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Tourism Australia is under fire for outsourcing the majority of its budget on third-party contractors in deals that did not have competitive tenders.

The Auditor General report into Tourism Australia found that two thirds of its contracts with a start date between July 2021 and June of this year “did not involve open competition” with most of those contracts made through closed-door arrangements that did not show "value for money".

The Auditor also found that there were not enough procedures in place to find contractors that offered the best value for money and that it was fairly common not to manage identified conflicts of interest with contractors.

An outdated ‘influencers’ list used for marketing contracts, variable and inconsistent payment structures and a lack of management plans were also flagged by the Auditor.

Tourism Australia has agreed to nine recommendations made by auditors, saying in response that it “accepts the recommendations for improvement”.

“Some of the report’s findings relate to work undertaken during the unprecedented events of the Covid-19 pandemic, when Tourism Australia’s primary focus was on the emergency response to support an industry in crisis,” Tourism Australia said.

The report follows recent revelations that three former staff had used taxpayer funds for personal travel. The three employees were sacked and repaid the funds.

The audit of Tourism Australia found it had reported a total $266 million in contracts over the three-year period regularly failed to comply with requirements to find contractors who were best value for money, treating suppliers fairly and appropriately declaring possible conflicts of interest.

The report found that it was "common" for there to be no actions to manage identified conflicts of interest, including in cases where tourism office workers had previously worked for a company tendering for a contract, or no records of those actions.

The Auditor General's report also revealed details of an internal audit by Deloitte in 2023, which examined the gifts and benefits tourism office workers had received over a six month period.

That investigation looked at 15 declared gifts, and found three cases where staff had been gifted sponsored travel without seeking approval.

Tourism Australia's rules require staff involved in a procurement not to accept gifts from "companies associated with the procurement".

In June, Tourism Australia Managing Director Phillipa Harrison revealed she had referred three former staff to the National Anti-Corruption Commission after they were sacked for charging taxpayers for personal travel.

The anti-corruption commission decided it would not launch an investigation because the employees had been terminated and the funds repaid.

Outdated 'influencers' list in marketing contract

Half of the contracts auditors examined were awarded to candidates who had not been assessed to be the best value for money, and many contracts involved work commencing before a contract was actually in place.

Many of those contracts had also been varied, with at least one contract doubling in value, without any records on why additional payments were being made - and sometimes retrospectively adding additional services that had already been delivered or paid for.

For other marketing contracts, Tourism Australia used a list of ‘Friends of Australia’ and social media influencers it said it had vetted - but the only document provided to auditors had not been updated for considerations such as any evidence of inappropriate behaviour by brand advocates.

None of the 33 contracts the audit office examined had a management plan in place, "including some high-risk and high-value arrangements".

Tourism Australia agreed to nine recommendations made by the Auditor General, including to strengthen its procurements processes and run more open and competitive tenders.

In response to the Auditor General, Tourism Australia advised “some of the report's findings relate to work undertaken during the unprecedented events of the COVID-19 pandemic, when Tourism Australia's primary focus was on the emergency response to support an industry in crisis.

"Nevertheless, Tourism Australia accepts the recommendations for improvement."

To the surprise of many in the industry, Harrison was reappointed to her role for a further three year period in August.

Images: Tourism Australia Managing Director Phillipa Harrison (top) and Tourism Australia's current Come and Say G'day campaign (below).

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