At a Senate Inquiry on Tuesday Victoria Legal Aid called the scheme an “abject failure” which should be immediately abandoned. 

Scarsdale’s Lee-Anne Thomas received a debt notice for just under $700 late last November for an overpayment allegedly made by the department in 2010. She said she asked the welfare agency to hold off the debt until she after her surgery when she could investigate the claim but her request was refused.

A week before she went in for surgery, the agency began fortnightly deductions from Ms Thomas’s pension.

“I had pre-admission appointments, I had surgical appointments, I had to have an ECT done, there was so much that had to be done within that time. 

“Before I went into hospital, I went into Centrelink in Ballarat. I sat there for two hours waiting for someone to see me and they said to me, ‘we’re terribly sorry we’re not trained to deal with this you have to call this number’.”

Centrelink waived Ms Thomas’s debt in January after she read aloud six months worth of payslips to an agency staffer over the phone.

Ms Thomas is among dozens who have come to Ballarat MP Catherine King’s office for advice after receiving a debt notice.

Ms King said over a third of those debts had been either waived or significantly reduced.

Ballarat’s Elsa Hoggard spoke to The Courier in January after her $554 Centrelink debt was referred to a Sydney debt collector. Ms Hoggard, who requested her debt be reviewed, has tried repeatedly to upload her payslips to Centrelink’s website but found the site was “constantly down”. 

“The way that it’s handled is just appalling, there’s no regard for the human beings that are involved in it.”

Victoria Legal Aid managing director Bevan Warner told the Senate Inquiry the automated debt system was “undermining the integrity of the welfare system”.

“It is arguably unlawful, and even if it is lawful, it shouldn’t be.

“The minor improvements that have been announced don’t go far enough and it should be stopped.

“The scheme was a blunt solution to a self-inflicted problem, that gave little thought to the customers who would be affected. What thought was given was of the uncaring kind.”

On Monday a report by the Commonwealth Ombudsman found the agency’s demands of former welfare recipients were unfair but that its initial “request for information” letter was reasonable. 

Human Services Minister Alan Tudge said the government would implement all the report’s recommendations.

“The Ombudsman’s report shows that the online compliance system is reasonable in its data-matching and can accurately calculate debt owing,” Mr Tudge said.

A Department of Human Services spokesperson said the department did not routinely require recipients to provide payslips and there were other ways to verify income.

They said people asked to review their income can go online, or call, and ask for an extension to the initial 28 day timeframe, which would be automatically granted on two occasions.