Emeritus professor of law at the University of Sydney Terry Carney, who was on the Administrative Appeals Tribunal for 40 years and was its longest serving member until finishing in September, has weighed into the debate over the controversial debt collection method saying the Department of Human Services has no legal basis to raise debts when a client fails to ‘disprove’ they owe money.

While Professor Carney urged it be made to comply with the law, the DHS rejected his comments, saying its Online Compliance Intervention program was consistent with legislation.

"Robo-debt" - the subject of a Commonwealth Ombudsman report and a Senate inquiry recommending sweeping reforms to the program - was at the centre of a maelstrom of controversy last year and remains loathed by critics calling for change.

The "robo-debt" program compares Tax Office income records against fortnightly income clients report to Centrelink, and asks them to confirm figures when a discrepancy is detected. From July 2016 the OCI scheme raised debts in every case where the person could not disprove the possible overpayment or its amount, Professor Carney said.

Writing in the UNSW Law Journal last month, he said that despite the DHS' stance it remained responsible for calculating debts based on actual earnings, not assumed averages.

"The failure of a person to ‘disprove’ the possibility of a debt is not a legal foundation for a debt," he said.

"When confronted with suggestions of having an overpayment, often from up to seven years ago, the least literate, least powerful, and most vulnerable alleged debtors will simply throw up their hands, assume Centrelink knows that there really is a debt, and seek to pay it off as quickly as possible."

The DHS' approach to internal and AAT reviews may also breach a standard requiring the government to avoid pursuing legal action in ways oppressive to citizens, he said.

"Robo-debt" had changed the way debts were raised, wrongly claiming to absolve Centrelink from its legal obligation to get enough information to raise a debt when its first contact with a recipient failed to unearth details about their actual earnings, Professor Carney said.

DHS spokesman Hank Jongen said the system did not automate debt recovery, nor change how income was assessed or how debts were calculated.

The independent review by the Commonwealth Ombudsman found the online compliance system met all legislative requirements and accurately calculated debts when the required information was entered, Mr Jongen said.

Referring to previous Federal Court findings, Professor Carney said a "default" outcome may result if a decision-maker wasn't satisfied about key facts in a case.

The default in decisions to raise an overpayment debt was that no debt existed unless Centrelink established its existence and size for a particular fortnight, as required by rules about raising debts, he said.

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Centrelink had, at best, failed to initiate its own enquiries by invoking its powers to require employers or banks to supply relevant records and information.

At worst its primary and reviewed decisions "misleadingly give alleged debtors the impression that the information for each fortnight has been checked and is accurate" or "imply that debtors have now ‘accepted’ calculation on an ATO average".

He argued the AAT should set aside decisions based on averaging and send them back to be reconsidered with a direction that overpayments be calculated on precise information about earnings in relevant fortnights.

Labor Human Services spokeswoman Linda Burney said the Coalition needed to clarify immediately the legality of "debt notices" issued to Centrelink clients and said it appeared many should not have been sent.

The Senate inquiry said debts calculated by averaging of income across a 12-month period should be reassessed, with the system redesigned and effective risk assessment process put in place.

It found the program had caused a "profoundly negative impact on the lives of thousands of Australians" and was responsible for trauma suffered by innocent welfare recipients required to prove they did not owe money demanded by Centrelink.

However the government said there was no evidence to support the recommendation that the online system be put on hold.

In April 2017, the Commonwealth Ombudsman found Centrelink's demands on former welfare recipients were neither "reasonable" nor "fair", but the Coalition said it vindicated the basic approach of the debt recovery program and that many of the watchdog's recommendations were already in place.

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