Private contractors will answer calls from Centrelink's welfare recipients after the Department of Human Services outsourced call centre work to multinational services company Serco.
In an unprecedented move for the welfare agency, 250 of the company's Australian subsidiary staff will take calls about payments in a three-year pilot program costing the government $51.7 million.
The main public sector union and Labor rounded on the Coalition solution to rising call wait times, saying it would not lift the agency's performance, and asking why a private company would be entrusted with critical services.
Human Services is turning to the private sector to supplement its own staffing for phone queries after a storm of controversy and client frustration, as more than 42 million calls to the agency received an engaged signal in just 10 months, a result officials blamed on smartphone apps.
Engaged signals met 29 million calls in the previous 12 months, a turn for the worse on 2014-15 when the number was 22 million.
The 250 extra call centre workers will be Melbourne-based, and are funded in the same 2017-18 budget that slashed nearly 1200 jobs from the Human Services department's ranks.
Serco, a UK-based behemoth that provides "catch-all" services for governments and private companies around the world, has run Australia's immigration detention centres.
Minister for Human Services Alan Tudge said the pilot, beginning in late October, would help reduce call wait times.
His office said using commercial suppliers was not a new approach, and that partnerships between the Australian Taxation Office and private companies had set the precedent.
"Under the partnership arrangement, Serco's staff will be fully trained and will comply with all Commonwealth government privacy and security requirements," it said.
"As an Australian-based supplier, Serco will ensure that no services or data will go offshore."
The Community and Public Sector Union said the contract added insult to the injury of recent job cuts in the department.
In condemning the move, national secretary Nadine Flood said the contract was a disaster for Centrelink that would put thousands of vulnerable people at risk.
"Trusting the highly sensitive needs and information handled by Centrelink staff to a private operator is scary in itself and this situation is even worse," she said.
"Providing Serco with even the most basic access to client records would be giving the company a frightening amount of personal information.
"Centrelink clients need real help, such as that they are given by our members who have permanent jobs in the department and therefore the proper training and experience to actually resolve peoples' problems.
"A private call centre that's designed merely to make the department's call waiting times look better isn't going to genuinely help anyone."
Opposition Human Services spokeswoman Linda Burney said Centrelink was under-resourced and understaffed.
"Mr Tudge must face up to the fact that he's failed to fix the massive blowout in Centrelink call wait times. Outsourcing Centrelink call centres just isn't good enough," she said.
Figures released by the department showed the average waiting time across Centrelink's "main business" phone lines was nearly 27 minutes in January, the height of its "robo-debt" controversy.
However real waiting times can be much longer than the average, as Human Services regards a call as answered if the caller is put back on hold and spends further prolonged periods waiting to speak to a person.
Mr Tudge's announcement came a day after the Turnbull government rejected findings of a Senate inquiry into its controversial "robo-debt" system for welfare payments, refusing to suspend data matching and defending procedural fairness in the recovery of payments.
Sign up for our newsletter to stay up to date.