Audit finds $630 million in wasted welfare costs

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Audit finds $630 million in wasted welfare costs

A government audit into the newly expanded national welfare system has revealed serious waste caused by poor operational oversight, as benefits continued to be paid to unqualified people and even the deceased.

The Board of Audit and Inspection yesterday announced the results of an investigation into the Ministry of Health and Welfare and other agencies involved with the welfare system. The audit, which took place from March 25 to May 24, revealed that 702.2 billion won ($629.6 million) went down the drain since the integrated system was created in 2010.

The announcement came as the Park Geun-hye administration battles a tax revenue shortfall because of her pledges of wider welfare benefits. Park has promised to expand welfare programs without increasing tax rates, but her government’s plan to fill the coffers by slashing tax credits has been wildly unpopular.

The Ministry of Health and Welfare established the integrated network by merging welfare systems operated individually by regional governments in 2010. Despite the original intent to improve the effectiveness of the system, money is still being wasted due to systemic sloppiness and careless civil servants.

The integrated welfare system manages 452 databases from 42 government offices including the National Tax Service, the National Health Insurance Corporation and the Ministry of Public Administration and Security, and information provided by 131 financial institutions including banks. As of April this year, the system managed 14 million benefit payments for 9.3 million people. Every month, the system is in charge of 800 billion won in cash payments.

According to the audit report, a total of 37.6 billion won in erroneous payments of welfare benefits was made during the first half of last year alone because the system failed to properly register changes in incomes and assets of the recipients.

At least 63.9 billion won was spent on welfare for 320,000 people who were already dead, the report said. When the Welfare Ministry established the integrated system, it simply accepted databases of welfare recipients from regional governments and used them without verification. As a result, the ministry considered 1.16 million dead welfare recipients to be alive, although not all of them got payment. It wrongfully paid 63.9 billion won to 320,000 deceased people since 2010, the audit found. Many payments were auto payments into the deceased peoples’ bank accounts.

The report said simple typing errors by civil servants caused serious leaks in the budget. For welfare for the disabled, including the disability support pension, the government paid out an excess of 16.3 billion won to 17,751 recipients since 2010 because their disability levels were inputted incorrectly.

In five welfare voucher programs including elderly care service, another 37.5 billion won was mistakenly paid to 13,586 people since 2010 due to the errors in their health insurance records and ages in the databases.

The ministry was also slow in providing recipients’ income and properties data to local governments, causing a delay in accurate calculations of the benefits.

The ministry provided the data every six months instead of every month and 75.2 billion won is wasted yearly due to the delay, the audit said.

The audit board also said the ministry failed to properly reexamine the qualifications of people getting the national basic living allowance when it created the integrated system in 2010. Although financial assets of all 900,000 family members of recipients should be processed, the ministry only has done so for recipients registered since 2010.

The ministry also failed to prepare legal grounds for local governments to access welfare recipients’ interest incomes and ended up paying out an excess of 95.9 billion won to 153,000 people every year.

While the ministry was criticized for its poor performance, the audit board also expressed concern that civil servants are overloaded with work due to the rapid increase in welfare payments.

Although the number of civil servants working on welfare programs at local governments went up from 22,748 in 2007 to 25,300 in 2012, their workloads snowballed, the report said. As of this year, 197 projects from 16 ministries are being implemented by them, and the audit board recommended the ministers of health and welfare and security and public administration to come up with a plan to hire more public servants.

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