The Government knew Centrelink's debt recovery program would incorrectly tell clients they owed money if human oversight was reduced, but continued to do so in a bid to cut costs.
In response to questions from Labor during Senate Estimates in 2015, the Department of Human Services admitted some welfare recipients had identified more than one discrepancy in their accounts.
"Analysis identified that in 85 per cent of instances the discrepancy would result in a debt, and the likely average debt value is approximately $1,440," the response said.
In mid-2016, the Government introduced changes to reduce the amount of human oversight and automate the compliance program, after a pilot program confirmed savings could be made.
"Using the newly-developed streamlined intervention approach, the savings now far outweigh the cost of undertaking the activity and far outweigh the cost of the overall measure," the response said.