The Australian Department of Employment and Workplace Relations commissioned Deloitte to conduct an independent review of the targeted compliance framework and the information technology system that governs automated penalties for individuals receiving income support in June 2024. The contract, which cost the Australian government $440,000, sought credible analysis and practical guidance for policy and system improvements.
Government and Academic Reviews Exposed AI-Driven Errors in the Compliance Assessment Report Made by Deloitte for the Australian Department of Employment and Workplace Relations
Contract and Intended Scope
The report was intended to evaluate whether the automated compliance mechanisms relied on fair assumptions and whether systemic flaws were producing undeserved outcomes. Government officials wanted assurance that automated compliance actions were transparent, procedurally sound, and supported by verifiable evidence rather than presumptions.
Deloitte was expected to evaluate the information technology infrastructure supporting penalty decisions, document operational weaknesses, and recommend improvements. It also needed to identify how many affected individuals faced sanctions through systemic errors or outdated protocols that failed to account for legitimate personal circumstances.
Observers anticipated a well-crafted report with thorough references, interviews, and independent analysis. Analysts from universities, media organizations, and parliamentary committees prepared to assess its credibility because the compliance framework had drawn criticism for punitive effects and limited accommodation of diverse regional and social considerations.
Discovery of Fabricated Material
The Financial Review published an article in August 2025 noting that academics discovered issues in the published report. It identified citations that did not correspond to verifiable sources, including references to fictitious studies, nonexistent legal judgments, and commentaries wrongly attributed to academics whose names appeared without documentary confirmation.
One particular reference involved an alleged legal case called Amato v Commonwealth that could not be found in any court record. Other citations mentioned institutions or experts that either did not exist or were inaccurately characterized. These suggested that portions of the document relied on generative artificial intelligence without adequate verification.
The Department of Employment and Workplace Relations confirmed that Deloitte had used AI for drafting. It further noted that the firm remained responsible for fact-checking and vetting every reference. Deloitte acknowledged the errors but maintained that the principal findings and recommendations were unaffected by the presence of erroneous references.
Corrections and Political Response
An updated edition of the review appeared in early October 2025. The revised document removed fabricated references, corrected typographical issues, and adjusted explanatory notes. Department officials affirmed that the guidance for policy changes and conclusions regarding the compliance system remained unchanged despite the alterations to source material.
Deloitte agreed to return to the Australian government the final installment of its consultancy fee and stated that the dispute had been resolved directly with the client. Government representatives further noted that the amount to be reimbursed would be disclosed publicly once all relevant administrative formalities concluded within departmental finance processes.
Senator Deborah O’Neill criticized the incident during parliamentary sessions. She said the refund amounted to partial recognition of substandard performance. She called for stronger safeguards governing AI usage, mandatory disclosure requirements, and improved human oversight to ensure legitimate and verifiable evidence in all publicly funded advisory work.
FURTHER READINGS AND REFERENCES
- Karp, P. 22 August 2025. “Academics Raise Alarm Over Suspected AI Use in Deloitte Report.” Financial Review. Available online
- Dhanji, K. 6 October 2025. “Deloitte to Pay Money Back to Albanese Government After Using AI in $440,000 Report.” The Guardian. Available online
Photo Credit: Michal Klajban / Deloitte Building During the Blue Hour, Christchurch, New Zealand / 2019 / Adapted / CC BY-SA 4.0