Welfare Fraud and the State

WELFARE FRAUD AND THE STATE: BRITISH COLUMBIA 197-0-1977. by John Andre Rachert B.A., University of Calgary, 1985 THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS (CRIMINOLOGY) in the School of Criminology John Andre Rachert 1990 Simon Fraser University April 1990 All rights reserved. This work may not be reproduced in whole or in part, by photocopy or other means, without permission of the author. Name : John Andre Rachert Degree: Master of Arts (~riminology) 'l'itie or. thesis: Welfare Frdud and the State: British Columbia 1970 - 1977 Examining Committee: Chair: Ted S, Palys, Ph.D. Brian ~urtch,Ph.D. Nancy Maxler-Morrison, Ph.D. External Examiner Professor, School of Social work University of British Columbia Date Approved: I htere2y grant to Simn Fraser Universi'y The right to ier,~ my thesis, pro-iecf or extendpa essay 'Itt~etitle of wk,ich is 5hcn.n heir,^) to users of Tqe Simon Frassr University Lik,rar)*, and to make partial cr single copies only f07 sucn bsers or in response To a reqbest irm the libfar\,, of any other university, or other educarional institution, c;, its own behalf or for cne of its users. I icrther agree that perrn:ssi~q for mul?iple copying of this wcrk fcr scholarly purposes may be granied by me or the Sea? of Graduats S?goies. It is understood thzt copying or publication of this work for iinzncizi gain shall'not Se allo*ed without ny written permission. Ti~iec? Tk4zsis/F~~~$$~/~~~#~+~/~~+~/ Welfare Fraud and the State: British Columbia 1970-1977 Abstract This thesis constitutes a macro-sociological analysis of the British Columbia government's changing reaction to welfare fraud from 1970 to 1977. The policies and actions of three consecutive governments (Social Credit, NDP, and Social Credit) are examined. These governments shaped the current welfare fraud policies in British Columbia. The state's reaction to welfare fraud is examined using a modified, neo-Marxist, structuralist theoretical trajectory. The analysis of the role of the state within the structure of capitalism is interwoven with an examination of the impact of human agency. Throughout the period studied, little evidence of widespread welfare abuse was found, yet the disciplinary component of the welfare system was increased. During the 1970 to 1977 period two economic recessions led to increases in the number of provincial social assistance recipients and greater provincial welfare expenditure. The increase in the policing of welfare that occurred in the period was partly a reaction to the rise in welfare costs. Moreover, increasingly coercive anti-fraud measures emerged when the governments were attempting to either establish or buttress their legitimacy. Each government's legitimacy was threatened by the activities of a variety of interest groups (human agents). The nature and sources of this pressure changed as the government in power changed. iii The Social Credit party promoted a public perception of widespread abuse whether they were in power or attempting to regain power. The NDP government was forced to react to the Socred promotions because of a variety of economic and interest group pressures. The scapegoating of social assistance recipients was primarily a political tool used to erode and buttress government legitimacy. Essentially, welfare fraud became a significant social issue from 1970 to 1977 because the governments were facing contradictory pressures to ensure economic and social stability during a period of economic and social change. Sources of evidence for the analysis include Hansard, four lower mainland newspapers, a variety of provincial and federal reports, information culled from authors who have researched British Columbia's political history, and interviews with persons connected to the provincial welfare system. DEDICATION This thesis is dedicated to three literary characters: Larry Darrell, for his pursuit of knowledge; Dunstan Ramsey, because he showed me the pursuit is esoteric; and, Ignatius J. Reilly, who showed me the comedy of arrogance. QUOTAT LON There's a mighty big difference between good, sound reasons and reasons that sound good. Burton Hillis. ACKNOWLEDGEMENTS This thesis could not have been completed without the help of many people. I would like to thank the following: my committee members, Dr. Robert Gordon and Dr. Brian Burtch; and, my external examiner, Dr. Nancy Waxler-Morrison of the School of Social Work, University of British Columbia. Information on the B.C. political scene in the 1970's was supplemented by Ms. Patsy George, Mr. Bob Williams M.L.A, Mr. Emery Barnes M.L.A., Professor Dennis Guest, Dr. David Schreck, Mr. Dennis Cocke, and Professor Dennis Koenig. Mr. Rob Harvey and Mr. Gerry Merner of the Ministry of Social Services and Housing, helped in filling in the statistical blanks. I would also like to thank the library personnel of U.B.C.'s Social Work, Law, and Government Publications divisions, and the secretaries in the School of Criminology. On a personal level I would like to thank Dale Phillipe, Andy and Therese Rachert and Laura Nordean. TABLE OF CONTENTS Approval ............................................. ii Abstract ............................................ iii Dedication ............................................ v Quotation ............................................ vi Acknowledgements .................................... vii Table of Contents .................................. viii List of Tables ....................................... xi Chapter I. INTRODUCTION ............................. 1 NOTES ................................................. 8 Chapter 11. WELFARE FRAUD AND STATE CONTROL: PERSPECTIVES .................................. 9 Public Opinion and Welfare Fraud ............. 10 .. The State and Welfare Fraud Mythology ........ 19 Neo-Marxist State Theory: Canadian Research ............................ 26 Neo-Marxist State Theory ..................... 32 Summary ...................................... 44 viii NOTES ................................................. 47 Chapter I11 . THE POLITICS OF WELFARE FRAUD IN BRITISH COLUMBIA: 1970 TO 1975 ............... 49 The Socred Government and weif are Fraud : 1970 to 1972 ................................. 49 The NDP Government and Welfare Fraud: 1972 to 1975 ................................. 59 Summary ...................................... 88 NOTES ................................................ 92 Chapter IV . SOCIAL ASSISTANCE "REFORM" AND THE POLICING OF WELFARE: THE SOCIAL CREDIT RESPONSE ...... 98 The Socred Government and Welfare Fraud: 1976 to 1977 ................................. 98 Summary of Events: 1976 and 1977 ............ 121 Welfare Fraud and the Legitimacy L," of the State ................................ 123 NOTES .............................................. 130 Chapter V . CONCLUSIONS AND OBSERVATIONS .......... 134 A New Understanding of Welfare Fraud ........ 134 Welfare Fraud and Structural Neo-Marxism .... 139 Future Research ............................. 145 APPENDIX A: ,METHODOLOGY ............................. 149 APPENDIX B: TABLES ................................... 158 1. British Columbia Estimated and Annual Number of Social Assistance Recipients per Month for Fiscal Years 1968/69 to 1978/79 ............ 159 2. Unemployment Rates for Canada and British Columbia: 1970 to 1978 ..................... 160 3. British Columbia Growth of Social Service Expenditure as a Percentage of Total Provincial Expenditure: 1967/68 to 1978/79 ........................ 161 4. British Columbia Gross Domestic Product 1969 to 1978 .............................. 162 5. Postwar Periods of Economic Slowdown and Recession in Canada: 1951 to 1980 ......... 163 6. British Columbia Department of Human Resources Estimated and Actual Expenditure by Service 1975/1976 and 1976/1977 ................... 164 BIBLIOGRAPHY ........................................ 166 LIST OF TABLES Table Page 1 British Columbia Monthly Social Assistance Rates and Canadian Poverty Lines For Singles 1970 to 1973 ................................. 57 2 British Columbia Monthly Social Assistance Rates For Singles: 1970 to 1976 .................... 69 3 British Columbia Department of Human Resources Summary of Supplemental Estimates: 1974-75 ... 75 4 Department of Human Resources, Statement of Estimated and Actual Expenditures: 1966/67-1974/75 .............................. 77 5 MHR Inspectors Program Available Statistics: 1977 to 1980 ................................ 111 6 Compendium of Charges and Convictions for Welfare Fraud in British Columbia 1969 to 1980 ................................ 113 7 Number of People Charged and Convicted of of Welfare Fraud and the Costs and Savings Accrued Through the Process: 1976 to 1980 ... 115 Chapter I Introduction: The State and Welfare Fraud At certain points in Canadian history, the various levels of ' government have asserted that welfare fraud is a serious threat to the integrity of the social assistance system. On these occasions governments have proposed and implemented a number of measures designed to eradicate welfare fraud, often with a great deal of ! public support. But how is the integrity of the social assistance system threatened by fraud? Are there so many social assistance recipients committing fraud that costs rise to unacceptable levels? Are there large numbers of people living on welfare when in fact they could be working at readily available jobs? Much of the Canadian research into welfare fraud focuses on the perceived

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