Chris Rudge researches health and welfare law at the University of Sydney. He was reading a 237-page government report when he hit a reference to a book by one of his colleagues, a professor of public and constitutional law. He had never heard of it. The title suggested a subject well outside her field.
“I instantaneously knew it was either hallucinated by AI or the world’s best kept secret,” he later told the Associated Press, “because I’d never heard of the book and it sounded preposterous.”
The report had cost the Department of Employment and Workplace Relations about A$440,000. In December 2024 the department had hired Deloitte to review the Targeted Compliance Framework, the IT system that automates penalties for jobseekers on welfare who don’t meet their mutual obligations. The review, published on the department’s website on 4 July 2025, was hard on that system. It called it “driven by punitive assumptions of participant non-compliance.”
Rudge kept reading. By his count there were up to 20 errors. References pointed to reports that did not exist, credited to professors at the University of Sydney and at Lund University in Sweden. His colleagues’ work, he said, had been used as “tokens of legitimacy,” cited but not read.
What bothered him more was a robodebt case heard in the Federal Court, Amato v Commonwealth. The report quoted the judgment. The quote was made up.
“That’s about misstating the law to the Australian government in a report that they rely on,” Rudge said. He alerted the media, and in August the Australian Financial Review reported the errors.
On Friday 3 October, ahead of a long weekend across much of Australia, a new version went up on the department’s website. More than a dozen nonexistent references and footnotes were gone, the reference list had been rewritten, and the quotes attributed to the judge had been removed. An appendix now disclosed something the July version had not: part of the work had used a tool chain built on a large language model, Azure OpenAI GPT-4o, licensed by the department itself and hosted on its own Azure tenancy.
Deloitte did not say AI was the reason for the errors. Asked by AP whether the errors were AI generated, it did not respond. The revised report said the updates “in no way impact or affect the substantive content, findings and recommendations in the report,” and the department confirmed the recommendations had not changed.
Rudge read the new version closely. In the new version, where one fake reference had stood, there were now five, six, seven or eight real ones. “So what that suggests is that the original claim made in the body of the report wasn’t based on any one particular evidentiary source.” He still would not call the whole report illegitimate, because its conclusions matched plenty of other evidence.
Deloitte agreed to repay the final instalment of its contract. Labor senator Deborah O’Neill, who had sat on a Senate inquiry into the integrity of consulting firms, said: “Deloitte has a human intelligence problem.” On 21 October the department said the refund came to more than A$97,000.
The department’s page for the report now carries one more line. On 3 February 2026 it was updated again, “to address identified corrections.”