A former public servant has denied misleading authorities about the federal Department of Social Services’ view of the debt calculation process used as part of the controversial robodebt scheme.

A royal commission is investigating how the automated debt recovery scheme went ahead despite government departments knowing the calculation method was unlawful.

The scheme from 2015 until 2020 wrongly recovered more than $750 million from 381,000 people, with several victims taking their lives while being pursued for the false debts.

On Friday, former Social Services employee Catherine Halbert was quizzed over her correspondence with the ombudsman’s office in 2017, which counsel assisting Justin Greggery KC suggested “manipulated the truth” about the department’s view on the scheme in 2015.

“It’s abundantly clear that you did,” Mr Greggery put to the witness.

“I was not trying to mislead the ombudsman’s office and if I’ve written it incorrectly, that’s my responsibility,” Ms Halbert replied.

The former group manager of payments policy denied Mr Greggery’s claim that she understood the “importance of justifying the legality of the scheme to the ombudsman”.

“I didn’t feel any justification to justify the legality of the scheme,” she replied.

“I don’t believe we were endorsing income smoothing as a concept.”

She agreed that in 2015 the department advised that the calculation of debts with reference to averaged payroll data was contrary to law, saying it did not resile from that position.

In 2017, she conceded “surprise and anger” at the department that “income smoothing” was being used to raise debts and insisted she “was in no way trying to present a false impression of anything”.

“I was passing on an understanding the department had in 2015 as it was presented to me … I don’t know what more I can say,” Ms Halbert said.

Under questioning from Commissioner Catherine Holmes, Ms Halbert rejected the suggestion DSS had been “turning a blind eye” in 2017 to income averaging to raise debts.

“There was no blind eye whatever, I had no skin in this game in 2017,” she said.

Following media reports, it became known that the scheme implemented at the Department of Human Services was not what DSS thought would be set up, she said.

“We were not looking for an excuse for DHS … there was certainly anger at what we were finding out,” Ms Halbert said.

DHS official Mark Withnell is due to give evidence on Friday, a day after being accused of becoming frustrated in a 2015 meeting in which he was told the scheme’s “income averaging” debt calculation practice wasn’t lawful.

Mr Withnell seemed “particularly unhappy” a $1.2 billion projected saving might be threatened if the scheme couldn’t happen, Social Services official Andrew Whitecross said on Thursday

Former Human Services secretary Kathryn Campbell will also return to the witness box for the second time this week.

– AAP