Costs and benefits comparison: social enterprise employment and disability employment services

This report reviews the costs and benefits of the Payment By Outcome (PBO) trial, which places people with disability into employment with social enterprises. It finds the trial is delivering on the twin goals of improved personal income and reduced fiscal costs. 

The report has projected outcomes for a prospective cohort participating in the trial based on available data and compared this to a counterfactual. The counterfactual used is the trajectory for the same cohort in the Disability Employment Service (DES). Cashflows considered include employment earnings, welfare benefits, income tax, DES program costs, PBO payments and additional GST.

The PBO trial looks at a small subset of individuals who have been unemployed for more than nine of the last 12 months with the DES program, along with other specific criteria. 

Findings
Benefits to individuals and government remain substantial even if:

• Employment retention rates (continuance rates) were lower than currently observed.
• More people transitioned to competitive employment or earned above the upper threshold (triggering more outcome payments).
• The Disability Employment Service (DES) performs significantly stronger than assumed.
• The initiative was applied to a different welfare cohort, such as a greater fraction of DSP clients.
• Given some conservatism and uncertainty in the assumption setting, future estimates will likely be impacted by evolution in employment retention rates, movements into competitive employment, and trajectories once the PBO is completed.