Centrelink employees were told "over and over" the robodebt system was working as intended when they raised concerns, a royal commission has heard.
On the penultimate day of public hearings, the commission heard from two Centrelink employees who worked with customers affected by robodebt.
The unlawful scheme ran from 2015 to 2019 when averaged tax office data was used to calculate welfare debts.
Luke Baker, an authorised review officer between 2014 and 2017, told the commission there was "no rationale" for how debts came up in the system.
"The premise of how the debts were raised seemed bizarre or magical," he said.
"We would previously have something from the debt team to explain the debt but this was missing (in the robodebt program)."
He likened the scheme's premise to raise debts as being "the emperor's new clothes", without substance or truth.
Mr Baker said no training was provided to Centrelink staff about how to review decisions made by the averaging system.
Instead, staff were told in 2015 the new compliance system would recoup billions of dollars in debt.
"There was curiosity (among staff), about how there could possibly be that much outstanding debt to the Commonwealth," Mr Baker said.
Mr Baker said employees felt frustration and grief that the computer-generated debt was so different to their common sense.
Yet despite raising issues with his superiors, Mr Baker said senior department figures continued to say the system was legal "over and over again".
"Each and every time we raised concerns ... we were told the system was working as intended," he said.
A second former employee - who worked for Centrelink for more than 20 years - told the commission she was criticised and dismissed when she tried to raise concerns about how debts were being calculated.
"Ms Smith" - a pseudonym used by the commission - worked in a customer service role and saw first hand the human impact of the debts.
"I was concerned that this process might not be getting it right for our customers, causing them stress and anxiety," she said.
"I was quite upset that we might be incorrectly generating debts."
After helping a number of distressed customers, Ms Smith raised her concerns with higher levels of management.
Yet instead of addressing her concerns, the department instead formally cautioned her and she was not allowed to serve customers with debt-related issues.
The formal warning also told her to "behave in accordance with the APS (Australian Public Service) Values and Code of Conduct at all times".
Ms Smith felt confused about receiving such a serious caution when she had passed on customer feedback.
"I couldn't believe that my workplace, that Centrelink, was causing this sort of harm and trauma to people," she said.
