Several mid-level legal officials in the department gave evidence on Friday to possessing legal advice from Clayton Utz of the unlawfulness of the robodebt scheme in 2018.

That advice sat within the branch for many months and during that period was not passed upwards to the secretary or minister.

Ms Campbell would not have wanted to hear advice, claimed Anna Fredericks, a then-principal legal officer in the department.

"After she came to the department ... there came to be a culture even at the higher levels of reticence or fear to raise issues," Fredericks told the commission on Friday.

"Colloquially there was a commentary no one wanted to give her bad news."

She said if the independent advice was acted on, the robodebt scheme would have been changed or stopped altogether.

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The branch manager of payment integrity, Allyson Essex, confirmed under oath by July 2018 she could not be satisfied robodebt was legal. She gave evidence she later approached the deputy secretary Nathan Williamson who responded: "It's legal, it's really clear that it's legal."

Ms Essex rejected a suggestion the advice was not acted upon, and was waiting it out until she could move to a different department and it would no longer be her problem. She said she turned her mind on building a case when there was existing advice it was legal.

The commission heard Ms Campbell was concerned the Administrative Appeals Tribunal was routinely dismissing debts at appeals by this point and "too many appeals were being approved by EL2s".

She acted by raising the seniority required for those appeals to the Band 2 senior executive service level.

Ms Essex agreed the behaviour of the department in those appeals was not consistent with its model litigation obligations.

The Clayton Utz advice said using annual tax office data to calculate average fortnightly earnings and automatically issue welfare debt notices was not legal.

Ms Essex said she thought all other options had to be exhausted before income averaging was used as a means to calculate debt.

"I had concerns that it might not be lawful at all. I had definite concerns that the way it was being applied ... was not lawful," she said. "I had heard the secretary express that income averaging was lawful and that the Commonwealth is on solid ground in using income averaging."

Earlier another official, Kristin Lumley, who was involved in payment integrity, told the commission she was concerned the government would face substantial legal exposure over robodebt because of the lack of independent advice.

In an email to a colleague, Ms Lumley said she was "extremely concerned" the department was sitting on the legal advice and the matter would "definitely end up in the Federal Court".

She told the commission the draft advice prompted the need to urgently brief the minister on the issue as it had whole of government implications.

Royal Commissioner Catherine Holmes said there had been a "certain passivity" among lawyers within the department at the time it was providing advice on robodebt.

Ms Campbell has been contacted for comment.

With AAP

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