Victim's terror over false $65k robodebt

An aged pensioner has revealed the "sheer terror" of being told she owed Centrelink $65,000 due to a faulty debt calculation.

Rosemary Gay, 76, fronted the robodebt royal commission on Monday and relived the "very dark period" where the government agency chased her up for the huge debt they later ruled she did not owe.

Centrelink's debt collectors even started taking money from her pension to repay the $64,998 they said she owed despite Ms Gay having lodged a dispute, where one senior official allegedly told her there was "no way you can possibly owe that money".

The royal commission is investigating how individuals' annual tax information was used to determine average fortnightly earnings and automatically establish welfare debts, an approach ruled unlawful by the Federal Court in 2019.

The system wrongly recovered more than $750 million from 381,000 people and led to several people taking their lives while being pursued for false debts.

Ms Gay, who worked part-time at a transport and logistics company, had her reported income effectively doubled between 2010 and 2016 to create the false debt.

When told in October 2016 she had to pay back the $65,000 in less than a month, Ms Gay said she was shocked and surprised, given her meticulous methods of reporting income to Centrelink.

Having lodged the dispute with Centrelink and being told by a senior department figure - nicknamed God - a glitch in the system had triggered the debt, $133 a week began being taken from her pension as repayments.

"It couldn't be possible that I owed them any money … it was a very dark period of time for me … my mental state and physical health were at a very low ebb," Ms Gay told the commission.

A manual reassessment of her debt was the figure reduced to $6683, before she disputed that claim again and it was eventually scrapped altogether in 2020.

"It was just immoral it took them that time to admit they made that mistake…they only admitted they did because of the groundswell of victims," she said.

"I was really angry with them … this happened in 2016 for a miscalculation…here we are in 2020 and they're offering to refund the money they'd taken."

Ms Gay spoke of the pain, trauma and anguish the "laughable" situation had caused victims.

"It was a system that could destroy peoples' whole lives so simply," she said.

The third hearing block, which began on Monday, will focus on the impacts of robodebt along with the criticism of the scheme after it was implemented and ongoing legal defence despite such criticism.

Former ministers Christian Porter and Alan Tudge are due to give evidence next week.