There isn't a media storm. All of the articles I've read have accurately stated that the passport was only temporarily confiscated while customs officials examined the passport because of wear and tear. The hysteria only exists on places like reddit where college students with mediocre educations don't bother reading articles, and have created a distorted image within their minds of Australia based on sensationalist headlines.
edit: here's the actual interview
http://www.youtube.com/watch?v=mXj72pNb6U0
http://www.youtube.com/watch?v=ZBbS4btirUE
here's the specific part where the passport is discussed.
http://www.youtube.com/watch?v=ZBbS4btirUE#t=9m8s