House debates

Monday, 18 February 2019

Bills

Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018; Second Reading

6:50 pm

Photo of Rebekha SharkieRebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

I welcome the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 and the protections that this bill will provide to individuals in the financial and corporate sectors who seek to report wrongdoing. Whistleblower laws are there to protect those individuals who would, without measures like this bill, likely find themselves facing legal action for speaking out, drawing attention to misconduct in the workplace like that uncovered by Jeff Morris in 2008 while employed in the financial planning arm of the Commonwealth Bank. Because Mr Morris was brave enough to speak out, over $50 million in compensation has been paid out to victims of poor financial advice. But as a consequence, Mr Morris lost his job, his family and his health. He is a courageous man who paid a huge price.

While Australia does have a patchwork of protections spread across three separate acts, this bill will strengthen the existing whistleblower frameworks through two broad measures. First, it will consolidate and broaden the existing protection and remedies for corporate and financial sector whistleblowers. Second, it will create a whistleblower protection regime to ensure disclosure of information regarding breaches of tax laws or misconduct relating to an entity's tax affairs.

Before I turn to the substantive provisions in this bill, I want to acknowledge the work of former Senator Nick Xenophon and my Centre Alliance colleague, Senator Rex Patrick, for their work on this bill, which led to a significant improvement in the integrity of our private sector. Both have worked tirelessly to ensure individuals are not penalised for speaking out against misconduct when they see it—first, through former Senator Xenophon's support for the 2013 Public Interest Disclosure Act, a bill to encourage those in the Australian public sector who report suspected wrongdoing and then, second, through amendments to the 2016 fair work registered organisations amendment Act offering similar protection to whistleblowers. It was during the negotiations between government and former Senator Xenophon that the 2016 act that the government finally undertook to take a serious look at protections in the private sector.

This bill was also the culmination of a number of parliamentary inquiries involving the work of parliamentarians from both sides of the chamber and individuals such as Professor AJ Brown, who have generously shared their knowledge and expertise in this field, and I note Professor Brown is in the gallery today. Indeed, it was an earlier report prepared by Professor Brown and his colleagues at Transparency International that showed protections for private sector workers in Australia were actually on par with nations such as Russia and Saudi Arabia. Clearly these reforms are long overdue.

Many of the measures contained in this bill were previously identified in the unanimous and bipartisan 2017 report of the Parliamentary Joint Committee on Corporations and Financial Services, which undertook a comprehensive analysis of whistleblower protections in the corporate, public and not-for-profit sectors. This bill addresses 32 of 35 recommendations from that 2017 report and, may I say, it's quite rare for a bill to address that many recommendations so it's pleasing to see. But the recommendations not addressed include a single private sector act, the introduction of a reward scheme for whistleblowers and the establishment of an independent whistleblower protection authority. I understand that work will continue in these areas, and Centre Alliance will monitor the government's progress closely. Notwithstanding these omissions and the need for further reform, this bill does broaden the protections open to whistleblowers and it is an important step forward. The revelations from the royal commission into misconduct in the banking, superannuation and financial services industry highlight the importance of a robust whistleblower framework that encourages individuals to report wrongdoing without fear of reprisal.

In the final report, Commissioner Hayne drew attention to the culture of greed, and how this led to behaviour that fell well short of community standards. Commissioner Hayne said:

Rewarding misconduct is wrong. Yet incentive, bonus and commission schemes throughout the financial services industry have measured sales and profit, but not compliance with the law and proper standards. Incentives have been offered, and rewards have been paid, regardless of whether the sale was made, or profit derived, in accordance with law. Rewards have been paid regardless of whether the person rewarded should have done what they did.

Commissioner Hayne went on to note:

Misconduct will be deterred only if entities believe that misconduct will be detected, denounced and justly punished.

The royal commission has exposed the flaws in our financial sector, but the real work lies ahead. What is required now is cultural change.

The bill will address that cultural change by requiring all public and large companies to develop whistleblower policies that clearly set out what protections are available to whistleblowers, how and to whom a disclosure can be made and what steps the company will take to support and protect whistleblowers. It is effective and responsible whistleblowing that will foster integrity and accountability which, in turn, will deter and expose misconduct, fraud and corruption.

Part 1 of the bill seeks to achieve that aim by bringing the corporations and financial sector whistleblower regimes into alignment, and it broadens the category of people who are eligible for protection. Currently, the Corporations Act 2001 protects a current officer, employee or contractor of a company who makes a disclosure in good faith—meaning without a personal grievance about a breach of Corporations Law. That test has now been changed, and instead it will become a question of reasonableness rather than inquiry to the motives behind that disclosure.

Specifically, the whistleblower must have reasonable grounds to suspect misconduct or an improper state of affairs. Existing protections include some immunity from civil or criminal liability; or contractual remedies for making the disclosure, prohibitions or victimisation; and the right to seek compensation for damage from victimisation. There are also currently some restraints prohibiting the disclosure of a whistleblower's identity or the information disclosed. Similar protections exist within the financial sector whistleblower provisions for a disclosure concerning misconduct or impropriety in APRA related entities. The bill will ensure that these two similar sectors are now able to adopt a uniform approach to whistleblower protection by aligning the two legislative frameworks. The bill also extends the same protection to entities regulated by the National Consumer Credit Protection Act and the Financial Sector (Collection of Data) Act, which do not currently include any whistleblower protections. A clear and consistent approach to the protections provided to whistleblowers, as outlined in this bill, can give individuals the confidence they need to call out this type of behaviour that Commissioner Hayne has described.

Importantly, the bill will also amend the emergency disclosure provisions. Previously, a whistleblower was required to wait a reasonable time before making an emergency disclosure. This bill discards the opaque time limit placed on emergency disclosures. However, some limits remain. A disclosure must have been made previously to a regulator and the regulator then notified again prior to making the emergency disclosure. I note that the requirement to wait 90 days will remain for a disclosure that is to be made on the grounds of public interest. For example, should a person wish to disclose information to a journalist in the belief that it is in the public interest to do so, they must first notify the regulator or other designated recipient. If no further action has been taken after 90 days and the matter remains one of public interest, then the disclosure can be made to the journalist.

Whistleblowers will also have the opportunity to pursue compensation in the event that they have suffered a detriment as a result of their actions as a whistleblower. The ability to seek compensation is an acknowledgement that the service provided by whistleblowers often comes at great personal cost. To be clear, the protections set out in the bill do not extend to those individuals who would seek to use a whistleblower regime to further their own agenda or to settle personal grievances. The bill expressly prohibits protection for disclosures relating to individual personnel, employment or workplace grievances. Those disputes may well be legitimately impacting on the individual, but the focus of this legislative framework is the detection of misconduct, not misunderstandings or miscommunications.

The second aspect of the bill is also an important step forward. Part 2 of the bill amends the taxation amendment act to protect individuals who report noncompliance with tax laws or misconduct in relation to an entity's tax affairs. There is currently no explicit protection offered with respect to taxation matters. The amendments in relation to taxation matters will be broadly similar to those that relate to the corporate and financial sector. The impact of so-called white-collar crime should not be underestimated. In 2016 estimates prepared by the Attorney-General's Department consultation paper into prosecuting corporate crime, it was revealed that these crimes are costing Australia more than $8.5 billion a year. I'll just repeat that: $8.5 billion a year to our nation. To put that into context, this equates to 40 per cent of the total cost of crime in Australia.

But we know that the cost of corporate crime extends well beyond the hip pocket. As the New South Wales Law Reform Commission notes:

Given the pervasive presence of corporations in a wide range of activities in our society, and the impact of their actions on a much wider group of people than are affected by individual action, the potential for both economic and physical harm caused by a corporation is great.

The royal commission has proven just how widespread that harm can be. But this bill provides an opportunity for banks to earn back the public trust by implementing meaningful whistleblower policies so that no other employee has to suffer the same David versus Goliath battle that Jeff Morris had to endure. Instead, organisations can use whistleblowers as part of a comprehensive risk management policy and stop small problems before they impact on consumers.

Finally, I wish to acknowledge the contribution of Minister O'Dwyer, the member for Higgins, for this significant reform and note that it was the minister's willingness to engage in open and frank negotiations over a long period of time with Centre Alliance that enabled this bill and the benefits that it will provide to the public to come to fruition. I commend this bill to the House.

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