A common assumption in welfare reform debates is that a more generous benefit payment rate provides a disincentive for the unemployed to seek paid employment. In the Australian and international context this assumption has recently been applied to certain types of people with a disability. We argue in this paper that not only is the empirical evidence unconvincing, there are also strong moral reasons why the assumption and the policies based on it are misguided (Berkel and Moller 2002; Larsen 2005). We argue that, in fact, the reverse is more likely to be true; increasing benefits is likely to be a better way of helping people find a job and will avoid some of morally dubious outcomes associated with lowering payments. The article is in two parts. In section one, we describe some of the arrangements that are currently in place in Australia and overseas. We consider evidence from Australia and overseas on income support policies for people with a disability and qualitative accounts of barriers to employment for people with a disability. The international context challenges the idea that lowering income support payments increases the likelihood that people will secure paid work. In the second part we argue that not only is there little empirical evidence to support the policy of cutting benefits, it is morally dubious as well. What we call the ‘motivation model’ of welfare policy does not accurately reflect the situation of people with a disability who are unemployed. The motivation model focuses on one cause of disadvantage in particular – individual motivation – and then applies penalties where motivation is lacking, often with disastrous results. More fundamentally, we also claim that welfare policy, especially for the disabled, should not be guided by considerations of assigning blame and praise, especially where doing so may reduce benefits to groups who are already significantly disadvantaged.