Deloitte’s AI fiasco: Australian government refunds contract after chatbot ‘hallucinations’ uncovered – Storyboard18

Welcome to the forefront of conversational AI as we explore the fascinating world of AI chatbots in our dedicated blog series. Discover the latest advancements, applications, and strategies that propel the evolution of chatbot technology. From enhancing customer interactions to streamlining business processes, these articles delve into the innovative ways artificial intelligence is shaping the landscape of automated conversational agents. Whether you’re a business owner, developer, or simply intrigued by the future of interactive technology, join us on this journey to unravel the transformative power and endless possibilities of AI chatbots.
ADVERTISEMENT
Deloitte has come under fire in Australia after it admitted that sections of a government-commissioned report were written using artificial intelligence — and that the system had fabricated references, quotes, and academic sources.
The incident, which led to Deloitte refunding part of its AU$439,000 (£230,000) consultancy fee, marks one of the first public cases of a government receiving repayment over undisclosed AI use in official work. It has since sparked a national debate about the transparency and credibility of AI-assisted consulting, as per a report by Business Standard.
The controversy began in December 2024, when Australia’s Department of Employment and Workplace Relations (DEWR) hired Deloitte to conduct an “independent assurance review” of its Targeted Compliance Framework, an automated welfare system that penalised jobseekers for missing obligations.
Read More: Bill Gates warns Gen Z: AI alone won’t guarantee you a job
The 237-page report, published in July 2025, initially appeared unremarkable — until Dr Chris Rudge, a researcher at the University of Sydney, discovered that it cited non-existent experts, papers, and even an invented quote attributed to a federal court judge. Some of the supposed studies were linked to the University of Sydney and Sweden’s Lund University, though neither institution had published the works in question.
After media scrutiny, Deloitte confirmed that several references and footnotes were fabricated and admitted that it had used Microsoft’s Azure OpenAI GPT-4o system to assist with drafting parts of the report. The firm subsequently issued a corrected version on 26 September 2025, which now includes a disclosure noting the use of AI tools and removes all falsified citations.
Deloitte has since repaid the final instalment of its consultancy fee following discussions with the department. The DEWR maintained that the report’s core analysis and recommendations remained valid despite the inaccuracies.
Read More: After acquisition, Cognition hits reset at Windsurf with layoffs and buyout offers
The revelation has intensified calls for stricter oversight of AI-generated content in official and corporate work. The timing is also uncomfortable for Deloitte, which only weeks earlier announced a partnership with AI firm Anthropic to give its nearly 500,000 employees access to the Claude chatbot — part of a broader effort by global consulting firms to integrate generative AI into daily workflows.
Read More: Explained: Why Accenture is cutting jobs and what it reveals about workforce transformation
ADVERTISEMENT
According to LinkedIn’s research with over 1,700 B2B tech buyers, video storytelling has emerged as the most trusted, engaging, and effective format for B2B marketers. But what’s driving this shift towards video in B2B? (Image Source: Unsplash)
ADVERTISEMENT
Arattai is an Indian chat and calling app available on Android, iPhone, desktop, and TV.
ADVERTISEMENT
Advertising
Co-lead or crown? Tussle for Omnicom–IPG leadership race in India heats up
Brand Marketing
Advertising's identity crisis: Comedy agencies, meme metrics and the death of brand memory
How it Works
Wave of CFO exits hits India Inc; Over 100 departures in H1 FY2026
Social Media
Silence from social media giants: Instagram and YouTube dodge accountability on safety. #SocialMediaResponsibly
Digital
Zoho's Arattai: 'WhatsApp killer' or another Koo in the making?
Social Media
#SocialMediaResponsibly: The AI emotional crutch and how schools are fighting tech-mediated loneliness
Digital
Today in AI | OpenAI to allow erotica for adults | Walmart deepens AI push
Brand Makers
Kiran Rao talks about social media impact on success of films, and effect of AI on film industry
Brand Makers
Akshay Kumar moves Bombay HC over deepfake, AI-generated content misusing his image
Digital
Airtel partners with IBM to power India’s AI and Cloud ambitions
Storyboard18 today has grown into the premier, multi-media destination for the news and the views that matter to the A&M community. In a short span of time, through its pioneering content and properties, Storyboard18 has become an aspiration platform where a mention matters more than the rest, setting the agenda and creating an impact for individuals, brands and businesses. Storyboard18 probes and provokes, igniting heated debates and discourse on the issues and topics that matter. Its breadth of content has grown to include trend-setting coverage of not only the advertising, marketing and media industries, but also startups, policy and tech. Storyboard18's IPs slate has grown to include marquee, aspirational properties like The Visionaries and Share The Spotlight. With its digital depth and television presence through two shows – Media Dialogues With Storyboard18 and the Storyboard18 weekend show, the brand has solidified its position as the apex platform for the A&M industry.

Partner with Us:

For sales and collaboration queries, reach out to

Have a query? Got feedback? Want to share tips or ideas? Our team would be happy to hear from you. Get in touch with us here:
Storyboard18@nw18.com

source

Scroll to Top