But council officer, Deanna Amato – with the backing of Legal Aid Victoria – will also take on the DHS over an alleged debt of $2754 from an Austudy allowance she received in 2012. The 33-year-old only discovered the debt when DHS issued a garnishee order against her tax return in January. "My tax return was $1709.87 and they took every cent ... It actually felt like I was being told I was guilty before I could prove my innocence. I couldn't believe they could find out my personal ATO information and take away my tax return, but could not find my new address or contact details," Ms Amato told The Age and The Sydney Morning Herald. It actually felt like I was being told I was guilty before I could prove my innocence. Deanna Amato She said the scheme introduced by the Coalition government had caused enormous hardship for many people who had relied on Centrelink benefits while studying or seeking employment.

"It just adds to anxiety about money and the future. You're trying to improve yourself and use that education and get a better job, and you have that debt looming over you," Ms Amato said. The unpopular automated system relies on a fortnightly average to calculate a former welfare recipient's debt, rather than discovering the exact amount that was claimed. Correspondence from DHS does not provide people with any explanation of how their debt was calculated, and places an onus on the recipient to disprove the amount by suppling the department with pay slips or tax returns. The DHS has also been criticised for its heavy-handed approach against those who fail to repay debts, including threats of compounding interest, garnishee of wages and seizure of money from bank accounts. DHS spokesman Hank Jongen said it "would be inappropriate to discuss the details of a matter that is presently before the court".

Loading "The Commonwealth Ombudsman, in reviewing our processes, found that it is reasonable and appropriate to ask people to explain discrepancies in data," he said. However Rowan McRae, executive director of civil justice access and equity at Victoria Legal Aid, said the robo-debt system, was "opaque and unfair". "We're committed to testing the lawfulness of this flawed scheme. For this to have a benefit for hundreds of thousands of other people, it needs to be done through the court," Ms McRae said. She said the program continued to cause significant financial strain and mental health issues among some of the nation's most vulnerable people.

Loading In February, DHS conceded before a Senate inquiry that only $500 million had been recouped but administration of the scheme had cost about $400 million since its introduction in 2016. At the time, Labor senator Murray Watt questioned the merits of the scheme The department is expected to issue more than 200,000 debt notices in 2018/19, while 173,000 have been referred to external debt collectors. About 113,000 debts, or about 20 per cent, have been changed or erased completely since 2016.