The watchdog who investigated the robodebt program says he should have referred the federal government department responsible to the appeals tribunal in 2017 due to his doubts about the scheme's lawfulness.
Richard Glenn served as acting Commonwealth Ombudsman between January and April 2017 when an investigation into the human services department took place.
The department misled his office by withholding key documents that flagged issues with the scheme's legality.
Yet ombudsman staff still held doubts about the advice the department had provided them.
Questions about the legality of the scheme raised in a draft report were removed in the final version, which was used by the former coalition government to defend the scheme continuing.
Mr Glenn said although his team had "doubts", he couldn't form a definitive view about the program.
He decided to focus on improvements with the administration of the scheme but said he should have clearly stated the report did not answer the question of legality.
"On the material before me, I was not satisfied that we could make a declaratory statement and I chose not to comment on legality," he said.
"I think I should have said very clearly 'I am not dealing with the legality' ... to exclude the possibility of people over-reading the report."
The ombudsman did not refer the department to the Administrative Appeals Tribunal at the time, but Mr Glenn said knowing what he does about the scheme now he would have made a different decision.
"My thinking was influenced by the fact that I couldn't make a clear determination one way or the other about legality," he said.
"The advice that I was receiving from the team was that they were concerned but we couldn't land a crisp, contrary view."
Mr Glenn said department staff were "highly invested" in defending the program but he did not recall a similar investment from former coalition ministers.
"Certainly the department advocated strongly its belief in the system," he said.
The unlawful scheme ran from 2015 to 2019 and used annual tax office data to calculate and raise debts.
The commission is examining the role of the ombudsman, whose initial investigation identified flaws in the scheme, but did not declare the "income averaging" process unlawful.
Former senior assistant ombudsman Louise Macleod told the commission her team had concerns with how averaging was being used.
But she was unable to convince her superiors to include these concerns in a final report.
"We flagged concerns with what the department were doing, basically from the outset, but ultimately it didn't make it into the final report," Ms Macleod said.
The commission presented Ms Macleod with several documents, including emails from 2014 flagging legal problems with income averaging, which she had not seen before.
Had this legal advice been provided to her office, Ms Macleod said the ombudsman would have publicly called for the scheme to be scrapped.
