Labor Senator Deborah O’Neill has called for the Albanese government to demand a full refund from Deloitte Australia following the revelation that a $440,000 report contained significant errors related to the use of artificial intelligence. This report, which assessed the Department of Employment and Workplace Relations’ IT system for automating welfare penalties and payment pauses, was found to have multiple inaccuracies, including three non-existent academic references and a fabricated quote from a Federal Court judgment.
The initial version of the report, which was revised and published on March 15, 2024, had over a dozen corrections, including deleted references and a rewritten reference list, although the recommendations remained unchanged. O’Neill, who has been involved in parliamentary inquiries into consulting firms like PwC, criticized Deloitte for relying on AI in a way that undermined the quality of their work.
“A partial refund looks like a partial apology for substandard work,” O’Neill told the Australian Financial Review. She emphasized that Deloitte appears to be substituting human expertise with AI, stating that “anyone looking to contract these firms should be asking exactly who is doing the work they are paying for.” O’Neill suggested that instead of hiring large consulting firms, the government might be better served by subscribing to AI services like ChatGPT.
The issue has drawn further criticism from Greens Senator Penny Allman-Payne, who echoed O’Neill’s call for a full refund. She remarked that the report was intended to highlight failures in the welfare system but instead allowed Deloitte to profit without delivering reliable results. Allman-Payne stated, “Labor should be insisting on a full refund from Deloitte, and they need to stop outsourcing their decisions to their consultant mates.”
Concerns were also raised about the findings related to the Targeted Compliance Framework (TCF), with Allman-Payne suggesting that if the government cannot confidently assert the legality of the TCF, it should cease operations and redo the report. Both versions of the Deloitte report have indicated widespread issues with the department’s computer systems and processes, particularly following a critical report from the Commonwealth Ombudsman that found many welfare payment suspensions were unlawful.
Questions about the government’s ability to effectively procure professional services from private consultancies have resurfaced. Since 2021, Deloitte has secured contracts totaling nearly $25 million with the department. A spokesperson for the department confirmed on March 18, 2024 that Deloitte acknowledged the errors and that corrections had been made, although the core recommendations remained intact. The spokesperson added that Deloitte would repay the final payment under its contract, emphasizing the department’s commitment to ensuring the integrity of the TCF.
The secretary of the Department of Employment and Workplace Relations, Natalie James, a former Deloitte partner, was noted as not being involved in the decision to hire Deloitte for this contract. As the government navigates this controversy, Workplace Relations Minister Amanda Rishworth has not yet responded to media inquiries regarding the matter.
Academic Christopher Rudge from the University of Sydney, who was instrumental in exposing the report’s problems, labeled it as “irredeemable,” insisting that a full refund is necessary. Rudge stated, “This is the government’s ‘robo-debt moment’ for AI. It must stop this practice now and implement a hard rule.” He argued that consulting firms should be required to declare and verify all AI usage to maintain accountability.
Opposition industrial relations spokesman Tim Wilson has called for the department to extend its scrutiny of Deloitte’s practices. He indicated that the department must remain vigilant against potential misuse of public funds, whether through consulting firms or other forms of misconduct in government contracts.
The fallout from this incident highlights the critical need for transparency and accountability in the use of artificial intelligence by consulting firms, particularly when public policy is at stake. The Albanese government faces mounting pressure to address these concerns and uphold the integrity of its decision-making processes.
