Fraud

The Australian Institute of Criminology has released its 96 page report on Fraud against the Commonwealth 2008–09 [PDF], a document to which News Corp imprints claimed "exclusive access". (The ministerial media release indicated that "The Fraud Against the Commonwealth report has been pro-actively released publicly for the first time amid a Freedom of Information request"; News presumably requested the report under the FOI Act, with the Government thence having to give effect to its stated commitment to openness and accountability" through what was subsequently described as "proactive publication".)

The AIC indicates that the report -

presents the findings of the seventh annual survey of the fraud experiences of Australian Government agencies reported under the Commonwealth Fraud Control Guidelines, May 2002. It is the third survey undertaken by the Australian Institute of Criminology. As required by the Guidelines, the AIC is to produce a report each year on fraud against the Australian Government and fraud control arrangements within Australian Government agencies. The current report is based on information relating to the 2008–09 financial year, which was supplied by Australian Government agencies after October 2009. Data were provided through the completion of a secure online survey by relevant agencies. In addition, and as required under the Guidelines, this report includes additional data provided by the Australian Federal Police and the Commonwealth Director of Public Prosecutions relating to fraud investigations and prosecutions, respectively. It also reviews and compares public sector fraud findings derived from various fraud surveys undertaken in recent years by market research organisations and consultancy practices.

Readers with an interest in identity offences (eg individuals buffing their attributes in order to gain government social service payments to which they are not entitled) and mechanisms such as the Australia Card (the subject of a work noted here) will appreciate the report's coverage of 'Social Security Fraud'. For example -

information, or omitting relevant information, to a government agency in order to receive a social security benefit to which the person is not entitled. Benefits can include unemployment benefits, disability pensions and family allowances. In a report calculating the cost of fraud in the United Kingdom, the National Fraud Authority (NFA) reported that benefit fraud against the Department for Work and Pensions amounted to £1.1b in 2008–09. This represents an increase of £500m from the estimated mid-point of £700m in 2005–06, reported in the 2008–09 Fraud against the Commonwealth report (Levi, Burrows & Hopkins 2007). This included:

• £260m in housing benefit;
• £250m in income support;
• £110m in pensions credit;
• £110m in other related fraud;
• £80m in jobseekers allowance;
• £70m to incapacity benefit;
• £45m in disability living allowance;
• £50m in carers’ allowance;
• £50m council tax benefits;
• £10m in instrument of payment fraud; and
• £10m in interdependencies (NFA 2010).

In Australia, Centrelink administered $86.8b in payments to 6.8 million customers in the 2008–09 financial year alone. The large customer base of Centrelink leaves the agency particularly vulnerable to fraud. One of the ways to combat social security fraud is through the use of 'tip off' hotlines. In 2008–09, Centrelink conducted 50,277 entitlement reviews resulting from public tip-offs, which led to alterations to the customer’s payment and/or a debt of $119.3m (Centrelink 2009). In the 2008–09 financial year, Centrelink conducted nearly 3.9 million entitlement reviews that resulted in 641,504 payments being cancelled or reduced and generating customer debts totalling $536.2m (Centrelink 2009).

One response might be that social welfare fraud - or the fraud that is detected and reported, not necessarily the same thing - amounts to quite small sums on a per capita basis. The notional cost of the $119m "alterations" and "debt" is less than $5 per capita per year; without condoning fraud we might ask whether a few cents per week is an acceptable cost, part of the price paid for the liberal democratic state and - dare I say it - less than the cost of acquiring and maintaining glamorous but unfunctional military hardware.

We might also ask whether the bureaucracy involved in recovery of $536m debts is cost effective and whether the debt recovery strategy means that some deserving people are denied support by the state.

The Government indicated that overall fraud against the Commonwealth has been reduced by 10% (in dollar values) and was equivalent to around 18 cents in every $100 spent by the Commonwealth. (The statement refers to "every $100 invested by the Commonwealth", given the hegemonic value that government is a commercial enterprise that "invests".) 23% of the money lost through light-fingered public servants, commercial fraud and welfare fraud is recovered.

Given the need for politicians to be seen to emote over misuse of public funds the Minister for Home Affairs & Justice Brendan O’Connor indicated that the Government has "launched new measures to help Commonwealth agencies prevent and combat fraud".

Fraud is a really low act. There are vulnerable people who genuinely need our help, and fraudsters play on our nation's generosity for their own criminal purposes. Fraud is completely unacceptable and that's why we're doing all we can to stop it. We're determined to fight fraud against the Commonwealth by minimising chances for it to occur, and rapidly detecting, investigating and prosecuting fraudsters.

Those new anti-fraud measures include -

• shorter and simpler Commonwealth Fraud Control Guidelines outlining agency obligations

• a new central online portal, Commonwealth Fraud Control Information Online [here], where agencies and the public can find fraud control information.

The Minister indicated that Commonwealth agencies reported losses of about $597 million in 2008-09, with the number of dedicated fraud control staff being boosted by 38% and 827 more workers employed to combat fraud against government departments.

Even though there were fewer incidents and losses, it's still a lot of money and there's always more we can do to boost our vigilance against Commonwealth fraud. ... It's awful to think that some people seek to make a profit from measures aimed at relieving human misery, but it does happen and we need to do all we can to stop it.

Perhaps we don't need to do "all we can", particularly if compliance costs are greater than loss prevention/recovery. A different mindset - and a wariness about indulging popular mythologies - might be appropriate.