The draft proposal for the Robodebt scheme from the Department of Human Services to former prime minister Scott Morrison in 2015 included a "watering down" of legal advice, the Royal Commission has heard.
The Royal Commission into the unlawful Centrelink debt collection scheme continued on Thursday when Department of Social Services officials were questioned over emails sent about the draft proposal of the Robodebt scheme.
An email from January 2015 from Melissa Ryan, the then-General Manager of the participation division of the Department of Human Services, said she had been asked by former minister for Social Services Scott Morrison for a brief about possible proposals on ""compliance", including serious fraud, payment integrity options etc".
In the email, sent to Department of Social Services official Catherine Halbert, Ms Ryan said she was "mindful" proposals may need "possible legislative changes".
In a later email from Ms Halbert to then-Department of Human Services deputy secretary Malisa Golightly, made suggestions for changes to the brief to Mr Morrison about the proposal which would become the Robodebt scheme.
Ms Halbert said the suggestions "are at a high level and reflect the cautionary note" and said using PAYG data to calculate debt "may not provide a realistic picture of the amount that might ultimately be recoverable".
She suggested amending the brief to soften language from "proposals may have fundamental impacts to social security policy" and also add "DSS advise that care will need to be taken".
Ms Halbert also commented saying "I don't think we need to say this" on the draft proposal.
Council assisting Justin Gregory said the amendments to the drafts were a "watering down" of the "practical implications on Social Security Policy".
In a different email, Department of Social Services Deputy Secretary Serena Wilson said she was "concerned about the smoothing proposal on assessing debts rather than looking fortnight by fortnight", which referred to the income averaging method that led to people on Centrelink receiving incorrect debt notices.
Ms Wilson also said she expressed her "reservations" to Ms Golightly and that Mr Morrison was "most interested in hard edged fraud stuff and participation compliance".
Andrew Whitecross, the former branch manager of rights and means testing policy at the Department of Social Services, who was included in these email exchanges amending the draft, said he saw it as "a red flag".
The Royal Commission continues, with the former prime minister and social services minister Scott Morrison due to appear before the inquiry next week.
