A public servant has denied trying to "manipulate the truth" to the federal watchdog over the legality of Robodebt at a royal commission into the unlawful scheme.
Catherine Halbert was at the Department of Social Services (DSS) when it advised on the proposal that became Robodebt in 2015.
During her second day of evidence, the former DSS deputy secretary was questioned over a response she drafted to the Commonwealth Ombudsman investigating the scheme in 2017.
Ms Halbert told the commission it was her understanding in 2015 that the Department of Human Services (DHS) had made changes to ensure the income smoothing proposal was compliant with legislation.
The commission previously heard that in early 2015, DSS received legal advice showing the central method of the program – known as income averaging – was unlawful.
Ms Halbert denied claims by Counsel assisting the commission Justin Greggery KC she "manipulated the truth" about the department's knowledge of the debt calculation process used in the controversial scheme.
"You are giving evidence that you did not try and manipulate the truth to the Ombudsman when it is abundantly clear from your written words that you did," Mr Greggery said.
"Well, I was not trying to mislead the Ombudsman's office and if I've written it incorrectly, that's my responsibility," Ms Halbert replied.
Mr Greggery said: "What you represent in your draft letter to the Ombudsman was that, in fact, DSS came to a view in 2015 that legislative change was not required for … income smoothing."
"I'm not sure that's what we were trying to say, but I believe that's what we thought."
Mr Greggery, raising his voice, interrupted: "I'm not asking what you believe, I'm asking what you represent."
"In your response, you represent that DSS became comfortable with the concept of income smoothing after the opportunity was provided to the customer in the creation of a debt. That's what you represent."
Ms Halbert replied: "All I can tell you is we were not endorsing income smoothing as a concept, we were — I won't use the word reluctantly — but pained to accept that if no other information was available that this information could be used in this way.
Mr Greggery interjected: "That's not what you represented."
"Give me a break. I am telling you the advice I was providing to DHS and others was based on the understanding that the proposal was as it stood at the time," she responded.
'Simply untrue'
In a lengthy and tense exchange, Commissioner Catherine Holmes put to Ms Halbert that the information she provided to the watchdog was "simply untrue".
"DSS didn't come to that view in 2015 or express it," Commissioner Holmes said.
Ms Halbert replied: "That is the view that was expressed to me."
But she could not say by whom.
"It may be badly worded Commissioner, I don't know," Ms Halbert said.
"Back in 2015, this is second-hand information to me, DSS came to understand that … I don't know exactly what they came to understand … that the ways debts were calculated on a fortnightly basis would not change."
Commissioner Holmes said: "DSS could've said to the Ombudsman: "look, we've been had, they (DHS) were averaging, they gave us to understand they weren't, so it's a surprise to us."
Ms Halbert conceded the information she provided to the Ombudsman was "badly worded" and she takes responsibility but denied trying to hide anything.
She rejected Commissioner Holmes' claim that DSS had "turned a blind eye" to the income averaging to raise debts process.
"I had no skin in this game," Ms Halbert said.
She said in 2018 there was "surprise and anger" within her department at DHS that income smoothing was being used to raise debts.
The royal commission continues.
