Letters asking Centrelink recipients to prove they don't have a debt are causing just as much anxiety as raising a debt itself, a Senate inquiry has heard, even as a government senator disputed the colloquial term for the controversial debt recovery system.
Representatives of community legal centres and financial counsellors said people with low literacy levels don't feel like they have the power to challenge the debts, and often accept them even if they believe they are wrong.
In the second day of hearings into the government's controversial automated debt recovery program, often referred to as "robo-debt," Liberal Senator Hollie Hughes insisted use of the term "robodebt" was misleading, as many Centrelink staff were involved in the process.
"It's incorrect to suggest that this debt is somehow generated without human intervention, without there being some sort of discussion with an actual person," Senator Hughes said.
Senator Hughes said the name was causing anxiety, but evidence was given that the onus of proof being placed on the recipient to prove there wasn't a debt was causing problems, especially for vulnerable people.
"We've been advised by financial counsellors that just sometimes the impact of the letter that has caused much distress to many of those customers," Diane Hayes from the Financial Counsellors Association of Western Australia said.
"Many people have paid the debt without challenge because the assumption has been that it is a government request, and therefore it must be valid."
Financial Counselling Australia called for the government to act as a "model debt collector".