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Deloitte to repay Australian govt over flawed $440,000 report aided by AI
In August, media reports highlighted multiple inaccuracies, including citations of non-existent academic references and a fabricated court case (Deanna Amato v Commonwealth). University of Sydney academic Dr. Christopher Rudge identified these errors as "hallucinations," a term for AI models incorrectly generating information.
Deloitte will provide a partial refund to the Australian federal government for a $440,000 welfare review report after admitting that generative Artificial Intelligence (AI) was used in its production and that the document contained multiple factual errors. The Department of Employment and Workplace Relations (DEWR) confirmed that Deloitte will repay the final installment of the A$439,000 (US$290,000) contract once the transaction is finalized.
Deloitte was commissioned in December 2024 to conduct an independent assurance review of the Targeted Compliance Framework (TCF), the IT system that automates penalties for jobseekers. The original report, published in July 2025, noted several system issues, including "system defects" and poor traceability between the framework rules and legislation.
In August, media reports highlighted multiple inaccuracies, including citations of non-existent academic references and a fabricated court case (Deanna Amato v Commonwealth). University of Sydney academic Dr. Christopher Rudge identified these errors as "hallucinations," a term for AI models incorrectly generating information.
In a recently updated version of the report, Deloitte included an appendix acknowledging the use of a generative AI large language model (Azure OpenAI GPT – 4o) as part of its methodology.
Deloitte did not attribute the errors directly to the AI use. The firm stands by its substantive findings, stating that the corrections and updates "in no way impact or affect the substantive content, findings and recommendations" of the report.
Labor Senator Deborah O’Neill criticized the situation, stating Deloitte has a "human intelligence problem" and calling the partial refund a "partial apology for substandard work." DEWR stated that the report's substance and recommendations remain unchanged and that the refund and contract details will be made public once finalized.
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