Centrelink management has ordered frontline staff working in branches not to process disputes over the Federal Government's controversial debt claw-back scheme and instead refer welfare recipients to an online portal.

Key points: Memo orders branch staff not to process debt disputes in person

Memo orders branch staff not to process debt disputes in person Also says staff must "not cancel the activity under any circumstances"

Also says staff must "not cancel the activity under any circumstances" Employee says customers "anxious, fearful, confused and frustrated"

An internal Centrelink memo obtained by 7.30 said staff "should refer customers online to undertake the intervention" and "must not process activities in relation to the Online Compliance Intervention".

The instructions, available on Centrelink's internal communications system, also told staff in bold text: "Do not cancel the activity under any circumstances."

The memo appears to contradict Human Services Minister Alan Tudge's claim on Wednesday that people having problems with online and telephone services could go into a Centrelink office and see someone "in 10 minutes".

When pushed on claims that recipients had been turned away at Centrelink offices, Mr Tudge said: "We do have self-terminals in the Centrelink office and there are people there who can help people be able to get online with that process."

A statement from the minister's office to 7.30 said "there is no contradiction — both the memo and the comments are correct".

"A person arriving at a service centre with an enquiry about the online compliance system will be met by a customer service officer, have their enquiry assessed, and be referred to the right person to resolve their enquiry as quickly as possible," it said.

The internal Centrelink memo does suggest staff can offer help to vulnerable clients in certain circumstances.

"Customers must be encouraged to self-manage as assistance is intended for vulnerable customers or those with extenuating circumstances," it said.

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Customers 'anxious, fearful, confused and frustrated'

A Centrelink employee, who asked not to be identified because they were not authorised to speak publicly, said front office staff were given no warning about the data-matching program before it was launched in July last year.

"The first an office staff member was aware of the new program was when a Centrelink customer has walked through the door with a letter about it," the employee said.

"Every customer I have assisted that has presented with the online compliance intervention letter has been extremely anxious, fearful, confused and frustrated."

The Commonwealth Ombudsman is investigating claims the scheme resulted in welfare recipients around the country receiving incorrect debt notices.

Labor has asked the National Audit Office to also investigate, and welfare groups are pushing for the Government to suspend the program.

But Mr Tudge rejected claims there were flaws in the automated system that has matched welfare recipients' reported income with their tax records.

"The system is working and we will continue with that system," he said on Wednesday.

Staff sceptical data-matching system can be fixed

The Community and Public Sector Union's assistant national secretary, Michael Tull, said Centrelink staff were under pressure to deal with problems being created by the automated system.

"But they're captive to a computer system and a set of processes and regulations which don't always let them provide the advice or support or make the decisions that the clients need," he said.

"It's absolutely demoralising to be talking to a client who is clearly struggling, who's clearly feeling very bad about the circumstance they're in, and not being able to help them."

The Centrelink employee who spoke to 7.30 said staff were sceptical about the suggestions that the data-matching system could be refined to stop debt notices being sent out in error.

"It is as if Centrelink has simply decided that their prized data-matching program is now too hard, too time consuming and too costly," the employee said.

"So let's outsource it to the customer — they will be so overwhelmed that they will give up."

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