My understanding of how it works in QLD is that the QLD govt has purchasing contracts with both Virgin and Qantas and other smaller airlines that deal in specialised routes.

The rates are pretty good, but the people I've spoken to who work for various govt departments (both state and fed) aren't aware of the specific discounts (commercial in confidence I think).

In QLD, Qantas used to have a special fare class that earnt no points (but I think earnt SC). Sometime last year, or the year before, this was re-negotiated, and Qantas dropped the requirement to not earn points. I presume that Qantas just decided it was too much work to track. Not really sure.

I agree that Governments shouldn't be outlandish with taxpayer's money, but I also see the flipside that staff who work for the Govt shouldn't be penalised for working there. (ie, they should get the same benefits when travelling as a staffer from the private industry)