The Department concealed key debt theft advice from the Ombudsman

The department responsible for implementing the debt robbery scheme withheld key documents pointing to its possible illegality from an independent watchdog investigating the scheme, a royal commission has been told.

The commission is trying to understand the role of the Commonwealth Ombudsman, whose 2017 report identified a number of flaws in the scheme but stopped short of outlawing the “average income” debt calculation process.

But while providing evidence, Senior Assistant Ombudsman Louise Macleod was shown various documents, including emails marking the scheme as potentially illegal, which she had never seen before.

Ms. Macleod said the human services department had not provided the documents to her office during the investigation.

“It bothers me terribly and it’s really disappointing,” he said.

“This shows that (the department) was not participating in good faith.”

Ms Macleod said that all departments investigated by the Ombudsman were expected to provide relevant information and that it was an offense not to provide it.

Earlier, the commission heard that the Ombudsman’s inquiry was triggered by a dramatic increase in complaints from people who had received Centrelink debt notices.

Social security complaints accounted for two-thirds of the total received by the Ombudsman, but Ms Macleod said they almost doubled between October and December 2016 after the scheme came into force.

“Increases in complaints are always a red flag for the Ombudsman’s office,” he said.

The Ombudsman’s inquiry into the scheme pointed to problems with the internal review mechanisms used by the department of human services when they received a complaint about a debt.

Ms Macleod said it appeared the department was “skipping the proper administrative process” meaning complainants would not have the option to appeal their matter.

“Beyond that, you’re also talking about a cohort of people accessing the welfare system (who) don’t have the means to take it to the Administrative Court of Appeals or Federal Court,” he said.

“So we were concerned about that.”

Former Commonwealth Ombudsman Michael Manthorpe is due to lead the commission on Wednesday afternoon.

The debt robbery scheme ran from 2015 to 2019 and used average income from tax office data to calculate and increase debts.

The commission is examining how the scheme was allowed to continue, given significant concerns about its legality raised in early 2017.

More than $750 million from 380,000 people was illegally recovered through the program and automated debt notices have been blamed for contributing to multiple suicides.

Meanwhile, Deloitte partner Elea Wurth, commissioned by the commission to produce a technical study of robodebt, said a review found that artificial intelligence was not present in the program.

Rather, it was a “relatively basic” automation system that could not learn from mistakes or become more accurate over time, unlike other AI programs that have the ability to “self-learn”.

“The debt robbery scheme did not have algorithms that would allow for self-learning over time; it was very defined and specific to achieve a very specific goal.” said Dr. Wurth.

“He was extremely rigid. Once those rules have been codified, the system itself stays in place until a human comes in and changes the rules.”

Deloitte’s report recommended methods to improve trust with automated programs in the future, including “human-centered design.”