The Turnbull government has decided to waive a debt accrued by the Family First senator Bob Day when he sat in the Senate despite being ineligible to be a candidate.

The special minister of state, Scott Ryan, told a Senate estimates hearing on Thursday that Day had sought a waiver of the debt he owed to the Department of the Senate and the finance department, which was an option available to him under the process.

Ryan told the committee that, after advice from officials, he had agreed to waive Day’s debt. “The waiver of this debt is consistent with the outcome in previous similar cases,” the minister said.

But the waiver of Day’s debt to the commonwealth contrasts with the punitive approach the government has taken to chasing down welfare debts. The government’s “robo debt” recovery process has been mired in controversy since its inception.

Day is not the only former senator with debts owing. The former One Nation senator Rod Culleton is in a similar position.

Ryan, in his statement on Thursday afternoon, indicated Culleton had not yet applied to the government for a waiver.

“As the media has reported, letters were sent to both Mr Culleton and Mr Day outlining the situation and presenting a number of options to progress this issue,” Ryan told estimates.

“The letters provided Mr Culleton and Mr Day with options in relation to the debt. Mr Day has elected to take one of those options, which was to apply for a waiver.

“Those options remain open to Mr Culleton.”

Ryan told the committee he had sought recommendations about how to proceed from a committee, which, in its advice, had “noted it may be seen to be inequitable for the commonwealth to recover the debt, given Mr Day performed his duties as a senator in good faith”.

He said in making the recommendation, the committee “also noted Mr Day’s current personal financial circumstances”.

Day’s debt was in the order of $130,000. He resigned last November when his building companies were liquidated.

In early April, the high court ruled unanimously that Day was ineligible to be a senator because he had an “indirect pecuniary interest” in an agreement with the commonwealth.

The former senator’s eligibility was referred to the high court late last year to determine if he had an indirect interest in the lease of his Adelaide electorate office by the commonwealth, which would breach of section 44 of the constitution.

Fullarton Investments, an entity that bought the 77 Fullarton Road property from the Day family trust on a vendor finance basis, was to receive rent from the commonwealth and use it to pay back the trust, although no rent was ever paid.

A majority of the court found that Day was ineligible from 26 February 2016, the date on which Fullarton Investments directed the commonwealth to pay rent to a bank account owned by Day.