A recently widowed pensioner from New South Wales was shocked and angry when he opened a letter last week that claimed he has owed Centrelink $67.55 since 1998.

Key points: NSW pensioner Norm Austwick received a bill from Centrelink claiming he was overpaid in 1998

NSW pensioner Norm Austwick received a bill from Centrelink claiming he was overpaid in 1998 DHS apologised for the error, but an angry Mr Austwick says his time has already been wasted

DHS apologised for the error, but an angry Mr Austwick says his time has already been wasted ACOSS continues to call for reform to debt recovery system, which it says causes '"stress and torment"

Norm Austwick, from Mogareeka, on the state's Far South Coast, said the letter, which claimed he was overpaid that amount 21 years ago, caused him considerable distress and wasted a good deal of his time.

Eventually the Department of Human Services apologised to Mr Austwick and conceded the letter should never have been sent — but not before the 79-year-old had spent hours on the phone trying to get to the bottom of the matter.

"I was very angry because my family thinks I'm obsessive about informing Centrelink of any changes and I believe it would be impossible for me to have a debt," Mr Austwick said.

"When you get a letter like that all you do is think about it and think about how unjust it is.

"I am not a rogue, not a cheat, and I hate being cheated."

Mr Austwick said Centrelink should provide evidence for how it arrives at debts rather than just stating the amount that is owed.

Norm Austwick outside his home at Mogareeka. ( ABC South East NSW: Claire Wheaton )

He said he knew of people who had queried their debt notices with Centrelink, only to have Centrelink reduce it.

"I know people who have received a debt bill, gone through the system, and had them reduced from thousands of dollars to hundreds of dollars," he said.

"Now, there's something really wrong with that.

"If anybody gets a letter, they've got to find out why they owe that money."

Reform needed to curb 'stress and torment'

The Australian Council of Social Service (ACOSS) is calling for the government to reform its debt recovery system.

ACOSS Senior Policy Officer Charmaine Crowe said Mr Austwick's case proved the system needed to be more humane, accurate and fair.

"It should not happen that someone receives a debt notice of $67 from 20 years ago and have to go through the stress and torment of trying to prove their innocence with Centrelink," Ms Crowe said.

"We are deeply concerned that there have been hundreds of thousands of people who have paid an alleged Centrelink debt that they do not owe or paid a debt that's higher than they owe."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 8 minutes 29 seconds 8 m Centrelink accused of chasing debts that don't exist ( Paul Farrell )

Ms Crowe said Centrelink's approach to debt recovery needed to change.

"We don't see anyone in the private sector being able to tell their customers that they owe them money, and they need to prove that they don't," she said.

ACOSS was encouraging people who receive a debt notice to consider seeking legal advice, adding that it may be in their best interest to have it reviewed.

In a statement to the ABC, Department of Human Services General Manager Hank Jongen said Mr Austwick's letter was not issued as part of its online compliance system, but as part of the aged pension income stream review process.