We’re going to be hearing a lot politically about welfare fraud and welfare “reform”. 3 News last night gives us a taste of what is to come:
3 News has obtained details of a massive $217 million in overpayments made to beneficiaries by Work and Income.
Sounds bad doesn’t it! But…
Just $22 million of that was actual fraud. The rest were so-called mistaken overpayments from the department – an average of $206 dollars. …
“It’s hugely concerning,” says Ms Bennett. Those concerns come with National about to announce major welfare reform – and that’s part of her fix.
So, actual fraud of $22 million and “mistaken overpayments” of $195 million? What is going on? Let’s start with the overpayments.
Overpayments of $195 million is business as usual. Last year the overpayment was $191 million. Perhaps we should be asking why Bennet is so incompetent that she has let this problem not only continue on her watch, but get worse? (I suggested at the time last year that slashing all those “back room bureaucrats” probably wasn’t going to help).
Actual fraud of $22 million by beneficiaries is bad of course, no one would deny that. But let’s also keep it in perspective, specifically the perspective of “white collar” fraud. This article from 2010 provides some context:
This week came the news that in fact fraud is much more prevalent in New Zealand than had been previously thought and that it was expected to increase markedly as the full effects of the financial downturn, and crime committed at its height, are uncovered.
The grim extent of such activity was revealed in a report by international auditing firm KPMG. It shows there was a “massive” rise in the number of multimillion-dollar frauds exposed in New Zealand, with transgressions to the cost of $98 million caught out last year alone. …
KPMG’s “Fraud Barometer” counts the costs of frauds that have been revealed and are before the courts and does not take into account crimes below $100,000.
Let’s take a look at that Fraud Barometer. Here’s the reading for March 2011:
There has been a new record high for the value of fraud in the six months to December 2010 when compared to the first half of 2010.
In this time period, the value of large fraud cases totalled NZ $100 million (up from NZ $72m in the first half of 2010). This is also the first time the KPMG Fraud barometer has recorded $100m in a single period.
So – benefit fraud of $22 million a year vs. Work & Income overpayments of $195 million and white collar fraud of $172 million. Which are the bigger problems here? If we’re going to use the $22 million figure as part justification for beneficiary bashing (sorry, “welfare reform”), shouldn’t we also sack Paula Bennett for incompetence, and embark on a bit of “financial reform” to catch the white collar criminals? Shouldn’t we be addressing the worst problems? Yeah right. The 3 News piece (first article) above continues:
Welfare reform will be at the centre of National’s campaign; Prime Minister John Key will announce details at the National Party conference this weekend.
Predictably, National will keep demonising the most vulnerable members of society for electoral gain, and turn a blind eye to the rest. If Sue Bradford stands (for Mana) as predicted in Bennett’s Waitakere seat, it will be great to see them debating these issues head to head. My money’s on Bradford. The facts are on her side.