Prime Minister Scott Morrison has apologised to the hundreds of thousands of Australians who were impacted by the government’s now-scrapped robodebt scheme, describing the task of recovering debts as a “difficult job”.

“I would apologise for any hurt or harm in the way that the Government has dealt with that issue and to anyone else who has found themselves in those situations,” Morrison said in parliament on Thursday. “The business of raising and recovering debts on behalf of taxpayers is a difficult job.

“Of course I would deeply regret any hardship that has been caused to people in the conduct of that activity.”

Morrison’s apology was prompted by former Opposition Leader Bill Shorten who quizzed the prime minister about the experience of a cancer-sufferer who was “hounded” by debt-collectors for $2300 under the “illegal robodebt scheme”.

“Why won’t the Government apologise to Mr Murphy and thousands of other Australians who they hounded with their unlawful robodebt scheme?” Shorten asked. To which Morrison responded: “In relation to the particular gentleman that you referred to, that is a very distressing situation that you have raised.”

It comes after Minister for Human Services Stuart Robert last month confirmed that more than 370,000 Australians would receive a refund, after Services Australia identified 470,000 individual debts to be waived, totalling more than $721 million.

“From July this year, Services Australia will refund all repayments made on debts raised wholly or partially using income averaging of ATO data,” Robert said in a statement last month. “Refunds will also be made for any interest charges and/or recovery fees paid on related debts.”

Stuart added: “Services Australia will now put in place the mechanisms needed to start making refunds, including how affected customers are advised of next steps. Consultation will occur with stakeholders, including the Commonwealth Ombudsman, and clear communication is a priority, so people understand what it means for them.

“It is important to note all other income compliance debts will continue to be subject to recovery, ensuring the integrity of Australia’s welfare system.”

Robodebt – aka the Income Compliance Program – refers to an averaging process used to calculate debts owed by welfare recipients. It worked by matching averaged data from the ATO with income reported to Centrelink. However the scheme came under heavy fire, with critics arguing that it did not work and was sending out automated demands for money from people who did not actually owe the government.