Victoria Police has been forced to employ extra staff to manually process fines for more than a year because of Fines Victoria's failing IT system.
The VIEW software system, which was bought off the shelf from a British company by Fines Victoria to collect court fines and infringements for parking, red-light camera and speeding offences, has failed massively.
It has created a
Magistrates and County Court officials confirmed they had 123,000 outstanding fines and councils have also been left out of pocket, with some threatening legal action.
Chief Commissioner Graham Ashton said Victoria Police had been forced to employ staff specifically to manually process the fines because of the issue.
"We've had a process in place now for 18 months where we've had people working around those systems," Mr Ashton said.
"We've had to employ quite a lot of additional staff to do that."
The state government insists the debt payment system is still operational and Victorians should pay their fines as normal - if they're aware of them.
However, some Victorians are not aware they have outstanding fines until they receive a demand notice ordering they pay up within a week.
Meanwhile, sheriffs have been unable to enforce warrants because their system is not "talking to" Fines Victoria's computers.
While the government has acknowledged a $328 million increase in debts not being collected, a spokeswoman said the state expects to eventually recover the money..
"We know that the new IT system has fallen short of what was contracted and what Victorians expect," the spokeswoman said.
"The Attorney-General ordered a full-scale review of issues in relation to Fines Victoria earlier this year and conversations in relation to contractual agreements are ongoing."
Shadow treasurer Louise Staley said people were in for a "rude shock" when fines they never knew they had turn up and speculated the budget surplus could take a hit.
"There will be plenty of people no doubt who are entirely unaware they'd done something that could cause a fine and they're going to get a very rude surprise," Ms Staley said.
Ruth Parker, principal lawyer at Galbally Parker, has clients who couldn't pay their fines in time to comply with their court orders due to "significant delays".
"I cannot think of a case in the past 12 months that a client has received a fine promptly," she said.
From 2007 to 2015, Victoria paid $59.9 million to Tenix Solutions to build a new system but the contract was eventually terminated with no software delivered.
The replacement VIEW system, bought from British company Civica in a $103 million contract, is the one that is now failing.
The VIEW system was originally designed to enforce London's congestion charge.
Sources described the VIEW software as "death by a thousand clicks" and said the system was absolute chaos, and that teams of technicians were working in Melbourne and Britain to fix it, but VIEW will not be operational for at least a year.
AAP with Noel Towell, Tammy Mills and Cameron Houston