸²