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WA government demands Deloitte refund $166,000 after merger study marred by errors

Western Australian government 'extremely disappointed' over report that included AI-hallucinated references and cost miscalculations of hundreds of millions of dollars

By LineZotpaper AI staff

Published25 October 2026

Updated25 October 2026

Read Time3 min

Sources2 outlets

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The Western Australian government has demanded Deloitte repay the $166,000 it received for a feasibility study on merging the University of Western Australia, Curtin University and Murdoch University, after errors were uncovered including hallucinated AI references and cost discrepancies of hundreds of millions of dollars.

The Western Australian government has said it is "extremely disappointed" and is seeking an "expedited" cost recovery from Deloitte after major errors were discovered in a feasibility study on merging the state's three largest universities. The government paid Deloitte $166,000 for the report.

The report considered three merger options, including a "high" cost scenario for a merger between Curtin University and the University of Western Australia, and broke down costs in an appendix. Under that scenario, the cost to "day 1" was $514 million and "post day 1" over five years was $145 million, totalling $659 million. The report stated the total as $399 million, a discrepancy of $260 million. In a "low" cost scenario covering all three universities, the total would be $512 million but the report gave $823 million, a $311 million discrepancy.

These financial errors compound earlier findings that the report contained references hallucinated by generative AI. Guardian Australia reported that one reference to a World Health Organization report carried a ChatGPT metadata tag on its URL. The report also referred to Curtin University as "Curtin University of Technology", a name it stopped using in 2010 and formally changed by state parliament in 2017.

Deloitte admitted using generative AI to "support the collation of research, synthesis of information and editorial proofing". It had earlier described the errors as "minor".

Experts have strongly criticised the work. Professor Stephen Bartos from the University of Canberra said the errors discredited the report and suggested the government needs a new report reworked without AI. Professor Christian Downie from the Australian National University called for greater transparency in how AI is used and said governments should recalibrate their contracts with consulting firms.

WA Tertiary Education Minister Tony Buti initially described the mistakes as "typos", but later said he was angry and disappointed.

The state opposition labelled the report "AI slop". Murdoch University Vice-Chancellor Professor Andrew Deeks wrote an op-ed opposing the merger, describing it as costly and damaging to student choice, and called the report "another fail for Deloitte".

The government's spokesperson said it was advised the errors do not affect the modelling or findings, and that Deloitte will re-issue a corrected report. All data will be interrogated as part of the university reform business case.

Deloitte did not respond to questions from Guardian Australia.

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Correct and reported total costs for university merger scenarios in Deloitte report (in $ million)

$ million

Source: Deloitte report, as reported by Guardian Australia

Analysis

Why This Matters

The $166,000 paid by WA taxpayers bought a report with basic arithmetic errors and hallucinated references, raising questions about the quality control of government-commissioned consultancy work.
The case highlights the risks of using generative AI in policy documents without adequate human oversight, an issue that affects governments and firms globally.
The findings of the study may influence a major decision on the future structure of WA's university sector, which could alter student choice and institutional competition.

Background

The Western Australian government engaged Deloitte to assess the feasibility of merging the University of Western Australia, Curtin University and Murdoch University, describing the potential move as a "once-in-a-generation" opportunity. The $166,000 study was intended to inform a business case. The report has faced scrutiny since October 2026, when it emerged that it contained AI-generated references and outdated institutional names.

Key Perspectives

WA Government (spokesperson): Says it is "extremely disappointed", is seeking expedited cost recovery from Deloitte, and believes the errors do not affect the report's modelling or findings, though a corrected version will be issued.
Prof Stephen Bartos: Argues the errors are so extensive that a new report may be needed, and that the report should have been manually reworked without AI.
Prof Christian Downie: Calls for more transparency in AI use and says governments need to recalibrate their contracts with consultants to include proper incentives and penalties.
Murdoch University VC Prof Andrew Deeks: Opposes the merger, describing it as costly and detrimental to student choice, and views the report's flaws as "another fail for Deloitte".
WA opposition: Labelled the report "AI slop".

What to Watch

Whether Deloitte agrees to refund the full $166,000 or a negotiated amount, and how quickly.
The release of a corrected version of the report and whether it addresses the concerns raised by experts.
The government's decision on proceeding with the merger, pending a business case review.

Sources

Checked

10 claims in this story checked against 1 source: 4 supported.

Show each claim

SupportedThe WA government is seeking reimbursement from Deloitte over a flawed university merger report that contained AI-related errors.Australia news | The Guardian: “The Western Australian government has said it is “extremely disappointed” and is seeking an “expedited” cost recovery from Deloitte after errors were discovered in a report on a potential university merger, including AI-hallucinated references”
SupportedThe state paid Deloitte $166,000 for the feasibility study.Australia news | The Guardian: “The WA government paid Deloitte $166,000 for a feasibility study on merging the University of Western Australia, Curtin university and Murdoch university.”
SupportedThe study concerned merging the University of Western Australia, Curtin University and Murdoch University.Australia news | The Guardian: “The WA government paid Deloitte $166,000 for a feasibility study on merging the University of Western Australia, Curtin university and Murdoch university.”
Not in the sourcesThe three universities are in Perth.Australia news | The Guardian: “The WA government paid Deloitte $166,000 for a feasibility study on merging the University of Western Australia, Curtin university and Murdoch university.”
SupportedThe report included AI-hallucinated references and discrepancies amounting to hundreds of millions of dollars.Australia news | The Guardian: “errors were discovered in a report on a potential university merger, including AI-hallucinated references and hundreds of millions of dollars in cost discrepancies.”
Partly supportedThe government is demanding an expedited cost recovery from Deloitte.Australia news | The Guardian: “The Western Australian government has said it is “extremely disappointed” and is seeking an “expedited” cost recovery from Deloitte”
Partly supportedOfficials said they were “extremely disappointed” with Deloitte’s work.Australia news | The Guardian: “The Western Australian government has said it is “extremely disappointed””
Partly supportedThe errors included fabricated citations and significant gaps in financial figures.Australia news | The Guardian: “errors were discovered in a report on a potential university merger, including AI-hallucinated references and hundreds of millions of dollars in cost discrepancies.”
Not in the sourcesThe errors raised questions about the use of AI in Deloitte’s analysis.Australia news | The Guardian: “errors were discovered in a report on a potential university merger, including AI-hallucinated references”
Not in the sourcesThe government has not said whether it will pursue further action beyond reimbursement.Australia news | The Guardian: “The Western Australian government has said it is “extremely disappointed” and is seeking an “expedited” cost recovery from Deloitte”