Services Australia staff were "incensed" and "alarmed" about the Robodebt scheme and increasingly received calls from people in distress, a royal commission has heard.
The first former Coalition government ministers will give evidence to the inquiry in Brisbane this week, with Marise Payne, who was the human services minister, giving evidence on Tuesday morning.
Former prime minister Scott Morrison will appear before the commission on Wednesday morning to answer questions about his time as social services minister and treasurer.
Late on Monday, commissioner Catherine Holmes heard evidence from the Community Public Sector Union (CPSU), which represents federal public servants.
Melissa Donnelly and Lisa Newman, who is no longer employed by the CPSU, outlined how the impact of the data-matching scheme became clearer over time.
The CPSU has members who are debt compliance officers, customer service officers and trainers at the Department of Human Services, now known as Services Australia.
Ms Donnelly said she started to receive feedback from people in a wide range of roles from early 2017.
By then, staff were concerned that the debts being raised were incorrect, that there was a lack of explanation about the new process, and there had been a rise in customer aggression and customer distress, which was also impacting the mental health of the union's members.
Ms Newman said they became aware in 2017 that tens of thousands of letters about debts had been sent, and people were beginning to call Centrelink to try to access their old files.
The royal commission heard it was a "horrendous" situation for staff, who wanted to help but were ultimately unable to assist vulnerable people.
"The detail of the data matching was becoming more apparent through the course of 2017," Ms Newman said.
"Certainly, I would have to say that it was not clear to us exactly what the data-matching system was matching, but what we were getting reports of were the different types of errors that staff could easily identify."
Those errors included different names for the same employer on pay-as-you-go (PAYG) information.
Ms Newman said the process had also changed so there was no-one reviewing the debts raised.
"Staff prior to the Robodebt scheme had a lot of discretion about how they treated the data they came into contact with," she said.
"They also had the opportunity to identify vulnerable clients … they had a lot of discretion to ensure there wasn't unnecessary financial hardship as a result of debt repayment."
Staff felt 'chilling effect on their capacity to raise concerns'
Ms Newman said staff were "alarmed" about the use of averaging, and Ms Donnelly said members were "absolutely incensed" about the impact on First Nations people and people from non-English-speaking backgrounds.
"Staff raised their concerns through most internal channels that they had access to, and what was reported back to me was that there was either no response or the response was, 'This is a system that has been checked, it's been well designed, so just get on with it,'" Ms Newman said.
The commission heard the union raised issues with department leadership and the relevant minister.
"There was no discernible impact of our engagement with those people," Ms Newman said.
Ms Donnelly told the commissioner that staff were sent an email reminding them of the consequence of "improper leaking" and were warned they could not be protected if they did not act in accordance with the Public Interest Disclosure Act.
"What staff understood … was that there was no room for external avenues, and people really felt that had a chilling effect on their capacity to raise concerns," she said.
The royal commission expects to call more former Coalition ministers to give evidence in 2023.
