An understaffed passport office did not anticipate a post-COVID shift to "last minute" travel, a trend which contributed to a backlog of 430,000 applications in September last year.
The agency had planned for a surge when Australia's borders reopened, but the sheer scale of it caught top public servants by surprise.
"We had a plan, the plan wasn't enough and we were found wanting last year," Department of Foreign Affairs and Trade deputy secretary Craig Maclachlan told a Senate estimates hearing on Thursday.
"And we regret that very much."
About two million Australians did not renew their passports during the pandemic, Mr Maclachlan told senators.
"We anticipated needing more staff than we had prior to the pandemic, because we anticipated some people who delayed renewing their passport coming back in," he said.
"We anticipated that as the borders opened and the flight availability came on that progressively more and more Australians would want to travel overseas.
"We didn't anticipate the volume, the other issue we probably didn't anticipate was the change in the way in which people approach international travel."
Between June and November 2022, about 1855 extra staff were hired by Australian Passport Office, bringing the total staff working in the office to 2456 as at November 18.
During peak demand, DFAT graduates and Services Australia were also redeployed to help process applications and renewals.
Mr Maclachlan said staff had worked late nights and weekends to process the huge demand, which peaked between late May to June.
Bottlenecks in the passport office have significantly improved, with the backlog dropping to about 70,000 to 80,000 in January.
While the average wait for adult passports in the second half of 2022 was 23 business days, that had dropped to seven in January.
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