Deloitte will issue a partial refund to Australia’s Department of Employment and Workplace Relations (DEWR) after errors were discovered in a $440,000 report partially generated using AI.

Commissioned in December 2024 to assess the department’s welfare compliance framework, Deloitte’s report identified flaws in automation systems used to penalize jobseekers. However, the document was later found to include fabricated references and citations—attributed to “hallucinations” from generative AI tools, including Azure OpenAI GPT-4o.

Despite corrections, the firm maintained that the report’s findings and recommendations remain unchanged. The DEWR confirmed the repayment of the contract’s final instalment following Deloitte’s admission of using AI assistance.

Labor Senator Deborah O’Neill criticized the consultancy, stating that “Deloitte has a human intelligence problem,” urging public agencies to verify who—or what—is producing taxpayer-funded work.

As AI adoption accelerates in corporate consulting, the incident raises questions about transparency, accuracy, and ethical responsibility in government-commissioned reports.