Janette Suffield was shocked when she received a letter out of the blue from Centrelink telling her she owed $2350 for payments she received in 2015.
The registered nurse who lives in Campbelltown in Sydney's west received a notice to repay the money in late November and has lodged an appeal.
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Centrelink criticism
The new system that recovers welfare overpayments has raised millions according to the Social Services minister, who has hit back at criticism, saying there have only been a few complaints.
Ms Suffield said the dispute is over payments she received in 2015 while she was on leave to recover from surgery.
"I seriously do not owe this money," she said.
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"Since being alerted to this alleged debt I have been asked to report my income for the year in question no fewer than three times, both online and over the phone.
"I have been told I have to set up a payment plan to repay the debt or it will go to collections which to me seems ridiculous since I am appealing the debt."
Linda Burney, opposition human services spokeswoman, said the controversy over Centrelink's new automated debt recovery system had been going on for months.
"The concern about the program expressed by people to my and my colleagues' offices has been huge," she said.
"I think there is a very clear case to suspend the automated data matching process until these issues are resolved. It isn't only unfair and cruel, it's poor public policy."
Department of Human Services general manager Hank Jongen said he was confident in the online compliance system and checking process.
"In the past, staff manually checked customer records against data provided by other government agencies such as the Australian Taxation Office," Mr Jongen said.
"While the new online compliance system automates part of this process, it does not change how income is assessed or how debts are calculated – it is an easy way to confirm details and resolve any outstanding matters.
"The department is determined to ensure that people get what they are entitled to, nothing more, nothing less."
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