Today’s Australian reports a significant increase in tip-offs to Centrelink of alleged welfare fraud.
There were 118,491 such tip-offs in 2005-2006, compared with 95,570 in 2004-2006.
But – and here’s the rub – only 11,492 of these tip-offs resulted in payments being reduced or cancelled. This means that over 100,000 of these tip-offs resulted in the diversion of Centrelink staff time and other resources for no financial return, to the detriment of other more productive things the staff could have been doing, and often with intrusive questioning of honest clients and their friends, workmates and neighbours.
Despite the increase in the incidence of dobbing, the amount of money recovered by Centrelink from tip-offs fell from $1.8 million in 2004-2005 to $1.6 million in 2005-2006.
Let’s do some quick sums. The Centrelink employees responsible for following up these tip-offs are paid in the region of $30 to $40 per hour (people with inside knowledge are welcome to provide a more exact figure for the wages of compliance officers). If we assume that recording and following up each tip-off requires an hour’s work on average (again Centrelink insiders are invited to comment on this assumption) this would amount to a total 118,491 hours of Centrelink staff time in the 2005-2006 financial year, and thus a cost of between $3 million and $5 million. This is a rough estimate of the purely financial cost to Centrelink, without factoring in the wider economic cost of diversion of staff from more productive activity such as helping people find work, the negative externalities associated with bureaucratic harassment of 100,000 innocent clients, etc.
If my calculations (and more particularly the assumptions on which they are based) are correct, it means that Centrelink’s system of anonymous denunciation of supposed dole cheats is bleeding millions of dollars more in costs than it is recovering by detecting overpayment and fraud.
Such an outcome should not be surprising. Systems of anonymous delation are wide open to abuse by bigots, cranks, individuals pursing vendettas, etc., who can make any kind of scurrilous and mischievous accusation leading to public service time and money being wasted and causing needless distress to people who, in the case of Centrelink clients, already have more than enough on their plates, without ever being held to account.
Centrelink should replace its system of anonymous tip-offs with a system in which the dobber is required to provide, in confidence, a name and contact information, and can be subject to civil or criminal sanctions if their denunciation turns out to be frivolous, vexatious or malicious. Well-grounded complaints would still be investigated and monies recouped, and Centrelink and its innocent clients would be spared the trouble and expense occasioned by crank complaints.
[Disclosure: My opinions on anonymous "dob in the different" schemes owe much to a period in the late 1980s and early 1990s when my partner and I were periodically visited by employees of the Brisbane City Council and the RSPCA acting on anonymous complaints from a neighbour (who we were never able to identify) about the state of our back yard or the condition of one of our companion animals. Once they found out the facts of the matter, the BCC and RSPCA people were always very apologetic, and highly displeased at having their time wasted by Mickey Mouse complaints.]
If we’re talking financial terms, I’d like to know how much money those employees would have clawed back if they were were working at the ATO and were tasked with auditing high income earners – you know, the kind who reflexively claim everything as a tax deduction.
Yep, that was my reaction too. I haven’t seen any advertising campaigns asking us to dob in property investors who grossly inflate their expenses for tax deduction purposes. The foregone tax would greatly exceed the paltry $1 million recovered off struggling people on welfare.
There is also the probably deliberate effect of creating a public perception that people on benefits are cheats and bludgers who need to be kept in line by a strong Howard government.
In 1972 I had my first-ever job as a very young university dropout, in the Commonwealth Public Service, where I worked in Pensions: Pay Section and therefore saw an awful lot of this dobbing business.
And you know what hasn’t changed, in (oh God, shoot me now) 35 years? The automatic assumption, built into the welfare legislation, that if a man moves into the same house as a woman, they must be having sex, and if they are having sex she must be getting money from him, and is therefore automatically a welfare cheat and richly deserves to have the neighbours falling over themselves to contact the authorities.
So there you have it: a really, really, basic built-in-to-the-infrastructure (not to mention the social contract) belief, one that has robustly survived second- and third-wave feminism — much less the current belief that ‘we’re equal now so we don’t need feminism any more’ — that (1) there is a direct tradeoff between men and women of sex for money, that (2) sex is a commodity that women give and men take (and money vice versa), and that (3) all women living with men are prostitutes by definition.
Noice.
Your problem is that you think the exercise is a policy directed at the ends publicly proclaimed. It isn’t. The exercise is directed to ensuring that the medicants for whom this regulation has been designed, understand, every day, in every way, that YOU ARE NOT ENTITLED TO ANYTHING, NOT EVEN PRIVACY.
It is and has been, a very successful restructuring of the ‘culture of entitlement’ that was the fortunate byproduct of full employment, and increasing shares of output going to mere wage and salary earners. Fortunately, the morally destructive impulses that fearlessness gives rise to have been reigned in, and from now on in, regulation will micro manage every aspect of the recalcitrant and the unsufficiently incentivised.
Paul, the link doesn’t work and I can’t locate the story at the Oz website.
A great post on just how far Australia is on the wrong side of the Laffer Curve. You know you’re in trouble when it costs more to collect than what you actually collect…
Geoff, try the link now. It should work.
PC, you have reminded me of the unpleasant experience of one of my housemates in my old shared household at the beginning of 1998. She had completed her degree and had applied for Newstart while she looked for work. At one of her interviews, after she disclosed that she was sharing with a man (me) and another woman, she was questioned extensively and intrusively about the nature of her relationship with me, whether I was assisting her financially, etc. At around that time it was reported that private investigators were being hired to check up on Centrelink clients who were suspected of hanky-panky with flatmates, etc., which means all three of us in the household, and quite probably our regular visitors, would have been snooped on by some gumshoe.
after she disclosed that she was sharing with a man (me) and another woman, she was questioned extensively and intrusively about the nature of her relationship with me, whether I was assisting her financially, etc.
Ah, the famous “are you shagging your flatmate?” questionaire.
All in the name of taking money away from partnered people. ‘Cause you know how you need less money when you have a partner.
I’d say more, but my reaction to C*nterlink (that slur is not my idea, sadly) wouldn’t make it past the profanity filter.
Good to see the politics of envy still alive and well.
You can tip off the ATO.
Obviously, if you can rort Centrelink you are entitled to it! Keep up the good work!!
I guess the argument goes that $3 million bucks is a small price to pay for the reduction in welfare fraud that cripples the Federal budget by half that amount.
Sounds like a Howard government policy to me.
Let us never forget the insanity of Centrelink attempting several years back to claim a woman was rorting the system by LIVING WITH A MAN *GASP* by having a voicemail message saying something like “Hi you’ve reach Sally and Sam leave a message”.
Turned out Sam was in fact her teddy bear.
Bloody Centrelink.
The dob -in was some time ago the only method the ATO used to start enquiries .
This info comes from a sibling who worked as a lawyer for the ATO audits department. ( or whatever it is called ) .
So many people are so keen to do this my sibling was amazed at the numbers involved.
However even if a dob is made I’m fairly certain only a small number are investigated and the basis for selection wasn’t ever explained to me.
Some folks were beyond audit though and if an “unsuitable “investigation was started a directive to cease was soon made.
considering the numbers involved I doubt any that more than a small fraction of Centrelink dob ins are investigated .
Robert & Tony, do you have specific evidence/suspicion of a tax fraud/frauds?
No need to whine speculatively about how bigtime tax cheats may be getting away with something.
I am pleased to be able to bring to your attention an invention known as “google”. I used it for you. Less than 30 seconds browsing revealed this number on the ATO website to “Report Tax Evasion”:
1800 060 062
I am sure many of us have a keen interest in cheats being caught, please update us in here on the progress of the case against the cheat/cheats you are (hopefully) in the act of reporting.
Perhaps centrelink could use the WA Police model, who operate as a profit centre – oh don’t worry about the trivial fact that there is no real policing and every cop wants to be a radar jock.
Sketiclawyer, you got me. I take it, you’re not employed as a engineer in the Oil industry, where we spend a million to save 20,000.
SATP: according to an article in the Economist’s current issue, $10 million a day is leaving Australia to park itself in the Seychelles, Guernsey, and the British Virgin Islands.
More generally, spend some time around small business people, particularly farmers. You’d be amazed at their definition of “business purposes” when it comes to claiming tax deductions.
steve at the pub, why should I do the ATO’s work for free?
Or as an academic, in which capacity I once sat round a table with twelve other academic staff including two full professors, from a range of faculties, and spent a whole afternoon of our cumulative person hours and person dollars deliberating about how to spend $2,000 — a fact sardonically noted from the chair.
The Howard Government has refined its appalling policies toward the Unemployed. Centrelink now has “Advisors” whose sole job appears to be 1) to seriously act sympathetic toward your problem and then advise you call one of their other departments knowing full well you will get nowhere. When you come back to them they once again act concerned and give you another number saying things like “call this number they really would like to hear about this”. You call and get referred back to centrelink. Its all a bit unsettling to say the least. How can someone do that for a living and look at themselves in the mirror each day?
The worst part is the commodification of the unemployed to job network agencies. The most criminal of the lot is the Salvation Army Employment Plus. Hiding behind the cloak of respectability the Howard Government has hijacked everything the Salvos founder William Booth stood for. Apart from the fact that in 2006 the Satanic Army Employment Plus had to pay the Government back $9 Million that it tried to steal, they absolutely unequivocally misrepresent themselves on their website and all their literature eg.â??We make sure our services are tailored to suit your individual needsâ?? ,â??â?¦ get to know you and understand what your individual needs areâ??, â??we are here to help people reach their full potential in work that offers a real futureâ??, â??We seek to make a difference in the lives of individualsâ?¦ to start them on the path to a sustainable, self-sufficient future.â??, â??We respect the diversity of our clients, customers and staff and treat them as unique individualsâ??, â??advocate on behalf of unemployed people and have input into policyâ?? and so on.
The lies continue page after page. Ironically at the same time they proclaim their strong Christian beliefs. Does that mean I can start a business and just make outrageous claims that I had no intention of fulfilling. I guess I can if its Government sanctioned.
â??create effective links between all major stakeholders e.g Department of Employment and Workplace Relations (DEWR), Centrelink, etc. â?? they also claim. If ever anybody has had the unfortunate pleasure to go through these “effective links” let me tell you its all designed to go round in circles with no outcome and I it did (twice).
The one thing that maybe is true on the Salvos website is that they â??achieve successful outcomes against government benchmarksâ??. The Government hands down the law. Centrelink passes it on to job network agencies who enforce it onto the unemployed. If youve got a problem with that well too bad.
Stalinism meet Orwell’s nightmare.
118,491 tip offs eh? Reducing to 491 if the vexatious, frivolous & malicious tip offs were to be prevented.
Most interesting, at the start of an election year, are the targets of the Federal governments costly advertising. Presently they seem to be alternating between ‘terrorists’ and centrelink benefit recipients. Great mix but unlikely that it is coincidental.
It is not just centrelink that is embracing Stalinism. People are paid for sitting around waiting for a ‘dob in phone call’ for suspicious fridge magnet behaviour. Despite the fact that we all have a police forces that could cover this area well.
Obviously this stuff is economically irrational and a total waste of money.
Pavlov’s Cat, you’re wrong on the “they’re having sex so they must be married” bit – that was changed by the Hawke government in the mid-80s. The law speaks of a “marriage-like relationship”, and the guidelines given to Centrelink staff make it pretty clear that the major test of that is financial and social, not sexual, arrangements. Which is commonsense – they pay married couples less than two singles precisely because they assume two people pooling income and expenditures can get by on less than the same two people living independently (they’re not, of course, consistent on this. F’rexample, same sex couples aren’t recognised as living in a marriage-like relationship, because if they did that they’d have to recognise them for tax purposes too which this troglodytic government won’t have a bar of).
There are in fact many thousands of sole parents who are deemed by Centrelink to be “separated but living in the same household” as their spouse. It’s actually not hard to arrange if you know the ropes.
Tony Healy said:
For the same reason you shouldn’t be expected to get paid to ring the police when you see someone breaking into someone’s house?
Also when working out the numbers on whether bothering to follow up tips of people cheating on tax or welfare you need to also take into account the deterrent factor. The more that people believe that they can get away with claiming more than they are entitled to (whether it be welfare payments or tax deductions), the more they’re likely to do so.
We’ve become a nation of dobbers, snoops, mean-spirited functionaries and lousy economists.
The night of the rodent casts long shadows.
I didn’t actually say that, but I know what you mean. I was mainly going by the creepy TV ads about how important it is to let Centrelink know about your changed arrangements — ‘My boyfriend has moved in’, etc. That’s the message that’s still being disseminated.
Of course there are people who do rort that system — I saw all too many of them as a public servant — but my main concern is with the abstract assumptions about the differing roles of men and women in the sex/money nexus; the laws and guidelines may have changed, but the sexist assumptions don’t seem to have changed very much if the ads are anything to go by.
Fair enough, Pavlov’s cat. I do agree the ads are a bit creepy and also have a whiff of sexism.
But of course they’re not really directed at Centrelink clients – they’re election year ads designed to reassure Joe Bourgeois that the government is being tough on the riff-raff. Expect to see a lot more of this sort of ad (nominally directed at informing the public but really serving as support for the government) as the election gets closer. The Keating government really started this game, but the Howard government has perfected it.
This blog is based on poor reading. You should try reading the story carefully – (1) the numbers at the end are BILLIONS not MILLIONS and (2) what do those numbers mean? The “amount of money the federal Government received from debts as a result of overpayments” (apart from not seeming to make any sense in itself) doesn’t appear to have any close relationship to the number of “dob-ins” discussed before it. Has this been poorly drawn from some boring media release? This blog, and the story in the Australian are poorly written and show the authors’ lack of understanding.
Careful reader
Well caught.
Careful reader, what can I say but mea culpa?
Well, I can also point out that only a small fraction of the $1.6 billion received from recovery of overpayments would be due to anonymous tip-offs (otherwise the 11000 tipoffs resulting in overpayment or cancellation would be recouping about $139,000 each on average).
What we are then still left to sort out is the question of how much is saved as a result of the small minority of tip-offs which lead to reduction or cancellation of benefits, and how this stacks up against the costs of recording and following up the tip-offs, the opportunity cost of Centrelink resources being diverted from potentially more productive activities and the negative consequences of innocent clients (and those close to them) being needlessly investigated. Therefore I reiterate my call for specific figures from those in a position to know.
Also, most of the points made by commenters on this thread don’t stand or fall with my original misreading of the figures in the article.
What a blessing the
Australia Cardaccess card will put an end to all this rorting and waste of time and money …Of course, the costs of issuing all those cards and keeping track of them and policing their proper use and imposing massive fines on anyone found to require them as a source of ID are just the price to pay for a fair and efficient
middle-classwelfare system.I thought the Salvation Army would have been one of the more ethical job network operators.
If I was using a job network provider I would probably favour a charity over some whole-in-the-wall company that’s found the formula for pumping workers into short-term jobs, so they circle in the wash like a pair of socks, which after spin-dry allow the aforementioned company to maintain its financial addiction to government subsidy, which grows each time person X is placed in short-term job Y (the job which strangely disappears into the ether after the government stipulated three months have expired, making job network provider more than happy for the repeat work). I hear lots of stories, am I getting cynical in my old age.
On page 29 of Chapter 3 (PDF, 104KB) of the 2005-06 Centrelink Annual Report, savings and debts from tipoffs are identified as $125.6 million for that FY. Looks like a pretty decent amount of money. I think it comes to $2101.00 per review. Good productivity for an hour’s work.
Following up and investigating and then responding to appeals? An hour? Patently absurd…
Minor administrative problems at Centrelink tend to take far more than an hour, let alone proving something like this; I’ve heard that sometimes they do all kinds of professional investigative work. Of course, then the person would complain etc. These things aren’t filling out a few forms… they are big, big investigations.
Having said that… It is combined with a scary advertising campaign, so their primary motivation is not regaining money already taken, but creating a general deterrent effect to stop it happening in the first place. Who knows how much they save from this. Difficult to measure, but it should be noted!
The savings cited in the Annual Report come to $1060 per tip-off. It should not be assumed that the nearly 60,000 tip-offs which don’t lead to a review take zero time to record and initially assess whether they’re worth taking to the stage of a review. Then we need to factor in the issues raised by David – one of which, implicitly, is how many of the 11,492 benefit reductions and cancellations are overturned on appeal. Still, we seem to be nudging closer to a more accurate (if imprecisely quantified or unquantified) picture of the costs and benefits.
Instrumentalizing this issue to vent your spleens on Howard is a tad sad. Most of the people doing the “dobbing in” are disgruntled former partners of said welfare recipients. Oops. Centrelink “customers”