Thousands of robo-debt notices were issued by accident to Centrelink recipients after an error saw the program’s automated algorithm restart in April this year, according to leaked correspondence obtained in part by The Saturday Paper.

The incident is revealed in an email sent to the Department of Human Services (DHS) compliance workforce. It outlines how “a number of debts” were issued after the algorithm “came off pause in error”. These debts were “loaded prior to 11 February 2017” but issued between April 29 and May 3, 2019.

The document goes on to explain the program has been “re-paused” until October 30.

The error comes at a sensitive time for the department. Officials have spent the past fortnight promoting revamped processes for handling debt recovery during appearances at an ongoing inquiry into the robo-debt scheme by the senate community affairs references committee.

At a public hearing held on October 3, 2019, Annette Musolino from Services Australia explained how the system and online portal had been reworked three times since it was launched. These changes have altered the way a person interacts with the department and provides more information, such as the calculations used to generate the debt. But the underlying architecture of the system remains largely intact.

The debts identified under the earliest iterations of the robo-debt program remain on “pause”.

The year of robo-debt’s introduction, the number of notices issued increased more than sevenfold, to 142,634.

When contacted for comment, the DHS’s general manager of communications, Hank Jongen, acknowledged the error, saying a “small proportion” of debts had been released to the public but noted “the issue was quickly identified by staff and debts were immediately re-paused”.

Jongen said: “Arrangements are in place to prevent this happening again. Workaround measures were also immediately put in place for those affected. This included referring any calls to a dedicated support team and contacting people wherever possible to explain correspondence received that week requesting payment could be disregarded.”

The department did not clarify how the algorithm became unpaused and did not specify the arrangements to prevent this happening again.

At the time the letters were sent, compliance officers were instructed to redirect anyone who had received one of these accidental robo-debt notices to a specialised team tasked with handling the matter.

The Saturday Paper understands the batch of debts involved was among those identified by the earliest version of the automated algorithm, which began operation from July 1, 2016, and continues to operate today, with additional layers of oversight.

The DHS has used an algorithm to perform data-matching activities since 2004, but only gained the ability to store this data in 2010.

The algorithm worked by measuring the income a person declared to Centrelink against what they reported to the Australian Taxation Office. The tax office figures were averaged out, according to the time an individual spent receiving a particular social security payment, before being compared with the amount declared to Centrelink.

Where a discrepancy was identified between the two sums, a compliance officer would then be assigned to investigate further.

Often this meant compelling employers and banks to hand over a person’s records, using powers contained under the Social Security (Administration) Act 1999.

Doing so was time-consuming, but also meant the department would catch any errors and have a complete set of information before any contact was made with the alleged debtor. This level of oversight was stripped away when the robo-debt scheme began in 2016.

When the Commonwealth ombudsman investigated the scheme in 2017, it reported that prior to the automated process the department averaged 20,000 interventions annually. Where a discrepancy was identified, a letter was generated and sent to the person, asking for more information that, when answered, often resulted in a phantom debt being issued.

The year of robo-debt’s introduction, the number of notices issued increased more than sevenfold, to 142,634.

The current parliamentary investigation marks the second formal inquiry into the department’s methods for identifying and recovering alleged debts using income-matching software.

The first handed down its report in June 2017 and recommended the entire system be put on hold and that all those who had been saddled with a debt have it reassessed by specialist officers.

News of the accidental debts complicates matters for the Coalition government, which has so far remained steadfast in its support for the robo-debt recovery operations.

Last week, Coalition senators lashed members of the legal community, during a public hearing in Western Australia for their continued use of the term “robo-debt”. Liberal senator Hollie Hughes branded it a “media slogan” and surprised many when she suggested to Kate Beaumont, executive officer of the Welfare Rights and Advocacy Service, that the use of the term was “probably creating a bit more anxiety than is required”.

“If we’re trying to reduce the anxiety around this, not using that term, particularly in these sorts of settings, would probably be helpful,” Hughes said. “I’m just wondering if you understand, or if you understand now, how the income compliance process works under the CUPI [Check and Update Past Income] system and if you’re aware of how those debts are generated.”

A tense exchange followed between Hughes and Sharryn Jackson, executive director of the Community Legal Centres Association of Western Australia, who told the senator the program “is entirely contrary to best-practice debt recovery”.

“It seems passing strange that such a massive scheme can be introduced, and now we’re trying to fix it as we go along,” Jackson said.

When contacted for comment, the chair of the current senate inquiry into the scheme, Greens senator Rachel Siewert, said any such error represents a serious issue that must be investigated.

“If a mistake was made, it’s really important for the senate committee to hear about that,” says Siewert. “I think it’s important to the inquiry given that this issue goes to the heart of the system and how people could be affected.”

According to the department’s answers to questions on notice, the total cost of running the income compliance program from July 1, 2016, to June 30, 2019, has been $534 million, 78 per cent of which comprises salary and administration costs.

During that time the department has recouped $658 million in alleged debt through its compliance activities, out of a projected $1.03 billion. Through it all, the drive to automate has remained, says Melissa Donnelly, acting head of the Community and Public Sector Union (CPSU). This is in spite of staff raising concerns since the program’s inception.

“The government has been hell-bent on continuing to pursue its implementation whatever the cost,” Donnelly says. “They’ve amended parts of the program, but the fundamental problems with the robo-debt program are still there.”

Donnelly told The Saturday Paper members of her union were concerned the use of the program was actively undermining public trust in the DHS and the government.

“People are afraid to deal with DHS,” Donnelly says. “[People on social security] either make multiple contacts to DHS for fear of doing something wrong, or they refuse to speak to them at all.

“Social security is part of our fabric in terms of the kind of society we want to be. It’s an institution with a long and deep history in Australia. And it goes to characteristics about who we are and who we seek to be in terms of giving everyone a fair go.”

In a survey of DHS staff performed by the CPSU ahead of the senate inquiry, 78.7 per cent said the automated algorithm should be scrapped and 95 per cent wanted the human oversight reinstated.

Coupled with the intense pressure to make performance targets, the problems with the program have led to a demoralised workforce at a time when the very legal basis underpinning the automated debt recovery process has come under challenge.

There have been several lawsuits aimed at the department’s debt recovery scheme, including two separate cases mounted by Victoria Legal Aid and an independent class-action lawsuit by Gordon Legal, all arguing the department has reversed the usual onus of proof for raising a debt.

How they play out will have broad ramifications for the Department of Human Services, which has sunk considerable resources into forging ahead with automation while continuing to insist it is business as usual.