The Commonwealth Ombudsman has launched an independent investigation into the Centrelink debt recovery scheme, which was been described as a "diabolical" failure by industry experts.
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The Government has defended the system — that cross-references employment data from the Australian Tax Office and Centrelink — despite the Opposition describing it as "brutal" and "poorly designed".
In a statement provided to the ABC, Commonwealth Ombudsman Colin Neave said he commenced his own investigation into the scheme and was considering issues "on a systemic level".
Independent MP Andrew Wilkie and senator Nick Xenophon referred the Centrelink system to the Ombudsman late last year after being contacted by concerned constituents.
Labor has also called on the National Audit Office to investigate the system, with Anthony Albanese accusing the Government of scaring vulnerable Australians into paying debts they did not have.
Social Services Minister Christian Porter and Department of Human Services spokesman Hank Jongen rejected claims the automated notices were "debt letters", saying Australian had a chance to correct the record.