Australia Paid Deloitte $290K for a Report. There's an AI Issue

Deloitte Australia will partially refund the $290,000 or so paid by the Australian government for a report that was littered with apparent AI-generated errors, including a fabricated quote from a federal court judgment and references to nonexistent academic research papers. The financial services firm's report to the Department of Employment and Workplace Relations was originally published on the department's website in July. A revised version was published Friday after Chris Rudge, a Sydney University researcher, said he alerted the media that the report was "full of fabricated references," per the AP.

Deloitte had reviewed the 237-page report, which went over departmental IT systems' use of automated penalties in Australia's welfare system, and "confirmed some footnotes and references were incorrect," the agency said in a statement Tuesday. The amount to be paid will be made public after the refund is reimbursed. Asked to comment on the report's inaccuracies, Deloitte said in a statement that the "matter has been resolved directly with the client." Deloitte didn't respond when asked if the errors were generated by artificial intelligence.

A tendency for generative AI systems to fabricate information is known as a "hallucination." The revised version of the report included a disclosure that a generative AI language system, Azure OpenAI, was used in writing the report. Quotes attributed to a federal court judge were removed, as well as references to nonexistent reports attributed to law and software engineering experts. Rudge said he found up to 20 errors in the initial version of the report. The first error that jumped out at him wrongly stated that Lisa Burton Crawford, a Sydney University professor of public and constitutional law, had written a nonexistent book, with a title suggesting it was outside her field of expertise.

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"I instantaneously knew it was either hallucinated by AI or the world's best-kept secret, because I'd never heard of the book and it sounded preposterous," Rudge said. Sen. Barbara Pocock of the Australian Greens said Deloitte should refund the entire $290,000. Deloitte "misused AI and used it very inappropriately," Pocock told the Australian Broadcasting Corp. "I mean, the kinds of things that a first-year university student would be in deep trouble for."