Deloitte has agreed to refund part of an Australian government contract after admitting it used generative AI to produce a report riddled with fake citations, phantom footnotes, and even a made-up quote from a Federal Court judgment.

The consulting giant confirmed it would repay the final installment of its AU$440,000 ($291,245) agreement with Australia's Department of Employment and Workplace Relations (DEWR) after the department re-uploaded a corrected version of the report late last week – conveniently timed for the weekend.

The updated version strips out more than a dozen bogus references and footnotes, rewrites text, and fixes assorted typos, although officials insist the "substance" of the report remains intact.

The work, commissioned last December, involved the Targeted Complianc

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