Debt notices issued by the department’s automated debt recovery system have brought with them an avalanche of appeals – something the federal government anticipated by hiring an army of review officers before the process kicked in, the insider, who only agreed to speak on the condition of anonymity, said.

However the government was “unwilling” to employ staff to analyse debts before they were issued, they said.

The debt recovery system – which the DHS has denied is wholly automated – matches Centrelink’s data with Australian Tax Office records.

Had there been an investment in analysis, mistakes – which have been reported to the media in droves – could have been avoided.

“Centrelink has been fully aware of the expected impacts of the PAYG data matching exercise,” they said.

“The impact on already overstretched staff is palpable. 

“The plummeting staff morale, the heightened anger and anxiety in customers, and the diminishing credibility of DHS creates unwanted tension and strain every day.

Human Services Minister Alan Tudge has continued to defend the system, saying earlier this week that people were getting through to assistance over the phone or at Centrelink within minutes and just 1.6 per cent of the 169,000 debt notices issued since July had been challenged. 

However the insider said that figure was “flawed” and did not reflect the stages before a formal appeal.

Already Centrelink has begun retracting debts. One man The Courier spoke to received a call from a Centrelink employee late at night last week who apologised and said it was “clear” he had no debt.

A university graduate who received a $5,880 debt notice for a year he earned less than $12,000 was told he had been audited for a single year when in fact it had averaged his income of three years.

“What has happened is when the system set up its audit where it averages out income I have had all my income averaged out back to 2012. Which is why the debt was so inconceivably high,” the man, who did not wish to be named, said.

“It has taken me till today (Tuesday) and over four hours on the phone to have this correctly explained to me.”