The economist appointed to review the federal government's JobKeeper program says the nation needs a public service that can design better policy in the middle of a crisis.
Steve Hamilton, an assistant professor at George Washington University and fellow at ANU, said overpaying business support during the coronavirus pandemic was not unique to Australia but the ATO made design errors.
Support was offered on predicted, not actual loses and payments were initially locked-in for six months after it was clear firms were seeing profits, not loses.
"The initial period of six months was too long," Dr Hamilton told a parliamentary hearing on Friday.
"A better bill would have included a clawback mechanism."
Almost $13 billion went to businesses that continued to grow, according to tax data released at the request of Labor's Andrew Leigh.
Dr Leigh has been naming and shaming firms that continued to pay executive bonuses while receiving the JobKeeper support, which he dubbed "BillionaireKeeper".
Dr Hamilton said those firms should not be made to pay it back, which the inquiry was considering as part of a private members bill from Senator Rex Patrick.
Treasurer Josh Frydenberg has already ruled out the government supporting the bill.
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"If the tax law generates windfall gains, then it should be the drafters of that law that bear responsibility, not those parties who comply with it," Dr Hamilton said.
"What we need is a public service, this includes the ATO most critically, that has the capability to design better policy in a hurry in the midst of a crisis.
"The APS should have been able to implement a better targeted system - the fact they seemingly could not is the real lesson here."