A baggage handler found the device Monday in the cargo hold of the plane when it landed in Sydney after an internal flight from the state of Queensland.
He then breached security procedures by carrying it into the terminal, the report said.
The device was a cardboard roll stuffed with explosive that had a fireworks sparkler stuck in it.
"It was clearly placed there by somebody who had access to the airfield," said David Huttner, the airline's commercial operations chief.
In the run-up to next month's election in which national security is a key issue, federal Transport Minister John Anderson played down the discovery.
"I am relatively confident that if this had been a serious nasty, our security arrangements would have picked it up. The judgment was formed that this was a hoax," Anderson told Australian radio.