Chapter 1
Introduction
1.1
On 8 February 2018 the Senate referred the provisions of the Treasury
Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (the bill) to
the Economics Legislation Committee for inquiry and report by 16 March 2018.[1] On 16 March 2018 the Senate agreed to extend the reporting date to 22
March 2018.
Conduct of the inquiry
1.2
The committee advertised the inquiry on its website. It also wrote to
relevant stakeholders and interested parties inviting submissions by 23
February 2018. The committee received 33 submissions, which are listed at
Appendix 1.
1.3
The committee held a public hearing in Melbourne on 6 March 2018. The
names of witnesses who appeared at the hearing are at Appendix 2.
1.4
The committee thanks all individuals and organisations that contributed
to the inquiry.
1.5
Hansard references throughout this document relate to the Proof Hansard.
Please note that page numbering may differ between the proof and the final
Hansard.
Overview of the bill
1.1
Part 1 of Schedule 1 of the bill amends the Corporations Act 2001.
It widens the definition of eligible whistleblowers to include, for example,
former employees of a company; it strengthens protections for whistleblowers
and provides for compensation for retaliation against them; and it provides for
disclosure to a third party if the original recipient of information has not
responded adequately and circumstances require urgent action.
1.2
Part 2 of Schedule 1 amends the Taxation Administration Act 1953 along similar lines, noting that the identity of taxpayers is protected. Part 3
amends the Banking Act 1959, the Insurance Act 1973, the Life
Insurance Act 1995, and the Superannuation Industry (Supervision) Act
1993 so that there is a single whistleblower protection regime to cover the
corporate, financial and credit sectors.
Background and consultation
1.6
The reason for government interest in protecting whistleblowers is that:
...the prevention of corruption, waste, tax evasion or
avoidance and fraud relies upon appropriate protections for people who report
these wrongdoings.[2]
1.7
Similarly, the Australian Institute of Company Directors' position is
that:
We believe that strong protections for whistleblowers support
good governance outcomes and are therefore in the interests of business,
whistleblowers and the broader public.[3]
1.8
Protections for whistleblowers were included in the Public Interest
Disclosure Act 2013. They were intended to encourage public officials to
report suspected wrongdoing in the Australian public sector. The Act gave
public sector whistleblowers protection against reprisal action. The government
began work on provisions along the same lines for the private sector in
mid-2016.[4]
1.9
Similar protections were legislated in the Fair Work (Registered
Organisations) Amendment Act 2014, which was passed in November 2016. They
were added as an amendment by Senator Nick Xenophon. In his second reading
speech, Senator Xenophon noted an undertaking by the government to support a
parliamentary inquiry into implementing the same level of protection across the
corporate and public sectors, and to introduce legislation by December 2017 to
bring this about.[5]
1.10
The current bill is part of the Government's Open Government National
Action Plan, which was announced in December 2016.[6] In the Open Government National Action Plan, the government undertook to
improve protections for whistleblowers in the corporate sector, and for
whistleblowers on tax matters.
1.11
Since then, in September 2017, the Parliamentary Joint Committee on
Corporations and Financial Services (the PJC) has published its unanimous
report on Whistleblower protections in the corporate, public and
not-for-profit sectors. The drafting of this bill and consultation on it
were already under way when that report was published. The government has not
yet responded to that report, and the bill does not purport to address all the
recommendations of the PJC. However in effect the bill does address the vast
majority of the PJC’s 35 recommendations. The recommendations which are not
addressed, as they pertain to the private sector, are summarised in the
Explanatory Memorandum (pp. 10–11).
1.12
The measures in this bill reflect those in the Registered Organisations
legislation. Because the Government’s action to prepare this bill commenced
prior to the PJC’s reporting date, there are three substantive recommendations
of the PJC that are not addressed in the bill. These include a single private
sector Act, the introduction of a rewards scheme for whistleblowers, and the
establishment of an independent Whistleblower Protection Authority. The
government is considering all the recommendations of the PJC.[7]
1.13
Current protections for whistleblowers in the private sector are
included in the Corporations Act 2001, and in legislation applying to
the entities regulated by the Australian Prudential Regulation Authority
(APRA), namely the Banking Act 1959, the Insurance Act 1973, the Life
Insurance Act 1995, and the Superannuation Industry (Supervision) Act
1993.[8] There is currently no specific regime for tax whistleblowers.[9]
1.14
The Department of the Treasury released an exposure draft of the bill
for comment in October 2017. Submissions on the draft have been published.[10]
Financial implications
1.15
According to the Explanatory Memorandum, the Budget impact is minimal.
The estimated overall average compliance cost is $25.4 million per year over
ten years.[11]
1.16
However, consulting firm KPMG believes that the compliance costs have
been underestimated. In particular, the cost of training all managers and
supervisors in all firms—because they will be eligible recipients of
disclosures under the bill—and the cost of maintaining and communicating a
whistleblower policy in big firms, could be huge.[12]
Date of effect
1.17
The bill is to take effect on 1 July 2018. It provides that
whistleblower policies must be in place by 1 January 2019.
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