I whipped out a calculator and crunched some numbers on this.
The base rate for Supported Living Payment is $368 per week, for a single, childless person. That's $19,000 per year. So people permanently unable to work full-time, for medical reasons, are already paying tax on a portion of their benefit at the second tax rate.
That's before you add on an accommodation supplement and other add-ons that lift this towards a vaguely livable income.
(2/?)