The activist group GetUp has called on Human Service Minister Alan Tudge to suspend Centrelink's automated debt finder which it claims is destroying people's lives.
The call came a week after the government said it would be extending the system to target families and pensioners in order to claw back what it claims are welfare overpayments.
The Centrelink office sent tens of thousands of letters to people before Christmas 2016, claiming that their earnings were at variance with what they had declared to the Australian Taxation Office.
They were given up to three weeks to explain, or told they would face an adverse assessment and have to pay a recovery fee of 10%.
{loadposition sam08}A large proportion of these letters turned out to be wrong because they were sent by an automated system that had not calculated the amounts correctly.
Tudge has defended the system, claiming that those who were sent letters did indeed owe the department money.
GetUp economic fairness spokesperson Mark Connelly said under Section 6A of the Social Security Act, decisions made by the automated debt threat system were taken to be made by the department secretary and legal options were being explored to hold him accountable.
"The minister and the department are legally responsible for sending out debt threats based on duplicated income or income falsely averaged out across the year from ATO data," Connelly said.
"Estimates that 20% of the debt letters are false have risen to a massive 90%. With an error-rate that high the system is a total failure, and it must be stopped.
"The minister is yet to respond to the claims within an explosive Centrelink whistleblower document which outlined the recklessness of the errors, directives to staff not to correct them, and who will be held accountable."