The Herald learned last night that the contract was awarded to Principals, an Australian design agency which registered with the New Zealand Companies Office in February.
It has set up an Auckland office, run by New Zealander Tess Shaw.
But Designers Institute of New Zealand chief executive Cathy Veninga said several New Zealand agencies would have been able to do the job - and would have been more appropriate than an Australian firm.
"That an Australian company that doesn't understand our culture is asked to do it - from the Design Institute's point of view, it's an offence to the studios from our own country," Ms Veninga said.
"It's ludicrous. It's a slap for our studios who ... understand New Zealand culture.
"The Government is saying, 'We don't think this country is good enough'."
An authentically New Zealand firm should be telling the New Zealand story in an authentic way, she said.
"We're going to get a skewed point of view from Australia.
"There's a different culture here. We're across the Ditch but we're a million miles away in some ways.
"They can't appreciate their own indigenous culture - how are they going to appreciate ours?
"No one else can give your story but yourself, can you?"
She said she could not comment on Principals in New Zealand except to say it was a new kid on the block and she knew nothing about it.
Tourism New Zealand's public relations general manager, Catherine Bates, is the project leader for the New Zealand Story.
She said Principals had Kiwi connections - it had been founded in Sydney in 1995 by expatriate Kiwi Wayde Bull - and the contract was only for the first phase of the project.
"The work will be led from the Auckland office. A decision on delivery for the completion of the project will be made at the end of Phase One."
Brian Richards, an Auckland designer who was a finalist for the contract, said the public should be outraged that the New Zealand Story would be told by Australians.
"It would be like asking an Englishman to brand Ireland andexpect the locals to lie down and accept it," he said.
"We can only imagine what the person in the street might say when confronted with the fact that the Australians have been commissioned to tell our story.
"The Prime Minister is in Hollywood is wooing storytellers with tax incentives to operate here quoting, 'It's about jobs for New Zealanders' and his minister [Steven] Joyce, at the same moment, is giving work to Australians."
Principals appeared to have a token presence in Auckland, Mr Richards said, but he had not seen any evidence of New Zealand talent with the experience and credentials required for the project.
Emails and a phone message left with directors at Principals were not answered last night.
But a spokesman for Mr Joyce, the Economic Development Minister, said the agency was selected in an open tender process.
"There is no policy that says New Zealand advertising campaigns must be done by New Zealand-owned agencies," the spokesman said.
"Many government campaigns are run by internationally-owned agencies. It would be a significant change to seek to prevent that."
He cited the 100 per cent Pure New Zealand campaign, created by the international agency M & C Saatchi.
Principals had been selected for only the first phase of the project - to do research, conduct interviews, and prepare a framework for development of the New Zealand Story.
