Economics essay on: “Utility maximizing behavior by the recipients of government welfare payments can lead to unanticipated consequences”.

Welfare PaymentsWelfare payments refer to the types of benefits which have been granted by the state government of the country. These refer to the type of benefits which have been regulated by the SRS programs covered under each state government. There is a list of specified people who would be liable to receive such type of welfare benefits. The following requirements need to be fulfilled. They are as under:

Þ    Gross income for a month

Þ    Any household is pregnant

Þ    Seasonal workers at home

Þ    Rent or mortgage payments for the household

Þ    Utility bills for the households

Þ    Other necessary & living expenses

Þ     Individual income for every member of the family

Þ    Payment would be provided to the members of the family if they live outside their home

Þ    Other benefits received in the family

Þ    Criminals fervor within home

Þ    Payment would be done if there is any disabled person at home

Special payment would also be made to the households who are having an expectant mother. The welfare payments would be done by the state government once in a month. The payments would be done in the first week of each month. In order to apply as well as approve the welfare benefits would take some time. For example, if someone is applying for basic cash assistance then the expected waiting time would be 45 days. In case someone is applying for food stamps then the expected waiting time would be approximately 7 days (Hollis & Nell, 2005).The benefits reaped by the allowances would be depended upon different factors. The state government generally takes a test to determine what would be the approximate amount of welfare payment to be paid to any household. The need would include clothing, personal incidentals, recreational activities, food, fuel to heat, electricity, lighting, cooking heating, shelter, etc.

The benefits of the allowances would be paid to the families through any type of a welfare program applicable in the Australian nation.  As stated that, each and every state has different SRS programs therefore, the payments would differ from state to state depending upon the geographies, employment level within a particular country, cost of living, opportunities available within in a state, etc (Hollis & Nell, 2005).

The basic guideline which could be seen from the food program is to show that on an average approximately a family of 4 can expect food stamps of $500 every month. The figure or the amount mentioned above might vary depending upon the variability of the number of family members within one household. A household having a single person can expect approximately $200 every month. The figures mentioned above are on average basis (Hollis & Nell, 2005).

The benefits in terms of cash allowance would be done by the state government in order to support he households financially. The cash allowances would be circulated on different criteria. The expectation of any household consisting of 4 members would be $900 & the household consisting of a single member would be $300. The welfare payments would be regarded as different types of benefits such as health care, utility assurance, medical benefits, child care, etc (Welfare Information, 2012).

This section of the report would take into consideration the unanticipated consequences which might arise due to the high levels of government welfare payments. This portion of the report keeps in mind the various aspects which have been covered regarding welfare fraud in Australia. As mentioned above that, welfare payments are practiced in order to provide economic as well as financial support to the people or households who are need of it (Hollis & Nell, 2005). Excess of welfare payments have been termed to be more dangerous highlighting the different types of issues, frauds, etc. This portion also highlights the level of fraud as well as provides fair analysis of the data available. The data would be an in depth knowledge regarding the size, dimension of the entire fraud (Prenzler, 2011).

The unanticipated consequences of government welfare payments have been discussed as under. They are as follows:

Þ    The welfare state & challenge of fraud:Due to high levels of welfare payments amongst the households, welfare frauds or benefits have been seen within the society. This type of fraud is generally seen in such type of countries or states, who has been growing at a very high pace. It is seen that, the modern welfare state has been created post World War II. This led to an overall boom within the society. The entire welfare state was designed in such a manner that, state government would be able to support all the citizens at the time of need. The main view of the state government was to minimize the levels of poverty, upgrade the levels of health & standard of living (Welfare Information, 2012).

The welfare systems would be able to involve high levels of allowances which would be targeted the elderly people, people those who have lost their employment, physically disabled population, single parents & students. The support was in terms of partial or indirect funds from the state government. The basic types of benefits which would be provided to the people mentioned above would be in form of medical services, free medicine & childcare.

The first criticism which has been attached with welfare state refers to fraud. Over excessive welfare payments to the households would act as one of the major unanticipated consequences in the year 1970 & 1980. It was noticed that, people who were ill or disable were living on welfare but were still founded working. This was another major issue attached to the welfare payments provided by the state government. In order to get the welfare payments, it was seen that high levels of population obtained the benefits fraudulently (Prenzler, 2011).

In order to notice the levels of fraud within the welfare system provided by the Australian government could be seen through the agency i.e. Centrelink. In the year 2008-2009, Centrelink circulated approximately $86.6 billion amongst 6.8 million customers. This figure includes the individual entitlements as well as all the different types of benefits on behalf of the government agencies. Based upon the customer records, it has been proved that approximately, 2.7 million claims have been made operative amongst 1,000 delivery centers under 28,000 staff members (Welfare Information, 2012).

Þ    Ensuring payment integrity:The second unanticipated consequence attached to welfare payments refers to ensuring of payment integrity. There are various factors which would lead to high levels of reassessments to the welfare. Contraction of resources under varied conditions such as recession periods would lead to high levels of shocks. With the help of media, the frauds were detected amongst the welfare cheats. A rise in the economic rationalism has also leaded to an increase in the high levels of spending & debt payments. In the year 1980, social security fraud was detected for approximately $1,000 (Australian Government, 2012). This was considered to be worse than tax evasion. The other consequence which could be seen was in regards to the fact that fraud was one of the planks which led to expansion as well as detection of the various measures to introduce new opportunities.

Þ    Measuring welfare fraud and the welfare debate:

The last type of unanticipated consequence refers to the measurement of welfare fraud. It has been criticized that many anti fraud measures have been taken up in order to provide a punitive approach which could be supported by the income factor. It has been claimed that, assessments of the various fraudulent issues would act to be most effective & efficient. This would help in order to decrease the current errors which would help in order to report towards the different types of circumstances (Welfare Information, 2012).

The fraud which has been occurred due to an increased government welfare payment is mainly due to two incidents. It has been seen that, in Australia high levels of fraud have been measured. There are high levels of Australian population who would accept the benefits of the payments in receipt of the subterranean income. It has been estimated that approximately 75% of the population are not willing to search for a good job opportunity but would rather depend upon the welfare payments done by the state government (Australian Government, 2012).

The two recent Australian welfare state examples to illustrate this kind of behaviors have been discussed with the help of a diagram & are as follows:Þ    Centrelink: This section majorly takes into consideration the data provided by Centrelink in terms to frauds & the various related activities. It has been seen that, Centrelink does not estimate the levels of fraud but it takes into consideration the detection of frauds & errors which would help to take out different types of outcomes. There are proper reviews which might occur in numbers. There are various methods, random sampling, checks, etc to check out the levels of frauds & get into proper investigation (Australian Government, 2012).

The table below represents, that reviews for the last three years from 2006-2009 has been represented within the same. It has been seen that, 15.7% of the total reviews led to cancellations as well as reduction in payments. It has been seen that 0.8% were referred towards Commonwealth Director of Public Prosecutions (CDPP) but only 0.5% was being under processed (Prenzler, 2011). The processing stated that only 98.8% was the conviction rate (Sen, 2008). In the past three years, 0.04% of the entire customers were being termed under fraud. While fraud investigations were on it has been estimated that $380.6 million were the cumulative savings which were to be targeted in order to recovery the same. It was accounted that approximately, 26.2% accounted to the payment levels (Prenzler, 2011).

Hence, it could be concluded that Australia has been witnessed with high levels of frauds due to an increase in the levels of unanticipated consequences of government welfare payments. This has been referred to as a crime problam & cannot be measuerd in quantifiable terms. Therefore, various preventive measures shall be kept in mind while making responses to the suspected levelos of fraud (Prenzler, 2011).

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