The second day of the final hearing block of the robodebt royal commission heard on Tuesday from Paul Menzies-McVey, who is the former chief counsel for the Department of Social Services, one of the government agencies that administered the debt recovery scheme.
Mr Menzies-McVey was questioned on legal advice prepared by law firm Clayton Utz, which stated the means of using annual tax office data to calculate average earnings and automatically issue welfare debts was illegal.
He told the commission that while there was concern within the department about the advice, he was confident the issue would be resolved.
"There was ... an undesirable level of uncertainty about the legal underpinnings of the scheme, but steps were already under way to resolve that uncertainty in the best way possible," he said.
Mr Menzies-McVey said he first became aware of the legal advice in May 2019, upon becoming chief counsel at the Department of Social Services.
He said he was surprised such advice was sought from an independent law firm and not from government solicitors.
"If the matter needed to be escalated to a minister or cabinet down the track, then (government solicitor) advice would have been required," he said.
"Getting advice from Clayton Utz would have possibly just been only a first step of what would need to have been a two-step process.
"I would have thought that if (the department) was concerned about the program at some point, it was perfectly appropriate to get advice."
The commission is examining who knew about the legality of the scheme and how robodebt was implemented.
The scheme operated between 2015 and 2019, despite concerns during that period that the averaging of income data was unlawful.
It recovered $750 million from 380,000 people, with many taking their own lives due to the impact of the debt notices.
Mr Menzies-McVey told the commission his mind did not turn to the potential consequences for those who had received debt notices while the department was seeking advice from the solicitor-general on the scheme.
"My view was I was happy that the matter was going to be finally determined by the solicitor-general, or indeed, potentially by a court," he said.
"Certainly, I would be uncomfortable with the department oversighting a program that was unlawful of any type, especially a large program such as this."
The former chief counsel said also assumed that senior department secretaries were aware of the Clayton Utz advice on the legality of robodebt.
Other witnesses scheduled for Tuesday include Services Australia's compliance and debt operations officer Jeannie-Marie Blake and Attorney-General's Department assistant secretary Michael Johnson.
The last block of hearings will run for three weeks, with the final report due at the end of June.
Commissioner Catherine Holmes last week wrote to the government requesting a two-month extension of the inquiry.
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