Its a problem when facts get in the way of a good whine isn't it.
Most if not all C'wealth agencies have an "outsourced" travel provider - AMEX Travel, Carlson Wagon-Lits etc - which was forced on them by the Government. In the bad old days they used to have one or two "Travel Clerks" doing the same thing, only cheaper.
These "providers" are tasked in ticketing travellers on the best fare of the day - simple as that. Doesn't matter which carrier. And very few of the travellers are in Business Class. And FF points which accrue to the traveller, not the ticket purchaser, are used where possible to travel thus saving the government money. Of course, we all know just how easy it is to redeem these points don't we. Oh, and that FF or Club membership - it comes out of the individual's pocket - only the very upper echelon get any perks like that.
The bottom line is that if Rex or Virgin have the best fare that day, they get the business.
Here's a classic example of "best fare" - try to travel SYD-SEL and you'll gat a quote from QF and OZ with a price differential of around $800 with OZ being the cheaper. Its a QF/OZ codeshare so whichever fare paid its the same aircraft. And QF complains that they don't get as much government business as they used before.