EXCLUSIVE: The curious case of Kevin Rudd, Newscorp, ABC and the contract

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Not always enemies, Kevin Rudd with Rupert Murdoch after meeting at News Corp HQ in 2007 where Murdoch said Rudd would make a good prime minister (Image via ABC News)

Kevin Rudd scorns News Corp these days, but that wasn't always the case, writes former ABC reporter Jeffrey Waters.

IT'S BEEN a remarkable time in Kevin Rudd’s enduring public battle with News Corporation.

In October last year, he suggested the Coalition government was deliberately hamstringing the NBN at the behest of Rupert Murdoch, who he said wanted less competition for his cable television network.

Then in November, Rudd used the Saturday Paper to call for no less than a Royal Commission into what he called the News Corporation “cancer” and its impact on democracy — in spite of the fact, as writer Karen Middleton pointed out, that the company had backed his rise.

He’s been quite vitriolic (but markedly non-comedic), describing Murdoch’s Sydney Daily Telegraph as the “Daily Torygraph” and Brisbane’s Courier-Mail as the “Courier Fail”.

But a long-term observer of Mr Rudd’s relationship with News might find all this difficult to reconcile with his approach to the company when in government.

Indeed, it was Foreign Minister Kevin Rudd who curiously oversaw, but still attempted to distance himself from, the Australia Network overseas broadcasting tender that was rigged against the ABC from the start.

It’s a little known fact that has never been spoken of publicly.


The Australia Network contract – decreed by Mr Rudd – contained two clauses that the ABC couldn’t sign, which is why it failed twice in re-securing the contract for the service it had been providing for years, before a rupture in the Gillard cabinet saw Mr Rudd stripped of his power over the process and the highly controversial contract handed back to the ABC.

They may be ignorant of the reasons, but to any Qantas traveller, the principal behind what happened to this contract – and strict ABC editorial independence – is clearly illustrated on screen, on every flight.

When you’ve been away from Australia for years, the immediate, sudden switch from foreign to home environment is as startling as it is pleasing.

It’s like plunging into the surf for the first time on a hot day.

You step onto a Qantas plane and hear welcomes spoken in your own accent.

There are recent Australian newspapers and magazines; you are surrounded by imagery from home.

But have you ever wondered why, when the TV News comes on, it is always Channel Nine rather than the ABC?

There’s a very simple answer and it is the same reason the ABC was never actually meant to win that controversial Australia Network contract – $220m worth – which sparked one of the greatest closed-door rows between Kevin Rudd and his senior Labor colleagues.

The long-running Australia Network scandal caused a bitter dispute between the formerly deposed PM-turned-Foreign Affairs Minister Kevin Rudd and the rest of the Gillard cabinet back in 2011, when, I am told, he held his ground against the rest of his colleagues to try to effectively hand the ABC’s Australia Network to Sky — the only other tender applicant.

“Why aren’t we the news on Qantas?” was one of the first questions I asked my superiors when I arrived to work as a bulletin producer at ABC News for Australia Network (then a branch of ABC News) in 2006.

Why was not our quality, Asia Pacific news, apparently targeted to the sort of Asian audience that can probably speak English and definitely afford to fly, being broadcast on Qantas flights between Australia and its region at the very least?

The ABC managers would sigh, and would say words to the effect of: “There were talks, but Qantas wanted complete editorial control.”

Qantas wanted to tell ABC News what to broadcast — a thought rendered impossible by the independent broadcaster’s charter.

The Qantas problem was recently confirmed to me again by a very senior ABC source.

Losing such a money-spinner for an unflinching moral commitment – that is, complete editorial control over its own news – is a difficult thing to do when the government is cutting funds, but the ABC had the strength to hold the ethical line.

Its charter, but just as importantly its news-division ethics, would make it impossible for the ABC to hand-over control of its output to an outside organisation.

ABC News would destroy its admired international reputation for independent news and current affairs by complying to such restrictions.

So we watch Channel Nine on our flights and, back in the Rudd-Gillard years, the ABC failed twice to hold-on to Australia’s international broadcasting service for exactly the same reason.

Simply, it could never complete the full tender requirements imposed upon it, because it would not sign-away its editorial control to a potential, lucrative, client — in this case, the Department of Foreign Affairs and Trade, or DFAT.

Due to its ethics, the ABC couldn’t sign-off on two clauses in the tender application, which would give away its editorial independence completely, so it was never, actually, in contention to regain the service. 

Indeed, a tender committee was effectively given no choice but to (twice) award the accompanying $220m or so to to the least-watched news channel in the country – partially owned by Rupert Murdoch – Sky.


But why did this happen? Why would the ABC be asked to compete for a contract it could never sign, with the only other contender being a (partially) Murdoch-controlled company?

To explore this, a compilation of the timeline is extremely revealing and raises questions about why it was Kevin Rudd decided to go against public service advice, convention and the Gillard cabinet, as he apparently tried push this unusual contract process, while keeping himself technically at “arms-length” to the process.

If we go back to the wonderfully enthusiastic "Kevin 07" campaign and in the couple of years beyond, Mr Rudd enjoyed mixed, rather than outright vitriolic, coverage in the Murdoch media, with The Australian being the the most kind of the stable’s daily beasts.

That kindness has been attributed to the long-term friendship between Mr Rudd and one of the Australian’s columnists Chris Mitchell.

Mr Rudd is a godfather to a child of Mr Mitchell.

Following what was hailed as a “successful” first meeting between Mr Rudd and Mr Murdoch at the baron’s office in New York, after which Mr Murdoch is reported to have told the media that Mr Rudd would make a very good Prime Minister — though it may be notable that he did so with a smile and a very small laugh.

In October 2008, Mr Murdoch and Mr Mitchell were invited as guests to a prime ministerial dinner at Kirribilli House.


Nevertheless, Mr Rudd continued to receive a great deal of negative coverage in the Murdoch tabloids.

The then PM sealed his fate as a Murdoch enemy when, in February 2009, Mr Rudd published a great economic treatise.

It may be argued it was a political suicide note for a man who, as was said by Kim Beazley recently, had spent so much effort on the daily news and its cycle and not the big picture.

Effectively the entire Murdoch press went to war against Rudd over the publication of the essay, written in the wake of the Global Financial Crisis, in which Mr Rudd declared the markets had failed and there was a need for substantial government intervention.

It was classic Keynesian economics and the philosophy behind it (in spite of some tragic results in some parts of its implementation) eventually worked, ensuring Australia was the only OECD country not to slip into recession.

But that isn’t News Ltd’s preferred economic philosophy, and the attacks against Mr Rudd intensified and continued through 2009.


On the 22nd of September, Kevin Rudd had what was described as an “intimate dinner” for two hours with Mr Murdoch and his then wife, Wendi Deng, at the Australian consulate in New York.

It was Mr Rudd’s first known meeting on that trip to the USA, which included his attendance at a G20 leaders’ summit in Pittsburgh on the Thursday and Friday.

Nevertheless, the attacks in Murdoch’s papers continued and in November 2009 Mr Rudd lashed-out at the clearly biased coverage against him.

On 7 November 2009, The Australian published an article quoting Mr Murdoch, who accused the PM of being over-sensitive, and criticised the expansionary economic policy that had saved Australia from a recession.

If Mr Rudd had tried to placate Mr Murdoch at the “intimate dinner”, he had failed.


Fast-forward eight months to June 2010, and Kevin Rudd was war-weary and flailing.

There was talk of a move against him.

What could he do?

In that same month, Mr Rudd’s Government called for an “industry consultation process” into the $220m Australia Network contract already held and broadcast – for several years – by the ABC, sending shivers through those of us who worked for the network.

There wasn’t a journalist in the place who didn’t immediately suspect what might be going on.

The free-to-air commercial television networks would be sure to all give the same answer if asked if they’d be interested: “No”.

Network Seven had already, years before, stopped broadcasting a previous incarnation of the network because it was unprofitable.

The only members of the industry who might possibly be interested would be the non-profit ABC, or the Australian News Channel (Sky), because it was known that Mr Murdoch sometimes decides he can afford to run media outlets at a loss.

It is not clear whether the so-called “industry consultation process” was initiated by Prime Minster Kevin Rudd himself, or the then Foreign Minister, Stephen Smith.

Neither has responded to requests to be interviewed on the subject.

The questions were sent to Mr Rudd slightly before his call for a News Limited Royal Commission.

Cabinet as a whole decided Mr Smith could bring a proposal for the consultation process forward as part of the 2010–11 Budget considerations.

But Mr Smith, according to an Auditor-General’s report

''... opted not to bring the proposal forward in the Budget considerations as, by that time, he was considering launching a formal industry consultation process.''

Two independent and well-placed sources have told me Mr Smith personally supported the idea of continued ABC control.

The audit report continued:

''However, through the budget process the Department of Finance and Deregulation (Finance) and the Treasury had indicated that if the service were to continue, a tender process would be the preferred option in order to ensure value for money.''

Somehow, through “the budget process”, Mr Rudd’s apparent desire to put the Australia Network out to tender had been a success — thanks to Treasury.

On 23 June 2010, Kevin Rudd was removed from office by Julia Gillard and her supporters, but he stayed in Parliament.

By August 2010, Prime Minister Julia Gillard appointed the now former Prime Minister to the position of Minister for Foreign Affairs, giving him complete stewardship of the “industry consultation process” the Government he led had initiated.

And on the 1st of October, the incoming minister was briefed by DFAT officials.

In the briefing, DFAT recommended that the ABC’s existing contract to deliver the Australia Network service be extended for a further five years rather than being put out to tender.

It recomended: 

... that the Foreign Minister agree to rollover the existing contract with the ABC for a further five years, with a view to then fully exploring options to either:

move to a longer‐term contractual arrangement (as suggested in the industry submissions); or further develop [a] submission sponsored by the Communications Minister from November 2009, which would see responsibility for the Australia Network permanently transition to the ABC.

According to the Australian National Audit Office (ANAO) report:

In total, 14 submissions were received from industry. The majority of submissions did not support tendering for the contract and considered that, if the purpose of the Australia Network was to act as a tool of public diplomacy, the service should remain with the ABC as the national broadcaster. Several submissions also noted that it was unusual for an international broadcasting service funded by a government to operate under a commercial arrangement.

Ministers had agreed at an October 2010 meeting that the decision [on the final tender outcome] was to be made by Cabinet.

''However,'' the report continues, ''arrangements already put in place by the Foreign Minister for the Secretary of DFAT to approve the tender outcome did not envisage an explicit role for Cabinet.''

Late the next month, Kevin Rudd gave a briefing to cabinet advising that a ten-year contract for the service should be put out to competitive tender — and he was successful.

Mr Rudd announced the public tender the next day — but one extremely important part of the process was cloaked in mystery.

According to the Auditor General:

While formal records will not necessarily reflect all matters canvassed, the Government’s decision to select a service provider for the Australia Network through an open tender process was silent on the decision‐making process for the tender. The lack of a documented government position on this issue created some uncertainty in relation to the decision‐making process for the tender, and subsequently led to modified arrangements for, and delays in, the tender process.

Who’d be in charge was an interesting omission to make.

In the vast majority of cases, the minister takes the responsibility of finally signing-off on a successful tender, but for reasons known only to Kevin Rudd, the Foreign Minister tried to distance himself from this one involving the ABC and Rupert Murdoch.

A former Minister for Foreign Affairs, Alexander Downer, had been, naturally enough, deemed the designated “approver” for the 2005-2006 tender process for the network — which was awarded to the ABC.

Based on this precedent, DFAT recommended that Foreign Minister Rudd again assume the role of approver for the contract.

In what lawyers might describe as an “exotic” move, Mr Rudd chose to dismiss the recommendation and assigned the Secretary of his Department to perform the role.

It was an extraordinary departure, and Mr Rudd has not responded to questions about why he would not want to personally sign-off on such an important decision.

Whatever the case, it would not be Kevin Rudd who personally handed Australia’s national interests – and more than $200m – to Rupert Murdoch.

Mr Rudd would later explain that his decision was taken, amongst other reasons, to ensure that the contract was – and was perceived to be – on the basis of merit and not influenced by any other consideration.

So Mr Rudd was exercising ministerial discretion to ensure he had no ministerial discretion.

Within a few months, the Government dismissed the consultation process and departmental advice, and announced that a competitive tender process would be used to award a new ten-year contract for the delivery of the Australia Network.

Of course, the staff in the Australia Network offices around the country were nervous, but managers soothed their fears, saying all would be well and the staff’s dedication was unwavering.

“ASPAC” as it was first known within the ABC, had been set-up and initially funded by the Howard Government as “ABC Asia Pacific,” but changed its name to “Australia Network” (internally: “AUSNET”) after more than $200m injected into it by the coalition.

The ABC News Division filled the news slots on air.

By that time, “ABC News for Australia Network” was running around-the-clock half-hour news bulletins designed to appeal to the Pacific, Asia, and the Subcontinent, as the world turned at breakfast, early and late evening-time for each.

As well, there was a nightly live (and then repeated) current affairs programme called Newsline, which employed its own roving journalists, as well as utilising dedicated foreign correspondents in Jakarta, Beijing, New Delhi and the Pacific Islands, as well as those others already working around the world for the network.

Now, it could be a political pawn and the demonisation Kevin Rudd was enduring from the Murdoch media at the time was relentless.

The tender appears to have stirred a nest in Cabinet over the summer, and in mid-January 2011, Mr Rudd wrote to key ministers about the details of the tender process and his views, but the letter made no reference to who would be making the final decision.


By 25 January 2011, the Prime Minister had caught on.

Ms Gillard issued a “no” to Mr Rudd, and ordered that the outcomes of the tender would be decided by Cabinet and it alone.

Her response noted:

''Outcomes of the tender would be subject to Cabinet consideration, with Cabinet to agree the successful tender bid.''

The Auditor General said:

''This was the first documented reference to a formal role for Cabinet in the decision‐making process although a subsequent briefing prepared by the Cabinet Secretary indicated that Ministers had agreed at an October 2010 meeting that the decision was to be made by Cabinet. However, arrangements already put in place by the Foreign Minister for the Secretary of DFAT to approve the tender outcome did not envisage an explicit role for Cabinet.''

Clearly, there was a sense something was awry, setting Mr Rudd against the cabinet that had recently unseated him as leader.

According to a Senate Committee investigation into the process, the Department of Prime Minister and Cabinet acknowledged that there was

‘... a divergence between what had been in correspondence between the Prime Minister and the Foreign Minister and what was occurring in the tender process.''


The request for tender (RET) was lodged on a Government website, closed to only those who request to tender nine days later.

Of course, the security surrounding Government tenders is very strict.

According to the Auditor General:

''…information security is critically important to effective tender arrangements and there are accepted ways within government of managing this, namely, by not circulating confidential tender information to any departmental officers, Ministers or their staff, unless they are part of the tender decision‐making process or have a demonstrable need for such specific information.''

Indeed, the security was so incredibly tight, it took me several hours to get my hands on a copy of the tender document myself.

By this time, I was working in the job as “Senior Correspondent” for “ABC News for Australia Network".

Before seeing the document, I was first asked to promise that I would keep the contents completely confidential so as “not to upset anyone”.

Two clauses jumped from the pages: one demanding that the Department of Foreign Affairs and Trade have complete editorial control over what went to air on the network, and the other, demanding the successful tenderer could never be critical of DFAT.

I was allowed to read it pretty much on the spot and had to hand it back.

As I handed it over, I said quite alarmed something like: “Well that’s it then, we’re being given away”; or, “It’s all over, AusNet’s being handed over to Murdoch.”

It was slightly reassuring to hear the chatter within the organisation about how the political process would see the two offending clauses removed.

They were blamed on some unnamed and unknown DFAT bureaucrat who clearly had no idea about the ABC’s Charter.

There was a genuine belief within the ABC that, as tenders are (almost) always signed-off by ministers, Kevin Rudd would overrule the tender committee with his ministerial discretion should the ABC fall at these two, cleverly placed, hurdles.

Nevertheless, this reporter started looking for new jobs within the ABC the next day.

My anxiety was amplified by having been part of an ABC tender evaluation myself.

I knew very well that if even the most attractive of submissions couldn’t comply with every clause, it was out and the ABC couldn’t comply with two.

Applications for the tender closed on the 25 March, with two, predictable contenders: the ABC and the ANC, also known generally as “Sky”.


I have not seen either submission, but it would be fascinating to know if the ABC just ignored the two offending clauses, or actually spelt-out that it was unable to comply with them.

The ABC couldn’t tick all the boxes and could never win; the ANC, as it turns out, could and did, and on 25 March 2011, the tender closed.

Prime Minister Julia Gillard appeared, at this point, to need some sound legal advice on the matter, so on 18 April 2011, she asked Department of Prime Minister and Cabinet officials for advice on whether a cabinet take-over of the contract decision was sound in law.

The report from PM&C came back saying that the Foreign Affairs Department’s secretary alone – and not cabinet – could legally approve the document.

The PM&C’s letter to the PM was returned unsigned.

Ms Gillard has “respectfully declined” to be interviewed on the subject.

On the 4 May 2011, the tender evaluation board told the the Secretary of DFAT, in his role as approver, that he should accept the ANC as the preferred tenderer.

In an email, the Sky News chief, Angelo Frangopoulos, made it very clear he would not answer any questions about why his organisation was willing to sign-off on the tender.

Rupert Murdoch would have been rubbing his hands in glee and appeared very happy to turn it into an outright propaganda arm of DFAT.


But there was a hiccup caused by the “meat in the sandwich.”

According to the report:

''While the Secretary of DFAT had the authority to make a decision on the preferred tenderer once he was satisfied that all required steps had been undertaken, he considered that making a decision would be inappropriate given the differing views that existed within government, including at the ministerial and departmental levels, as to how the decision on the future provider was to be made.''

The Auditor General noted wryly:

“In the circumstances, this was a reasonable approach to take.”

It is not clear if the Secretary did or did not make a decision on the matter.

A meeting was called and PM Gillard met with Mr Rudd in late May to discuss the tender directly. In a letter to the PM from Mr Rudd dated the 5 June, the Minister noted that Ms Gillard has asked him to ensure legal arrangements be made for cabinet to make the final decision.


But, for some reason, Mr Rudd decided to stand up to his boss again, or at least dismiss her.

The letter also included lengthy reasons as to why Mr Rudd’s own decision to not approve the tender would stay: the legal advice, given the way things had been set up, was irrefutable — it was not possible for Cabinet to collectively takeover the approval process from his departmental secretary.

An alternative view, however, supplied by DFAT, said that an alternative minister could be appointed to make the final decision.

Mr Rudd appeared, again, not to want to sit in that chair.

According to the ANAO:

''The Minister stated that he would exclude himself from this role because of his publicly stated support for the current decision‐making arrangements, and because he believed they were the best arrangements from a probity perspective.''

He was indefatigable.

This recently ousted PM-turned-Foreign Affairs Minister was willing to take on PM Julia Gillard and her Cabinet, once again, to try to ensure he could have no say over a tender process mysteriously rigged against the ABC.

So, Mr Rudd was asked to bring forward a submission on the process to be presented to cabinet.

According to the ANAO, just hours before Mr Rudd’s presentation on the 14 June, news got to the Communications Minister that the ABC had lost the contract.

The report says:

''Shortly before the Cabinet meeting, the Communications Minister received an oral briefing from his staff on the departmental brief, which included reference to the TEB’s preferred tenderer.''

The written brief was returned unsigned by the Minister, and marked "overtaken by events".

So that day, Mr Rudd was entering a hostile cabinet room, which would have, by now, become aware of the stitch-up.


Rudd''s presentation wasn’t what Prime Minister Gillard wanted to hear.

Mr Rudd provided advice from DFAT (which was backed-up by the Department of Prime Minister and Cabinet) that Cabinet could not collectively decide on the tender, as the approver had to be an individual.

I’m told many in Cabinet became incandescent at this point and that there were very strong disagreements.

Cabinet was unwilling to hand $220 milllion to an organisation influenced by Rupert Murdoch, particularly because News Ltd had hounded and attacked them so vehemently and so often, and for so long.

Some were more ethically driven — worried about, as was said to me: “Australia’s national interests”, given the ABC’s clear superiority.

(It must be noted that Sky’s news service is quite possibly the least watched news service in the country, as opposed to ABC News 24, which leaves its commercial competition in the dust.)


But Mr Rudd’s advice did include one possible out: a new approver at ministerial level could be identified.

And, standing-firm on his insistence of never being seen to have been involved in the decision-making process himself, Mr Rudd informed cabinet he would exclude himself from that process because of:

''…his publicly stated support for the current decision‐making arrangements, and because he believed they were the best arrangements from a probity perspective.''

Mr Rudd was never going to personally approve the contract that had been rigged against the ABC.

The Government appears to have wanted a delay to the decision and was desperate for a way out of the situation.

Eventually, if the ANC got the network, the truth about the tender process would surely eventually come out and the Gillard Government would be branded with trying to buy-off the savage Murdoch press with $220m of taxpayer funds.

So it appears new conditions were invented so as to delay things.

The Government decided new clauses to the tender should be added and the process re-started.

Vague reasons about the necessity for the network to continue uninterrupted coverage of the so-called “Arab Spring” were given, even though the Australia Network didn’t broadcast to the Middle East west of Pakistan.

There was also ridiculous talk of us broadcasting to Latin America and Africa, without the required funds for satellite transponder rental.

But there was no announcement of anything being taken out of the tender requirements — that is, the issue of editorial control that ruled the ABC out of the process.

Two days later, the DPM&C advised Ms Gillard that, in effect, the new arrangement wasn’t advisable and that the evaluation criterion on the Middle East was ''too limited, leaving the government open to considerable risks''.

The Department recommended terminating the process and starting it again instead. It told the auditor it didn’t have a record of the PM’s response to that brief.


Just six days after Mr Rudd staged his audacious hot-potato move in cabinet, the Government decided to amend the tender process, with the official announcement pre-empted by a leak to newspapers on 22 June.

It all went back to the tender evaluation board, with additions, but, presumably, no subtractions.

At this stage, it is not clear who would become the final approver of the tender — the secretary of the department, or a newly-nominated cabinet minister.

On the 30th of August, the decision came back:

''… while the ABC’s amended tender improved its overall position, this improvement was not considered significant enough to increase the ABC’s overall rating or affect its relative rating when compared with the ANC’s submission.''

It’s important to remember the “rating” in this case is primarily the tenderer’s ability to “tick all of the boxes.”

The then Communications Minister, Stephen Conroy, fired-back a series of almost 30 questions to the tender evaluation board on the decision, highlighting the need for the

''... application of established editorial policies and their impact on the independent and accurate reporting of news and current affairs.''

It appears Mr Conroy, at least, could see through the ruse clearly.

In the second of the two blasts, the Minister asked, again why the board did not pick the ABC, with questions about editorial control and independence, financial viability and “non-performance”.


The Government wanted an out.

It sought the advice of the Australian Government Solicitor about how to end the whole process and it’s here that the Australian Federal Police appears to have been used for political expediency.

The Solicitor’s advice said that, without an investigation into the leaks to the media, a termination of the process would be difficult to defend.

''If there were insufficient grounds to warrant an investigation then it would be difficult to justify a termination of the process'', the advice said.

So on 27 October, the Secretary of the Department of Prime Minister and Cabinet wrote to the Commissioner of the Australian Federal Police requesting an investigation into the who was leaking to journalists.

Subsequently, Communications Minister Stephen Conroy told the Senate:

“The leaking of this information clearly compromises the process. The Government regards the leak as serious, so serious as to justify requesting in the Australian Federal Police to investigate the leaks.”


Finally, with negative media coverage over the whole mess plaguing the government, The Communications Minister terminated the tender process on 7 November, citing media leaks about the process as the Government’s reason.

The next day, the Deputy Opposition Leader made a second formal request to the Auditor General, asking for an investigation into the entire contract process. This time, with little wonder, the Auditor decided an investigation was warranted.

That decision followed a second request, from the Communications Minister himself, shortly after.

On 5 of December 2011, the Government finally announced that the ABC would be providing the Australia Network service on a permanent basis (well, for as long as they were in government, as Tony Abbott famously closed it down in 2014 after promising “no cuts to the ABC” the previous year).


And by the end of summer – 22 February – a spill was called, again, and Mr Rudd emerged as Prime Minister for a second time.

The public had never been told about the full extent of his involvement in this clearly politically-warped process and now he could sit comfortably knowing that the whole issue could be buried and nobody would ever know of his involvement (or at least, insisted lack of involvement).

Until today, that is.

Jeff Waters is a former ABC national and international journalist and author, now working freelance.

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