Labor frontbencher Bill Shorten has accused the federal government of acting like a “legalised mafia” over the Robodebt scheme in which hundreds of millions of dollars in debt was racked up unlawfully.

It comes after Attorney-General Christian Porter admitted the Robodebt “system was flawed” but declined to say sorry to Australians who were pursued by debt collectors and forced to pay back money they didn’t owe.

The government announced on Friday that $720 million will be refunded for about 470,000 welfare debts thrown up by the scheme because of faulty income assessments made by the Australian Taxation Office.

A class action against the government is still going ahead.

“Some people committed suicide … this government got it wrong and they should just stop behaving like cowardly bullies,” Mr Shorten said.

Asked on ABC television’s Insiders on Sunday whether he would now apologise for the system, Attorney-General Christian Porter conceded the system had been “flawed” but would not say sorry, explaining: “As attorney-general I can’t use that sort of language in the context of the litigation.”

Speers: Do you now apologise for putting this flawed system in place?
Porter: The system was flawed, I’m not going to use that word because there’s litigation ongoing @David_Speers discusses the Government’s decision to refund $721m in #Robodebt debts with @cporterwa #auspol pic.twitter.com/whQ69kJjgp

— Insiders ABC (@InsidersABC) May 31, 2020

Cabinet colleague Keith Pitt has been more blunt, saying there is “nothing” to apologise for when conducting oversight over a large government program.

Mr Porter said the government would resist an argument for further damages in the courts for the way in which the government ran the system.

But he acknowledged that using annualised ATO data to assess incomes had been shown to be an insufficient basis for raising debts.

Insiders host David Speers: “So this was a flawed system. You were wrong to do it, but you won’t apologise?”

Christian Porter: “There’s litigation ongoing and that litigation argues, among other things, negligence and we don’t concede that.”

Speers: “Does ‘legally insufficient’ mean illegal?”

Mr Porter: “There wasn’t a lawful basis.”

Speers: “It means it was illegal?”

Mr Porter: “You can use that, but that’s a criminal term. Civilly, it was unlawful. There was no lawful basis for it.”

Mr Porter was social services minister when the Robodebt system was first introduced in 2015.

The interview prompted further angered Labor, with the party’s government services spokesman Mr Shorten labelling Robodebt an “unlawful, unjust scheme” and comparing the government’s tactics to that of debt-chasing gangsters.

“Australians expect to be able to trust our government,” he told reporters in Melbourne.

“What we don’t expect to see is the government act like some sort of legalised mafia, shaking down citizens, saying unless you agree with us and pay the money we allege you owe us, we will chase you. You might get debt collectors, stop you getting jobs or travel overseas. We will put you under mental distress.”

Shadow treasurer Jim Chalmers believes the issue has a long way to run and said some ministers may still find themselves “in the dock”.

“What we are talking about here is the illegal thieving of people’s money, which has ruined lives and in some cases cost lives,” Dr Chalmers told Sky News’ Sunday Agenda program.

• Lifeline 13 11 14

-with AAP