Deloitte Australia will partially refund the 440,000 Australian dollars ($290,000) it received for a government report found to contain fabricated quotes and references likely generated by artificial intelligence (AI), The Associated Press reported.
The Department of Employment and Workplace Relations commissioned the 237-page report to review its use of automated penalties in welfare systems. Originally published in July, the report came under scrutiny after Sydney University researcher Chris Rudge discovered what he described as “fabricated references,” including a fake quote attributed to a federal court judge and citations of nonexistent academic papers.
After Rudge alerted the media, Deloitte and the department reviewed the report and confirmed multiple errors. The department said in a statement that Deloitte had “agreed to repay the final installment under its contract,” with the refund amount to be disclosed once processed.
A revised version of the report was released Friday, maintaining its original findings but removing false citations and fabricated material. It also included a new disclosure stating that Microsoft’s Azure OpenAI system was used in drafting the report. Deloitte told the AP that the “matter has been resolved directly with the client” but declined to confirm whether the mistakes were produced by AI.
Generative AI systems are known to “hallucinate,” producing convincing but false information. Rudge said he identified up to 20 fabricated citations, including a made-up book title attributed to Sydney University law professor Lisa Burton Crawford. “They’ve totally misquoted a court case, then made up a quotation from a judge,” he said.
Australian Greens Senator Barbara Pocock called the errors “inexcusable” and urged Deloitte to refund the full amount, saying the firm had “misused AI” in a way that would “get a first-year university student in deep trouble.”
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