The distributional impact of the welfare-to-work reforms upon Australians with disabilities

Among the measures announced in the 2005 federal budget was a requirement that people with disabilities who apply for income support after 1 July 2006 and who can work between 15 and 29 hours a week at award wages will be placed on Newstart Allowance or Youth Allowance rather than Disability Support Pension. Ann Harding, Quoc Ngu Vu and Richard Percival show that the disposable incomes of people with disabilities could be up to about $120 a week lower under the proposed new system, and that effective marginal tax rates will be sharply increased over a reasonably wide range of earned income.