ELIZABETH:

From Schwartz Media, I’m Elizabeth Kulas, this is 7am.

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ELIZABETH:

Before entering parliament, Scott Morrison ran Tourism Australia. Then he was sacked by the minister, but the details of what happened have never been made public. Karen Middleton on the clearest picture yet of his time in the office.

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ELIZABETH:

Karen, can you tell me what this story is actually about?

KAREN:

Well it's about the past career of Scott Morrison and some elements of it in particular. The jobs he held in the tourism industry and the way he carried out those jobs and some of the criticisms that have been made of him that led to him losing his job in the case of Tourism Australia.

ELIZABETH:

Karen Middleton is the The Saturday Paper’s Chief Political Correspondent.

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KAREN:

Late last year, I came upon this auditor-general's report from 2008. It was an investigation the auditor-general had undertaken. It never really got any public scrutiny. So we started examining that report and this investigation that I've undertaken has stemmed from that.

ELIZABETH:

So Karen, can we start at the very beginning. When did Scott Morrison become a tourism executive?

KAREN:

Well, he went across to New Zealand in 1998 and joined the New Zealand Office of Tourism and Sport as its first director. He was reporting directly to the Minister for Tourism over there and was supposed to be working collaboratively with the New Zealand Tourism Board as well. But there was a bit of a falling out which was ultimately the subject of an inquiry.

ELIZABETH:

Okay, and that inquiry that happened in New Zealand, that comes first. There was also a later report from the Australian auditor-general in 2008. But first things first, what did the New Zealand inquiry, from the auditor-general there, look into?

KAREN:

Well the New Zealand auditor-general ended up looking into some of the events surrounding those relationships, and its report found that Scott Morrison had commissioned a review of the New Zealand tourism board's operations that he'd done that without informing its board members properly or allowing them to have any input. And then he used that report which found that the board was operating in a tactical rather than a strategic way, to demand in the end that the chairperson of the board be sacked and that the New Zealand auditor general's report was quite detailed in its criticisms of Scott Morrison and the way he ran that office. It wasn't just a broad criticism of relationships and activities of the agency, but there were some specific criticisms of Scott Morrison.

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ELIZABETH:

So does it give one the sense that he was working to undermine a rival at that time?

KAREN:

I think you come away from reading the New Zealand auditor-general's report with a sense that Scott Morrison had things he wanted to get done, that he felt that the processes that were in place were not allowing him to do that. And he found, it seems, that it was more effective to go direct to the minister to get things done, rather than going through the board. And the criticism is that he was supposed to have followed a different path.

ELIZABETH:

So, what happens for him next in New Zealand?

KAREN:

Well he ended up leaving his job before that contract was up.

He left New Zealand, came back to Australia and took up a job as the director of the New South Wales Liberal Party, so the State Director. And he ended up running election campaigns there for the New South Wales Liberal Party quite successfully, and ultimately moved back into tourism here in Australia.

ELIZABETH:

And that's when he gets the job essentially running Tourism Australia?

KAREN:

Yes, that's right. He becomes the managing director there in 2004. And he was employed on a three-year contract that was due to expire at the end of 2007.

ELIZABETH:

And what's his sort of signal achievement at Tourism Australia?

KAREN:

Well the best thing that he was known for there was the slightly controversial campaign that ran under the slogan “Where the bloody hell are you?”

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ARCHIVED RECORDING - Unidentified male:

"We've bought you a beer"

ARCHIVED RECORDING - Unidentified female:

"And we’ve had the camel shampooed."

KAREN:

It was an Australian marketing campaign that was run overseas. It featured Lara Bingle, an Australian model standing on an Australian beach.

ARCHIVED RECORDING - Lara Bingle:

"So where the bloody hell are you?"

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KAREN:

And it ended up being criticised in some countries because of the use of what was seen as an expletive. But actually, it was very successful. The numbers suggest that it did very well for Australia. The advertising contract was tended to M&C Saatchi a well-known advertising company in Australia. And the contract for media placement services and media buying was let to a company called Carat. And these were large contracts, these two contracts and a third contract associated with them were worth about 184 million dollars altogether. And there was concern within the government that they might not be value for money. Underneath there was some tension particularly with the executive government and the Minister for Tourism, Fran Bailey, over the way that campaign was set up and the contracts that were let.

And this was the beginning of what ended up being escalating tensions between particularly Scott Morrison and Fran Bailey, and the board to some extent.

ELIZABETH:

Ok so Scott Morrison presides over this controversial but also hugely successful campaign and at the same time, he’s finding that he's coming into conflict with his minister, Fran Bailey. What is the conflict between them?

KAREN:

Well in 2005, these contracts were first let, and there was a rule that contracts worth more than $5 million had to go to the Minister for approval. And this is where the tension really began and it lasted for a year. The agency put these contracts up for approval and Fran Bailey was raising some concerns about the process that had been followed. She asked her departmental secretary to have a look at it. He went to the Department of Prime Minister and Cabinet and they asked for internal and independent reviews of the contracts, and it came back with the same result--it still said that these two agencies were the best ones for the contracts and so they proceeded. But there was an indication there that the minister was a little bit concerned that things weren't going well.

ELIZABETH:

So you’ve got some of the correspondence that was actually shared between Morrison and Bailey at this time. What does it say?

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KAREN:

There was one particular letter that I did get through FOI through Tourism Australia that comes right at the end of this 12 months of tension, and it's quite enlightening because the auditor-general's report had reflected on the problems that Fran Bailey was having with the way those contracts were being managed and this fills in some gaps. It's a letter from Fran Bailey back to Tourism Australia, being quite scathing, really. I mean Ministerial correspondence, most generally, is reasonably moderate in its tone. So you've kind of got to read between the lines a little bit here too. But Fran Bailey had been asked to authorise next year's extension of the contracts that M&C Saatchi and Carat had for this campaign and she was clearly very concerned about what she was being asked.

In the end, she agreed to make an interim approval of a limited amount of money, I think up to about $20 million, because there was a campaign underway and she didn't want to disrupt it. But she said she wouldn't authorise any more than that until the agency came back with answers to some detailed questions.

ELIZABETH:

Okay, and what happens next for Morrison at Tourism Australia?

KAREN:

Well that letter was dated June 29, 2006. And what we know is within four weeks, Scott Morrison had been dismissed.

ELIZABETH:

We’ll be right back.

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ELIZABETH:

So at this point, the Australian auditor-general begins inquiring into those contracts. Those three major contracts that were awarded by Tourism Australia while Morrison was in charge. What else does that inquiry find?

KAREN:

The report was extremely concerned--firstly, that the contracts might have actually been actioned before they were properly signed. There was concern that information was being kept from the board. That procurement guidelines had been breached. And the report also talked about the issue of value for money which was the thing that Fran Bailey had been particularly concerned about both going back to 2005 when the contracts were first let, and again in 2006, in those weeks before Scott Morrison was terminated as managing director.

ELIZABETH:

And Karen, in your investigation, you also found correspondence from the Remuneration Tribunal. Tell me about that part of your reporting.

KAREN:

Yes, it was interesting in the months or weeks before Scott Morrison lost his job, the Remuneration Tribunal awarded a pay rise to offices of his level. That was going to take the base salary of the managing director from $318,031 annually to $332,030 annually. Now it's not really clear what happened after that. The pay rise was due to take effect on the 1st of July. Mr Morrison was sacked at the end of July. There's no indication in the schedule of documents I've been given, which includes the documents I have got access to and the ones that have been blocked, that, that pay rise didn't go ahead. So I'm assuming that it did, but we don’t know for sure.

ELIZABETH:

Karen, there are still other some mysteries that remain in this timeline and in this story, what are those?

KAREN:

We don't know precisely what reason was given in specific terms for Mr Morrison being removed. He was removed from his job about 18 months before the contract was due to finish. And that's unusual, it doesn't often happen to senior members of the public sector. Fran Bailey is reluctant to discuss it. She has only said on the record that she made a decision to dismiss him, unanimously supported by the board. We also don't know exactly what the payout was that he received. It's been widely reported, and never disputed that he did receive severance pay when he lost his job but we don't know what the dollar figure of that was or what conditions were set or arrangements made around that.

We know that the tribunal sought a meeting with the minister over Mr Morrison’s sacking and that its president then wrote to the chairman of the Tourism Australia board, Tim Fischer. The tribunal’s salary determination specified that an officer who lost a job prematurely for unsatisfactory performance wasn’t entitled to severance pay and that was attached to the letter. We're not suggesting Scott Morrison was sacked due to unsatisfactory or poor performance.

ELIZABETH:

Okay, and after Morrison is dismissed from Tourism Australia, Fran Bailey does make changes to the agency not long after he leaves the role. What were those changes?

KAREN:

Yes well, part of the mystery surrounding the dismissal of Scott Morrison was that we've had a lot of speculation about why it actually happened. There was suggestion that it was just a personality clash with Fran Bailey. And there was a suggestion that it might have been something to do with the changes she was planning to make around the agency's governance and structure. Now what is emerging through the documents that I've got is that, Fran Bailey successfully amended legislation to improve the accountability, basically, of the agency to the government and particularly, to the relevant minister. What she did was lowered the threshold for needing ministerial approval of contracts from five million dollars to three million dollars. And she also got greater ministerial power to terminate board members employment, where the performance had been unsatisfactory over a period of time. So, she did make some changes and they were endorsed by Prime Minister John Howard.

ELIZABETH:

So Karen, have you heard anything from Scott Morrison's office as you've been going through this reporting?

KAREN:

No, they've declined to comment on anything really associated with this issue. Mr Morrison's been overseas so there were some time difference issues but the questions were lodged and we haven't been able to get a response, at this stage.

ELIZABETH:

Karen, I think it can be interesting to see how the career of a politician progressed before they were elected to office and perhaps what it can tell us about them. What do you think this story might be able to tell us about Morrison?

KAREN:

Well it tells us he's a good marketer.

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KAREN:

He's good with a message and he has clearly had a career built on marketing and selling a message and I think we've seen that during the election campaign as well. But he doesn't want to look back, he wants to look forward and he is not enjoying people looking back into his past. He's been quite successful at keeping the details of his dismissal from Tourism Australia, hidden from view and he clearly doesn't really want them to arise again now. There is also a pattern of concern about the way he managed his job both in New Zealand and in Australia and suggestions that he didn't keep the board fully informed in New Zealand, and suggestions the Tourism Australia board wasn't kept informed either. So, I guess you see a pattern of someone who likes to do things their own way. He’s very driven to achieving success and he sometimes uses unorthodox paths to get there.

ELIZABETH:

Karen, thank you so much.

KAREN:

Thanks, Elizabeth.

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ELIZABETH:

Elsewhere in the news:

Finance minister Mathias Cormann continues to pressure Labor to legislate the Coalition's tax cuts, after One Nation said it was not sold on the package. Cormann says cuts were endorsed at the election, and it is incumbent on all parties to respect the will of the people.

One Nation leader Pauline Hanson has begun laying out her demands for the government, including a royal commission into family law, the construction of a coal-fired power plant, and the commencement of the controversial Bradfield Scheme, which was last abandoned in 1947, to irrigate inland Australia by diverting rivers.

This is 7am. If you’ve got a moment, please subscribe to the show through your favourite podcast app. Or leave us a review if you listen on iTunes or Stitcher. It helps others find the show.

I’m Elizabeth Kulas. See you Wednesday.