I'm actually okay with reasonable amounts of government fraud. Because government programs that serve all the people must operate from a default accept, not a default deny if they're to cover all people with benefits. Sure, do audits and penalties if fraud is found, but even still. I would FAR rather a daycare that's not following the rules get government funding than the 99% of daycares who are legitimately serving families be stuck without support. I would FAR rather some folks get social disability payments support who weren't supposed to than disabled people stuck for months or years with no help because they had "insufficient documentation".
Governments aren't supposed to be a business. They're meant to ensure everyone is covered equally, even the ones who are difficult and "unprofitable". Because that's what governments are designed to do.