Did Tourism Australia really get a KPMG report, or was it Scomo’s imagination?

by Jommy Tee | Sep 11, 2022 | Government, Latest Posts

There are still many questions surrounding Scott Morrison’s ill-starred time at the helm of Tourism Australia, writes Jommy Tee. Newly released documents confirm KPMG did not undertake a probity audit in 2005 into the assessment and evaluation of shortlisted tenderers for Tourism Australia’s advertising contracts.

It’s more than 100 days since Scott Morrison led the Coalition to a crushing election defeat. Under a twin assault from Labor and the climate independents, Coalition seats fell like ninepins everywhere except Queensland. Outside the Sunshine State, the Coalition recorded the worst defeat in terms of seats of any government since Gough Whitlam’s.

Which may be the reason Morrison hangs around parliament as a backbencher in Peter Dutton’s depleted team. This prime example of political undead likely stays on because the Coalition can’t afford to cede another seat. His southern Sydney seat of Cook could be lost by the Liberals if he was to leave and cause a by-election.

Meanwhile, he remains the gift that keeps giving not only for Labor, but the Greens and the independents who have risen in the wake of his disastrous four years as prime minister.

It’s not only the scandal over Morrison’s secret power grab, which is now the subject of a judicial inquiry. Former High Court judge Virginia Bell is examining Morrison’s secret actions in taking on five extra ministerial portfolios without informing the nation and will report by the end of the year.

Yet it is the saga of Morrison’s woebegone stewardship of Tourism Australia is the gift that keeps on giving for his critics.

Newly released documents obtained by MWM confirm KPMG did not undertake a probity audit in 2005 into the assessment and evaluation of shortlisted tenderers for Tourism Australia’s advertising contracts. The advertising campaign by the successful tenderer, M&C Saatchi, spawned the much maligned “So where the bloody hell are you?” campaign.

The documents, obtained under Freedom of Information, further discredit Morrison.

The first time Morrison lost the nation’s confidence: the story they don’t want you to know

Morrison had used the existence of the KPMG probity audit as cover to ward off criticism of the controversial tender process.  During his time at Tourism Australia Morrison was repeatedly asked about the probity audit at Senate Estimates stating the report was completed but could not be released because it was commercial-in-confidence.

MWM had previously sought access to the report however, despite a comprehensive search, Tourism Australia could not find it and KPMG advised that it could not confirm the report had been completed.

The new documents show that both Tourism Australia’s Audit Committee and the full Board, acting on the Audit Committee’s advice, resolved that:

an external review of the Stage II of the tender process was not necessary

Stage II incorporated the evaluation and assessment of shortlisted tenderers and included overseas in-market reviews, assessment of the financial submissions, final presentations, and a final recommendation.

The auditor has left the building

The decisions to not involve KPMG in Stage II were taken at the beginning of June 2005. Media reports of KPMG being called in to assess the tender began surfacing in late June. In reality by that stage KPMG had already left the building. The then minister, Fran Bailey, approved the tender the following month after she sought the intervention of the Department of Prime Minister and Cabinet (PMC) to review Tourism Australia’s internal procedures.

The FOI documentation does not name KPMG as being involved in the PMC initiated review. Importantly, PMC asked Tourism Australia run scenario tests and re-evaluate all tenders, but it was limited to the determination of the shortlist (ie. Stage I). The re-evaluation found no change was needed to be made to the shortlist.

It’s none of our business what happened to Morrison at Tourism Australia. Just ask ‘Scott’

Yet months later Morrison was conveying to Senate Estimates a misleading assumption that an all encompassing probity audit had been conducted.

In a written response to a Senate inquiry into government advertising in November 2005, Tourism Australia responded “TA requested internal auditors, KPMG, to undertake a review of the tender evaluation process to assist the Board with their review of the recommendation to be received from management’” (our emphasis).

two months after the minister had approved the tender outcome, KPMG’s written review into Stage I had not been finalised.

In fact KPMG’s role, according to the board papers was limited to the pre-recommendation Stage I phase.

KPMG presented a verbal report on Stage I (the process up to the shortlisting stage) to both the audit committee on June 2, and then to the full board the following day.

The board noted: “The board agreed to adopt the recommendation of the Audit Committee regarding the tender process”.

Morrison presented at both meetings focusing on Stage II of the tender process. Morrison was part of the five-person Tourism Australia team that assessed the final tenderer presentation reviews.

Three months after the Board and Audit Committee had signed off on the process and preferred tenderers, and two months after the minister had approved the tender outcome, KPMG’s written review into Stage I had not been finalised.

The email chain

An email chain in late August 2005 points to Tourism Australia wanting its “management comments” to be incorporated into KPMG’s Stage I review, which was tentatively called “KPMG Global Advertising Tender Draft Audit Report”.

The “management comments” give an insight into the significant flaws KPMG found with the tender up until the shortlisting stage. These flaws included:

  • Gaps in compliance by Tourism Australia with respect to procurement policies and procedures;
  • For Stage II the need to establish appropriate documentation to support accountability and transparency;
  • And concerns of inadequate time to assess Stage II; and
  • Failure to complete conflict of interest declarations by Tourism Australia officers prior to approaching the market

KPMG Global Advertising Tender Draft Audit report - undated

The overwhelming tone of response by Tourism Australia to the flaws detected were that they were not material in nature and did not impact on the Stage I of the tender process.

Audit Cttee meeting June 2

From his controversial “jobs for the boys” appointment, his run-ins with his minister and the board, his lack of transparency in the role, and his obfuscation at Senate Estimates it is no wonder that his departure came sooner rather than later.

Should Morrison ever look for a corporate gig after politics … well corporate Australia he’s all yours.

Where the bloody hell is it? Did Scott Morrison lie about the report that saved his bacon at Tourism Australia?

Jommy Tee is a long-time career public servant, having worked in the policy development field for 25+ years as well as an independent researcher interested in politics, current affairs, and Nordic noir.

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