What stops most middle class people from committing fraud – say, by claiming false expenses, making dodgy tax claims or exaggerating their assets to a bank – is thought to be a calculus of the risk of being caught and the extent of public disgrace if one is caught. By contrast, politicians seem to assume that underclass and working class fraud, like other crimes, including violence, being committed by them is deterred only by the severity of jail sentences.
The theory might be wrong, at least as far as welfare fraud is concerned.
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The average "fraud" on Centrelink seems to be about $1000. The war, and internal security, fraud control and quality assurance programs lead to about 4 million reviews of payments to individual clients every year. The cost of this fraud and quality control is about half of the money saved by reviews. By contrast, investigation of fraud by the Tax Office is sometimes said to produce a $7.50 return for every dollar spent on compliance review, although, no doubt, that is a figure that will soon be up in the air with the implementation of government directions to reduce taxation staff by more than 10 per cent. Even before those staff cuts, the Tax Office was reviewing only about 2 million files a year, although its "client" population is at least twice that of Centrelink and other welfare benefit services.
But increasing the resources going into the accurate reporting of income, or deductible expenditure, has political costs that hardly ever arise with welfare fraud, particularly if the sort of welfare fraud that is envisaged involves unemployed beneficiaries with undeclared sources of income, supposedly single mothers with undeclared partners, or invalid pensioners thought to be more fit and able than they claim to be. Dob-in rates from members of the public are high, as are investigations spurred by suspicions of Centrelink staff. In fact, about half of those "caught" catch themselves, because data holding on them elsewhere in the Commonwealth (including at the Tax Office) is at variance with information they have volunteered to Centrelink.
No one is suggesting that conscious and deliberate fraud on the welfare system should not be detected and punished. But the attention given to the problem, and the media and political spotlight on fraud, cheating, bludging and a bloated sense of entitlement, is out of all proportion to government resources focused on other types of fraud, or checks and balances against abuse of various systems.