Welfare Fraud—the Techno Fix
Mark Weller
Whether or not one believes that social programs are necessary, there is a point on which all Canadians agree—that government programs must be targeted to those most in need. People who misrepresent themselves in order to receive money to which they are not entitled are guilty of a most vile form of fraud—taking money away from the less fortunate in our society.
In British Columbia, the NDP government has made a few paltry attempts to reduce welfare fraud, but very little progress has been made. The department in charge of investigating fraud is so busy that it relies almost entirely on reports that are filed with the ministry by concerned citizens. There are so many fraud leads to follow up that the department has virtually no time left over to conduct its own investigations.
The argument is sometimes made that it may be less expensive to have some people cheat the system than to employ more investigators to pursue fraud cases. Experience in the state of California indicates that this is not so, but, in any event, more case officers are not required to catch more cheaters. All that is needed is a little technical ingenuity.
At the moment, the lists of beneficiaries of BC's Social Housing division, the welfare system, and the department responsible for disability benefits and health care are all maintained separately on various databases, and are often compiled using different systems. As a result, no central database keeps track of who receives what money from the government. This is so despite the fact that almost all these data sets contain a common reference code—the individual's social insurance number.
The solution is straightforward. The federal government should sit down with the provinces and agree on a protocol for data transference. The type of information exchanged could be limited to protect privacy. Then the governments could agree on a common export format for the data. A good test might be to have Revenue Canada provide the provinces with the names of individuals who make more than $40,000. The provinces could then run a check of this data against their lists of benefit recipients. Any names that came up in the cross reference could be investigated and their payments adjusted or stopped.
However, some may ask, how does this help those in need? First, by catching cheats, previously wasted money becomes available. Second, the amalgamation of data will result in better targeting of funding to those most in need. At the moment, people who are legitimately using the system often have their benefit payments delayed due to the immense bureaucratic overlap they encounter.
In fact, the bureaucratic web is so confusing that there is a huge incentive NOT to report overpayment or duplicate cheques. Reporting such errors results in a further delay in benefits paid, in addition to the waste of one's time. Simplifying benefit payments by integrating data sets would remove these perverse incentives.
So why isn't this happening now? Perhaps the reason lies in the bureaucracy itself. With the recent formation of the Ministry of Children and Families in BC, the Ministry of Social Services has become little more than a clearing house for welfare cheques. If the number of cheques being processed were reduced, then the number of staff required to process them could be similarly reduced.
This article originally appeared in the March 1997 issue of Fraser Forum.
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