Monday, 18 February 2019
Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018; Second Reading
I rise to resume my remarks on the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018. As I was saying previously, a Shorten Labor government will protect and reward the brave Australians who blow the whistle on crime and corruption, including in the banking and financial services sector. We've pledged that if Labor is elected we will set up a whistleblower reward scheme, establish a whistleblower protection authority, overhaul our whistleblowing laws with a single whistleblowing act, and fund a special prosecutor to bring corporate criminals to justice.
Right now, blowing the whistle on a crime and misconduct is incredibly difficult, with whistleblowers often facing reprisals and some never able to work again. I've spoken to some people who are in this situation, and the effect that blowing the whistle can have not only on their lives but on their family, their friends, their social networks and their psychology is often devastating. That's why we must be doing more to provide that support for people who are in these vulnerable situations and who do very, very brave things by coming forward with information that in some cases leads to charges against the individuals they're making accusation against. It shouldn't be the case that people risk their jobs for doing so, and Labor doesn't want to see good people punished for doing the right thing. Ultimately, that's at the heart of what we're discussing here today: people doing the right thing and uncovering activities that in some respects are illegal but in many cases have involved people acting underhandedly for profits and financial gain for themselves at the expense of other, vulnerable Australians.
To combat this, Labor will establish a whistleblower rewards scheme to make it easier for good people to come forward and report instances of crime and misconduct. The scheme will allow whistleblowers to receive a percentage of the penalties arising out of wrongdoing that they reveal. Once a crook is hit with a financial penalty as a result of whistleblowing, the whistleblower rewards scheme would allow a proportion of the penalty to be given as a reward to the whistleblower. The relevant investigative or law enforcement agency will have the discretion to determine the level of the reward within a legislated range. The whistleblower rewards scheme would be funded by the penalties collected by the government, so there wouldn't be any expense to the taxpayer directly from the establishment of this scheme. It would come from the activities and from the penalties associated with the wrongdoing that are blown by the person blowing the whistle in that particular case.
Labor will also strengthen protections for whistleblowers through the establishment of a whistleblower protection authority, a one-stop-shop to support and protect whistleblowers. The authority will have dedicated staff to advise whistleblowers on their rights, assist them through the disclosure process and help them access compensation if they face reprisals. Labor believes that all whistleblowers should be treated the same regardless of the type of workplace they're in, but right now our whistleblower laws are opaque and inconsistent, particularly across various industries, and that can't be the case if we are going to be fair dinkum about supporting whistleblowers in our laws.
A Shorten Labor government will create a single Australian whistleblowing act, consolidating all mainstream whistleblowing legislation into one location so that whistleblowers can readily understand how they are protected. This will be a major shake-up of Australia's whistleblowing regime. We will undertake detailed design work to make sure that the new laws, the proposed rewards scheme and the whistleblower protection authority are powerful and effective.
Labor is committed to cracking down on misconduct and corruption in the banking and financial services sector, and these announcements build on our commitment for a banking royal commission implementation taskforce and to deliver an extra $25 million over the next two years for the Commonwealth Director of Public Prosecutions to tackle corporate crime. As part of this funding, Labor will appoint a special prosecutor to crack down on corporate criminals. So our commitment is to ensuring that this underhanded conduct, this seedy conduct, this rip-off of victims, particularly in the banking and financial services sector, that has gone on for the last decade, that has seen delayed action by this government, has seen the parliament tardy in its response while victims went and had, in many respects, their life savings taken away from them without government action, will end. We want to make sure that the recommendations of the royal commission are responded to in a timely manner and that we legislate as quickly as possible to put those protections in place. We wish to make sure that what occurred in banking and finance over the last decade never occurs again in Australia and that, where it does, our regulators are well funded and have the expertise and personal to uncover and then to prosecute people who have done the wrong thing.
Finally, the third string to the bow, if you like, is that we want to ensure that whistleblowers—people who bravely risk their jobs, their livelihoods, by coming forward and detailing to regulators, politicians and the media what's been going on in particular industries that is illegal and underhanded so that it doesn't occur again—get the necessary protection they deserve.
So the choice is clear. While Labor fought for a banking royal commission and will crack down on white-collar crime, the Prime Minister and all members of his government, including the National Party—who often try to sneak out of these things when they go back to their electorate and say, 'No, we didn't vote against a royal commission; we supported the royal commission in the parliament,' when we all know that that's not true—voted 26 times against a royal commission. Labor will deliver a fair go for those brave Australians that blow the whistle on these tips of crimes and misdemeanours and ensure that they have the support and the necessary backing to speak up and to do what is right.
Whistleblowing plays a critical role in uncovering corporate and tax misconduct. It is a key means of combating poor compliance cultures by ensuring that companies, officers and staff know that misconduct will be reported. The opaque and complex nature of corporate crime makes it difficult for law enforcement to detect abusive practices. In many cases, corporate crime is only detected because individuals come forward, sometimes at significant personal and financial risk.
Some of our biggest corporate scandals have only seen the light of day because of whistleblowers having the courage to stand up to their bosses. It is easy to underestimate the true bravery that this takes. Imagine having to turn your back on a company that has offered you employment and workmates who you may consider friends. Imagine having to put your salary at risk, the uncertainty and the ostracism. The easiest thing in the world would be to turn the other way. Yet whistleblowers come forward regularly, in the face of these challenges, to open up scandals to the light of public scrutiny and judicial processes. Blowing the whistle may be the right thing to do, but no-one could ever say it is the easy thing to do. This is why we need these amendments. The importance of protecting corporate whistleblowers has been recognised for many years. However, while legislative protections have formed part of the Corporations Act 2001 since 2004, they have been sparingly used and are increasingly perceived as inadequate having regard to advances in the public sector and overseas.
This bill, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018, is particularly pertinent seeing what we now know has been going on in Australia's financial sector over the last few years. Whistleblowers have been pointing out the misdemeanours conducted by banks for years, but it was only the Hayne royal commission which demonstrated the depth of the systemic problems within the system. We will never know how many potential whistleblowers there would have been in this industry if these reforms had been passed years ago, but there is always the possibility that details we have seen through the royal commission may have come to light sooner through the efforts of many brave informants. Had this happened, we may be many months ahead of where we are today. This is why supporting whistleblowers is so important for their welfare and for the strength of our organisations, corporations and even our financial system.
Despite the great pride we have in our whistleblowers, it surprised me to learn that currently there are no specific protections for tax whistleblowers. The range of secrecy and privacy provisions relied upon are incapable of guaranteeing absolute protection, which is not good enough. That is why, in the 2016-17 budget, the government announced greater protections for those who disclose information about tax misconduct to the Australian Taxation Office. This will further strengthen the integrity of Australia's tax system.
Active protection of whistleblowers to encourage them to make disclosures is essential, and the government is determined to ensure it has the right legislative settings in place to achieve this, while at the same time ensuring disclosures can be fully investigated and that procedural fairness is provided to those who may be the subject of a disclosure. That is why the government, led by the former Minister for Revenue and Financial Services, Kelly O'Dwyer, committed to creating more transparency and accountability in business by strengthening the current framework to ensure both corporate and tax whistleblowers can be confident of protection and have greater incentives to make disclosures.
This legislation delivers on the government's 2016-17 budget commitment to protect individuals who blow the whistle on tax avoidance behaviour, tax evasion and other tax misconduct. It also delivers on the government's commitment in Australia's first open government national action plan, which was released in December 2016. The Open Government National Action Plan 2016-18 was developed collaboratively by government and civil society. The plan consists of the packaging of 15 commitments that aim to advance transparency, accountability, public participation and technological innovation in Australia. Stronger whistleblower protections are the first commitment of the plan, and it is designed to support the plan's objective of enhancing Australia's strong reputation for responsible, transparent and accountable business practice.
The government's commitment is to ensure that Australia has appropriate protections in place for people who report corruption, fraud, tax evasion or avoidance and misconduct within the corporate sector. This will be achieved by introducing whistleblower protection for people who disclose information about tax misconduct to the Australian Taxation Office and the strengthening and harmonising of corporate whistleblower protections with those available in this public sector. The legislation delivers on the government's commitment, and it creates a single, comprehensive whistleblower protection regime covering the corporate, financial, insurance, superannuation and credit sectors. It also establishes a new tax whistleblower protection regime to encourage and protect tax misconduct disclosures.
This will not be the first time this government has increased the protections for whistleblowers. On 21 November 2016, the parliament passed amendments to the Fair Work (Registered Organisations) Act 2009, the RO Act, with significantly strengthened whistleblower protections for people who report corruption or misconduct in unions and employer organisations. This builds on work done in 2013, when the parliament put in place protections for public sector employees through the Public Interest Disclosure Act 2013, which sought to promote the integrity and accountability of the Commonwealth public sector. This whistleblower act will align with these two whistleblower acts to ensure that there is a broad and consistent spectrum of protections for whistleblowers, no matter what sector they work in.
Whistleblower protections have formed part of the Corporations Act since 2004. However, they have increasingly been perceived as inadequate, having regard to advances in the public sector and the 2016 amendments to the Fair Work (Registered Organisations) Act 2009. The reforms of the whistleblower bill strengthen and harmonise whistleblower protections with those available in the public and registered organisations sector. Some key areas of the bill that align with protection in the public and registered organisations sectors are outlined below.
The whistleblower bill provides protections for current and former employees and officers, as well as anonymous disclosures, bringing into alignment the Public Interest Disclosure Act and the Fair Work (Registered Organisations) Act 2009. The whistleblower bill repeals and substitutes the good faith test with an objective test requiring that a discloser has reasonable grounds to suspect the relevant disclosable conduct. This reform aligns Public Interest Disclosure Act and Fair Work (Registered Organisations) Act 2009.
As with the Public Interest Disclosure Act, qualifying disclosures entitle whistleblowers to protection from exposure of their identities and immunity from civil, criminal and administrative liabilities from making the disclosure. Protections are available for whistleblowers who make 'emergency' or 'public interest' disclosures, where certain preconditions are satisfied. This closely follows the Public Interest Disclosure Act, with adjustments for the corporate context.
The whistleblower bill provides protections for those who suffer threats or actual reprisals consistent with the Fair Work (Registered Organisations) Act 2009; that is, protections are available where a threat or reprisal is taken against a person because the offender believes or suspects that the person or any other person made, may have made, proposes to make or could make a protected disclosure. All regimes allow a whistleblower to seek a range of civil remedies through a court, including an apology, injunction, reinstatement order and compensation for loss or damage and costs. The reforms of the whistleblower bill also provide a definition of 'detriment' that closely follows the Fair Work (Registered Organisations) Act 2009. A whistleblower may claim compensation or other remedies on the basis that they have suffered detriment because a company breached a duty to them. This is to align with the protections in the Fair Work (Registered Organisations) Act 2009.
These reforms are essential to ensuring all Australians who need to blow the whistle on corrupt behaviour can do so without fear of reprisals and be confident that the perpetrators of the crimes they bring to light will be brought to justice. Without whistleblowers within organisations calling out the crimes of those groups, a huge number of crimes would go unreported. But paramount amongst our considerations must be the welfare of the person who puts themselves at risk by uncovering these crimes. They put themselves, their families and their livelihoods on the line, and, if we take their information without protecting them, we are not worthy of their courageous actions. I congratulate the government on bringing forward this bill, acknowledging the support it has received from other parties, particularly Rex Patrick in the Senate, and I look forward to this coming into law and helping whistleblowers across the country.
I rise to speak on the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018. The banking royal commission shone a spotlight on significant and appalling corporate misconduct and crime. Some of the conduct would never have been discovered if it had not been for some very brave whistleblowers. Whistleblowers have often had to endure personal loss because they have spoken up for public good, and I acknowledge them. It is never an easy job to do. It was because of those people that Labor called for a banking royal commission—a banking royal commission that, unfortunately, the Prime Minister voted against 26 times.
The bill I speak on today includes significant amendments to the original bill that was introduced in 2017. In my view, the most important amendment the Morrison government has made to this bill is to allow whistleblowers to make a claim for compensation when a corporate entity breaches a duty it owes to the whistleblower to prevent a third person engaging in detrimental conduct towards them. That amendment expands the scope of protection and compensation towards whistleblowers. Sadly, whistleblowers are often left with substantial and ongoing detriment after stepping up to call out bad behaviour. Some never recover from the reprisals meted out to them. Some, unfortunately, can never work again. Another amendment in this bill will ensure that a court can make a compensation order that takes into account the period a person is likely to be without employment if they lose their job for whistleblowing. This bill only goes some way to protecting whistleblowers. In that respect, Labor welcomes the inclusion of a post-implementation review of the amended whistleblower laws that will occur five years after the amendments commence.
Labor's approach is always to make sure that our systems are fair. When people in big organisations break the law, whether they are the CEO or in any other position, they should be held accountable. It is often difficult for these crimes to be detected without someone on the inside speaking up about the behaviour. Whistleblowers are vital to making sure that big organisations are held to account, and whistleblowers must be protected. Labor believes that whistleblowers should be protected but they should also be rewarded. Labor would establish an Australian whistleblower act which would strengthen, expand and, for the first time, consolidate the public and private sector whistleblower regimes under a single set of laws overseen by a new whistleblower authority.
Labor would establish a reward scheme for whistleblowers. Relevant agencies would have discretion to determine the reward within a legislated range of percentages of the penalty imposed against the wrongdoer. There would be a range of factors that would be taken into account, including the degree to which the whistleblower's information led to the imposition of the penalty on the wrong doer, the timeliness in which the disclosure was made, the context of the disclosure and any reprisals and any involvement by the whistleblower in the conduct for which the penalty was imposed. The scheme would be funded out of penalties collected by the government and would only be prospective—that is, it would only apply to disclosures made after the commencement of the scheme.
Labor would establish a whistleblower protection authority to help whistleblowers understand their rights and the disclosure process and to assist them with reprisals and compensation claims. Labor already announced, in the 2017 budget reply speech, a tax-whistleblower protection and reward scheme, among other tax integrity measures. Under that already announced scheme, an individual who highlights tax avoidant behaviour, tax evasion, aggressive tax planning and other tax issues can collect a share of the penalty collected, capped at $250,000, or one per cent of the penalty figure, whichever is the higher. This share would be taxable as ordinary income. The Australian tax office would develop detailed criteria for a test regarding the contribution of an individual leading to court action. Essentially, the test would be whether court action was undertaken due to the information identified by an individual.
Labor has also announced that a Shorten Labor government would deliver a corporate crime task force. Labor would commit $25 million to equip the Commonwealth public prosecutor to respond to recommendations for criminal prosecution which stem from the financial services royal commission. The Abbott-Turnbull-Morrison government has significantly cut funding for the Commonwealth public prosecutor. Over the six years up to 2016-17, staff levels have been reduced by 23 per cent. Funding of their critical work, prosecuting crimes, is forecast to fall by a staggering $11 million over the forward estimates. The big banks have deep pockets, sadly. They spent millions defending themselves before the royal commission. The Commonwealth public prosecutor needs to be well resourced to make sure corporate criminals can be brought to justice. If the Commonwealth public prosecutor can't do its job, then the banking royal commission would have been a complete waste of time. There is no point uncovering wrongdoing if no-one is held accountable.
We know that there has been an awful lot of wrongdoing in the financial sector. The royal commission confirmed many of our worst fears. Again, I'm reminded that the Prime Minister and those opposite voted 26 times over 600 days to not have a banking royal commission. They fought tooth and nail to stop the royal commission from occurring. Thankfully, under the leadership of the opposition leader, we did eventually get a banking royal commission, and a light was shone on the extraordinary crime and corruption occurring in the financial sector. I thank again those brave whistleblowers and the bank victims who came forward to tell their stories—and there were so many we didn't hear from—but I also commend the shadow minister for financial services for her work in this area, particularly her work making sure that some of those victims who didn't get in front of the royal commission do get a chance to tell their stories, to be heard, to be understood.
The royal commission did not have time to hear the very many victims who have been harmed by the financial sector. The commission received more than 10,000 submissions. However, the shadow minister for financial services travelled the country meeting with victims, letting them tell their stories and, importantly, learning from them. We actually held a roundtable in my electorate of Moreton so that the local victims of banking misconduct could come together to tell their stories. They certainly appreciated the opportunity.
It is important, going forward, that we understand what has gone on and how we can improve the system. Labor's policies—to set up a reward scheme, establish a whistleblower protection authority and fund a special prosecutor—are underpinned by the lessons we have learned from those victims who came forward to tell their stories. Again, I thank them for their bravery and for being so candid. It is not always easy telling personal stories, particularly when they are accompanied by such raw emotion, but without their stories we would not know of the appalling misconduct that has been occurring. We would not know that the financial sector was engaging in such widespread misconduct.
Adele Ferguson, one of the first journalists to tell the stories of financial services victims, has described the conduct discovered by the royal commission as amounting to 'institutional theft'. But for 600 days—remember that: 600 days—those opposite, under their various prime ministers, fought to stop a light being shone on the appalling behaviour in the banking sector. For 600 days the Prime Minister, when he was Treasurer and then when he was Prime Minister, refused to allow these victims to have a voice. For 600 days those opposite put the banks before their hardworking customers and those who had been hard done by; 26 times the Prime Minister voted against having a banking royal commission. So we know where this government's priorities lie: they are only interested in helping out the top end of town.
Labor fought for a banking royal commission. Labor will crack down on white-collar crime. Labor will protect and reward the brave Australians who blow the whistle on crime and corruption, including in the banking and financial sectors. Labor will deliver a fair go for all Australians.
I couldn't begin without reflecting briefly on the contribution from the member for Moreton. Although he's leaving the chamber, I wish he wouldn't. He stands there and accuses this government of having done nothing in relation to the behaviour and the cultural attitudes of the big banks in Australia over the last 600 days. I reject that assertion and I remind him there were six long years during the Rudd-Gillard-Rudd years where zero was done, absolutely zilch—niente, if I was speaking in my mother and father's native tongue. Those who come into this place and seek to play the spin, quite frankly, need to remember there was a period that proceeded the good work this government is doing. It's too cute by half to come in here and suggest that everything was coming up roses until we were elected in 2013 and of course the assertion from them that nothing occurred over that period is wrong in its origination but also wrong when you consider the six years that preceded it—enough of that.
I'm here to talk about whistleblowers and enhancing protections for them. Ultimately, this comes down to integrity. We need to ensure the strongest possible protections for individuals who are across information because of the nature of their work, the nature of their participation in an industry, and in some cases the nature of their profession. The ability to provide that information in the context and in a safe environment is critical. Without that information, authorities, law enforcement organisations, individuals with regulatory responsibility are often blind to behaviour which in very many cases is either corrupt, criminal or unconscionable. So I'm here this evening supporting this bill, to speak to strengthening whistleblower protections. In particular, Mr Deputy Speaker Vasta, you know that this bill speaks directly to specific protections for tax whistleblowers and obviously it's a key plank in ensuring we strengthen the integrity of our Australian taxation system.
We've been working hard as a government to ensure that tax, where appropriate, is paid. That is not always an easy task. There are platoons of lawyers engaged often to facilitate arrangements that are lawful and that is one thing. But when individuals, companies, partnerships operate in a way that's unlawful then we need to act on the behaviour. I have to say, our government has a great track record when it comes to international corporates in particular, with some $6 billion of additional revenue arriving on an annual basis at Treasury because of changes in the law we have made. This is another tranche of the changes, one that says to whistleblowers: if you are aware of information that will assist us in ensuring that the law of the land as it relates to taxation is applied then you will be appropriately protected and that should be the case. This is not to look at these provisions in detail but to say that, as a government ,we understand the importance of how serious this behaviour can be. We understand the depth and the desire for protection and we are committed to it.
But this bill goes further. It's not just in relation to behaviour around individuals, companies, partnerships, et cetera and their tax liabilities. It also relates to protections for whistleblowers within the public sector. Wrongdoing in a public sector context could involve can a contravention of law—corruption, maladministration, abuse of public trust, deception in respect of scientific work, a flat-out waste of public money, unreasonable danger to health or safety, danger in the environment, abuse of one's position or grounds for disciplinary action.
We're committed to ensuring that public officials who make public interest disclosures are supported and protected from adverse consequences, and ensuring that public interest disclosures by public officials are properly investigated and dealt with—and that they are reported in the first place. This is about ensuring that whistleblowers are provided with the requisite level of protection, not just in a private context in relation to tax receipts and other things but also in the public context as it relates to the very important work of government from within government.
But perhaps the part of this bill that has interested me the most is the need to ensure whistleblowers are protected in the context of registered organisations. In November 2016, parliament passed amendments to the Fair Work (Registered Organisations) Act which significantly strengthened whistleblower protections for people who report corruption or misconduct in unions and employer organisations. The amendments provide a protection to persons who disclose information about certain contraventions of the law, including current and former officers, employees, members, contractors, et cetera. Importantly, anonymous disclosures are allowed. To qualify for protections, the disclosure has to be made to the Registered Organisations Commission, the Fair Work Ombudsman or the Fair Work Commission if the discloser suspects, on reasonable grounds, that it differs to disclosable conduct, defined broadly as an act or omission that contravenes or may contravene a provision of the Registered Organisations Act, the Fair Work Act or the Competition and Consumer Act, or constitutes or may constitute an offence under Commonwealth law.
The disclosure can be made via solicitors. Disclosure to other external parties do not qualify for these protections. The court can award compensation and impose injunctions. The courts can also make compensation orders, when detriment ensues from the failure by a manager to prevent a reprisal. This is because employers are objectively liable for reprisals and actual or constructive knowledge of an actual or potential disclosure is sufficient to create the liability.
The amendments also guarantee that if a whistleblower seeks compensation they will not be subject to adverse legal cost orders if their compensation claim does not succeed, unless their claims are vexatious or deemed to be an abuse of process. This amendment also provides more specific guidance on the use of protected disclosures and investigations conducted by the Registered Organisations Commission, the Fair Work Ombudsman or the Fair Work Commission.
In essence, people who are brave enough to call out any behaviour which is unconscionable, criminal, corrupt or falls shy of the requisite standard require the protection of this place and of all arms of government, because if that protection isn't offered or if it's not deemed satisfactory or it doesn't operate satisfactorily, these people will be disincentivised from coming forward. Of course, in dark places bad behaviour can not only continue but propagate. What this law does is say to individuals working in the public and private sectors and working for employer or employee organisations: if you are across any of this information, if it sits uncomfortably with you, not only should you take action; we will protect you when you do. It's only when you shine that bright light on this behaviour that we see it end.
I'll come back to the contribution from the member for Moreton. It was right for him to raise the behaviour we saw so well illustrated through the banking royal commission as an example of behaviour that occurs within corporate organisations that falls well shy of the requisite standard. I've said this publicly, and I'm happy to say it in this place: I'm someone who has apologised to my electorate for the delay in coming to the call for that royal commission.
There are brave individuals in the other place; Senator Williams, in particular, is the first person I saw call on this. At the time I thought we had a well-regulated banking sector, which had coasted us through the global financial crisis, and I was using that as evidence of how resilient the Australian banking system was and how well regulated it was. But it turns out I was wrong. I'm very pleased that we now have the very swift recommendations of Commissioner Hayne to work through. I'm very hopeful that, irrespective of those recommendations and the actions that will come from them from this place, the senior management teams within the banking sector in Australia understand the need to change the culture within those organisations; to refocus their attention on serving their customers, ensuring their customers are treated appropriately and fairly, and ensuring that their behaviour meets the requisite standard. I commend the bill to the House.
The banking royal commission has unveiled myriad banking and financial sector scandals that will change the face of banking in Australia forever. It was financial whistleblowers who exposed the corrupt practices at banks and financial institutions, including insurers, that led to the realisation of the need for a royal commission in the first place—a royal commission that this government declared was a 'populist whinge' for more than 600 days, a royal commission that this Prime Minister voted against 26 times. No wonder then that to date whistleblowers have been hesitant to come forward and dob in misconduct. It was only in February when the industrial relations minister named Labor's plan to reward whistleblowers as 'wacky'. No wonder whistleblowers are wary of retribution—the Minister for Jobs and Industrial Relations won't even give them the time of day.
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 implements to some degree some of the recommendations of the September 2017 report of the Parliamentary Joint Committee on Corporations and Financial Services into whistleblower protections, which I took part in. It's quite a tome. The report we formed outlines protections for the public and not-for-profit sectors. This report was intended to better protect whistleblowers. In the bill before us today the Liberal government has only addressed a fraction of the committee's recommendations, and it hasn't responded to the committee's report itself. It is disappointing, yet not at all surprising, that this Liberal government yet again had to be dragged kicking and screaming to strengthen this bill. Their protection racket for big business must stop.
The current whistleblower protection regimes concerning corporate and financial services whistleblowers, are currently found scattered across the Corporations Act, the Banking Act, the Insurance Act, the Life Insurance Act, and the Superannuation Industry (Supervision) Act. These regimes are inconsistent with each other. On top of that, there are currently no whistleblower protections under the National Consumer Credit Protection Act or the Financial Sector (Collection of Data) Act. The new protection regime in this bill will cover the disclosures in those aforementioned acts.
Under this new form of protection, disclosures must be made in a particular way—that is, they are to be reported to eligible recipients, such as supervisors, auditors, ASIC or APRA. This bill significantly broadens the conduct about which disclosures can be made, with the regime covering misconduct or an improper state of affairs or circumstances in relation to an entity or body corporate, as well as conduct that is a danger to the public or financial system and any breaches of Commonwealth law and breaches of any specified acts connected to the financial services industry in particular. This bill also allows for anonymous disclosures, which is much better than the current legislative regime, which requires individuals to divulge their identities, effectively deterring many.
This legislation removes the requirement that a whistleblower make a disclosure in good faith, as this requirement has also been found to create uncertainty and a risk for whistleblowers. Instead, these protections and remedies are based on the objective reasonableness of the whistleblower's grounds to suspect the misconduct or other disclosable matters.
The legislation also expressly allows for disclosures to lawyers for the purpose of obtaining legal advice and strengthens restrictions on revealing a whistleblower's identify. In addition, the legislation addresses key differences across the pre-existing regimes. It provides for emergency disclosure to a Commonwealth, state or territory parliamentarian, or a professional journalist, where the whistleblower has made a disclosure to the appropriate regulator and, after a reasonable time has passed, reasonably believes there is a threat to public safety or the stability of the financial system. Further, it provides for broad remedies for whistleblowers, including an extension of compensation for victimising conduct or, in appropriate circumstances, exemplary damages.
Critically important is the new requirement for public companies, large proprietary companies and registrable superannuation entities to have whistleblower policies in place. This has been a huge gap in our existing system. The lack of any policies in many large businesses has meant it has been unclear for people working within them to know where to go. Disclosures made to other agencies are not covered by protections under this bill and will be permitted only should there be no action by eligible recipients in an appropriate amount of time and public safety or the stability of the financial system are at risk.
This legislation, though, has been criticised, rightly, by a variety of experts, including the government's own whistleblower expert panellist, Professor AJ Brown, who called this bill 'more a sideways than a forward step on key issues'. Labor, on the other hand, has a strong record when it comes to whistleblower protections. In government, Labor introduced the landmark Public Interest Disclosure Bill 2013 for public sector whistleblowers. Labor have also committed to introducing tax whistleblower protections, and we will continue to push for a stronger and more comprehensive scheme of whistleblower protections in the private sector than is before us today in this bill. We on the Labor side want to ensure that whistleblowers come forward, and aren't afraid to do so, because we know how important it is for the culture of cover-up to be conquered once and for all.
This commitment is driven, as I said before, by the landmark consensus recommendations of the Parliamentary Joint Committee on Corporations and Financial Services through its inquiry into whistleblower protections. That was a consensus report driven by not only members of the government and members of the opposition but members of the Greens and those from Centre Alliance. The committee worked well in arriving at the report's consensus recommendations—things that we believe the government could, and should, have implemented through this legislation. Unfortunately, the recommendations in that report have been largely ignored.
A Shorten Labor government will implement a whistleblower reward scheme to enable whistleblowers to receive, from conduct they expose, a percentage of the penalty that is awarded by the court. The reward would be funded through the penalties collected by government and the amount would be determined by the relevant investigative and law-enforcement agencies. A Labor government will also implement an Australian whistleblowing act, which will strengthen, expand and consolidate public and private sector whistleblowing regimes under a single set of laws. Not only does this make the law clearer; it makes it easier for members of the public to understand what their rights and protections are under Commonwealth whistleblower protection law. In addition, a whistleblower protection authority will be established to ensure individuals can easily access information and assistance on their rights and the disclosure process.
Effective whistleblowing provides an essential service in fostering integrity and accountability whilst also deterring and exposing misconduct, fraud and corruption. A recent analysis of whistleblower protections across G20 countries found Australia's laws lacking across the private sector. Whistleblower protections remain largely hypothetical, with little real-world effect in either the public or private sectors. Unfortunately, under the legislation that is before us, there are minimal protections for those who expose serious misconduct and who are likely to be subject to reprisals. That is why we propose a whistleblower protection authority, which would be a body with a demonstrated track record in identifying and investigating corruption and bringing those responsible to account. Labor will establish a protection authority, overhaul current laws into one act and fund prosecutors to make sure those involved in criminal wrongdoing are brought to justice.
While Labor support this bill, the bill also makes clear that this government has no real commitment to whistleblower protections or to ensuring that there is an appropriate clamp-down on corporate misconduct in this country. It is but another fig leaf of this government for its inaction when it comes to corporate wrongdoing. It avoided holding a royal commission, it defunded ASIC and it refused to give additional funding to the Commonwealth DPP. It has not gone the whole hog when it comes the whistleblower protections.
The government has continually refused to do what is necessary to protect Australians from corporate misconduct. It continues to throw up piecemeal pieces of legislation. As I've said time and time again in this House, we called for the introduction of a banking executive accounting ability regime, and then they gave us one—except it was one that didn't actually protect consumers. Now, the royal commission has finally found that that's required, and the government tells us that it agrees to it. Again, there is no legislation forthcoming from this government.
These are all things the government could and should have been doing a long time ago. The report recommendations here are from September 2017. The legislation that we're debating today was held up in the Senate for so long by this government last year and we're only now debating them, which not only has caused us not to have proper whistleblowing protections in our law at a Commonwealth level but has also meant that businesses that have to comply with this law haven't known what they have had to comply with. They have had to look at moving start dates to make sure that they can have their policies properly drafted to comply with this law, which is a new requirement of this law, once it does eventually become law. This government doesn't make things easy for the Australian people, but it could at least get on with ensuring that they are protected from misconduct.
We support this legislation. It is absolutely necessary and vital that we have better whistleblowing protections in this country. Once again, the government has failed to do everything that is required. It has failed to deliver on proper, expansive whistleblower protections that will not only protect whistleblowers but encourage people to blow the whistle where misconduct is found. Because it is only through that conduct, over many years, that we eventually saw the exposure of the banks and the exposure of the misconduct by insurance companies that finally, eventually, led to a royal commission, which was the royal commission that this government refused to hold for over 600 days.
Whilst there is much in the member for Burt's contribution that I would agree with, I note had the pleasure of serving with him on that committee and into that inquiry. One important things from that inquiry were some of the stories of those who had sought to blow the whistle on a variety of misdeeds and misbehaviours and the way they were treated. Whistleblowing, in its simplest form, is about disclosing misconduct in the workplace. We have seen, in any number of areas over the past few years, sadly, those things occur.
I think it's critically important, as a consequence, that we have strong whistleblowing protections, because we need those people to be confident that, as they come forward to report that misconduct, they have the protections in place necessary. This is a good step in that direction. It's a good step because we need to ensure that the people who are inside these organisations have the confidence to come forward and report corporate misconduct or—in particular, in the case of this—tax and corporate misconduct. These protections are key to combating what are, in many instances, poor cultures of compliance and to ensuring that companies, their officers and staff know that that conduct will be reported.
Last week in this place in relation to the banking industry, which I had a career in before coming into this place, I made the observation that part of the problem that I see in banking today is that it's filled with managers these days, not bankers, and not with people who build relationships with people. I think we would see many of these cultural issues disappear or be moderated if the banks actually spent time focusing on working and building relationships with their clients rather than chasing profits at the expense of those very clients.
Whistleblowing is important because, oftentimes, in these big corporate organisations, the conduct that is falling short of community expectations or is outright corporate malfeasance is often opaque and complex by the very nature of the organisations involved. Because it's generally behind the four walls of the corporate organisation and not in the public realm, it makes it difficult for our law enforcement organisations to detect it in the first place. We've seen with the banking royal commission the inability of ASIC and/or APRA in a number of instances to deal with these issues or to deal with them in a timely manner. In many cases, corporate crime is only detected once whistleblowers come forward—and, as we saw and heard in the testimony in our committee, sometimes at significant personal and financial risk.
The importance of protecting corporate whistleblowers has been recognised for many years. There are already some legislative protections in the Corporations Act; however, they have been used sparingly and are increasingly perceived as inadequate, having regard to advances in the public sector and overseas. Interestingly, currently there are no specific provisions for tax whistleblowers, and a range of secrecy and privacy provisions are relied upon and are incapable of guaranteeing that absolute protection. This is why in the 2016-17 budget the government announced greater protections for those who disclose information about tax misconduct to the Australian Tax Office.
This bill will further strengthen the integrity of our tax system by creating active protection for whistleblowers to encourage them to make disclosures that are essential. The government is determined to ensure that it has the legislative settings in place to achieve this. In my office, over my time, in this place, I have spoken to a number of people who have raised concerns with me about the tax practices of certain organisations, and I have referred them to the relevant ATO helplines and reporting lines to ensure that they convey those concerns, and I would hope that the ATO has taken the relevant action and acted on those.
The legislation before us today is an important step in the right direction to ensure that our whistleblowers are protected. We see across this legislation the emphasis on the disclosure of wrongdoing and who it is reported to and investigated by within government. This emphasise is designed to make sure that the problems are identified and rectified quickly. Where an official does not wish to make a disclosure to their own agency, the disclosure can be made to the Commonwealth Ombudsman or the Inspector-General of Intelligence and Security. Officials can make disclosures to people outside government, other than a foreign public official, where certain criteria are met. It's important, though, that the disclosure must first be reported internally to the government, except in cases of disclosure in an emergency, or to a legal practitioner to obtain legal advice. That is a very important provision. I think it's extremely important that people who are going to go down this road ensure that they are themselves covered.
Qualifying disclosures entitle public sector whistleblowers to protection from exposure of their identities and immunity from civil, criminal and administrative liabilities for making the disclosure. The act also gives protections to public officials from victimisation and discrimination as a result of making a public interest disclosure. A whistleblower can seek a range of civil remedies through a court, including an apology, injunction, reinstatement order and compensation for loss or damage and for costs.
This is in addition to other accountability measures we've already put in place through this House, such as the Banking Executive Accountability Regime. We sought to ensure that the senior executives of our banking and financial services institutions are held to account for their actions. Sadly, as I've touched on before, the royal commission has shown the reason why legislation like the Banking Executive Accountability Regime was necessary.
I think I've said before in this place that I'd prefer that many of these pieces of legislation that are tied to people's ethics and conduct in our society weren't necessary, and that people acted in an ethical manner and conducted themselves in an ethical manner. There were days when you'd shake someone's hand or sign a contract to do a deal, and that's the deal that was done and honoured. Sadly, we've seen over the last number of years the conduct of organisations not meet those community expectations. I think far too often we stand in this place and pass legislation to deal with that ethical failure of those in the broader community. I think it's incumbent, as a consequence, on our corporate sector, the public sector, and, importantly, the private sector to ensure that standards of community expectation and standards of conduct meet the highest level possible.
At the end of the day, they are dealing with everyday Australians. In the case of financial services sector, they are dealing with people's finances. In the case of businesses that trade in other areas, like our major food and grocery organisations, they are dealing with everyday Australians—farmers and other manufacturers of food products that they sell on their shelves. We hear many stories of farmers and people who supply to large grocery chains. We hear the stories of how they are treated by the large corporates in that space.
Again it shows that these whistleblowing provisions—in whatever form they take, whether in the public or private sector—are necessary to ensure that conduct that doesn't meet legal requirements or falls short of community expectations is reported. I want to see in our community people treated fairly and equitably. It disappoints me that we have to stand in this place and pass laws such as this because our corporate offices—predominantly listed corporates—can't seem to do that and are more interested in chasing profits as a consequence.
I commend this bill to the House because I think it is a good step in the right direction to ensure that the whistleblowers in our community who have the information in front of them also have the courage to stand up and make the issues that they see on a daily basis or have come across known to the public. I trust that through that process we will see over time that the culture in our organisations that are doing the wrong thing is changed and is cleaned up. In doing that, I trust that all Australians will benefit through having and being able to restore that level of trust. I heard a contribution earlier today that talked about the level of trusts in our institutions and our corporate entities. We have seen these stories over the past little while and in the inquiry from people who were prepared to be whistleblowers. It's not unfair to reflect on why there is a loss of trust in some of our most well-regarded names when you see some of the things that have been brought to the fore by the whistleblowers who have had the courage to stand up and be counted.
I think it is critically important, through legislation in this place, we ensure those whistleblowers continue to be protected or be given, in this case, more protection to give them the opportunity to shine the light on the dark places where it needs to be shone, where things are not being done in accordance with the laws of this country but, more importantly, in accordance with community expectations and a level of ethics and conduct where everyone in our society can benefit. So I commend this bill to the House.
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.
Today I'm pleased to rise to speak on the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 because this is something that this House should care a great deal about. I will say up-front that the Labor opposition will be supporting this bill, even though we don't believe it goes far enough and its approach is somewhat piecemeal in an area which needs a major and significant overhaul after so many years of relative neglect.
I think most people on this side of the House know that I doorknock a lot. In fact, I've doorknocked at over 76,000 houses with a group of about four people over the last 15 years, and over that time the feedback that I get from people—what people tell me—has changed as their attention has moved. Someday I'll have to write a bit of an essay on how it's moved over that 15 years, but what I've really noticed in the last year to an extraordinary extent is the number of people that raise with me their concern that something's wrong—that decisions that government make, whether it's state, federal or local, don't always make sense. They don't know who those decisions are for or who benefits from them because they don't seem to be in the interests of the community. I get people talking about appalling treatment by banks and their sense of powerlessness when they're dealing with large organisations, the tax office or other large institutions and government bodies.
It's quite a tidal wave of a similar view that has swept across my community in the last year, and that's in spite of the fact that not many of those people would know that we've actually slipped down the corruption index as a nation—that when you rank Australia relative to the rest of the developed world we are slipping down. So the data seems to reflect exactly what people are telling me: that something is wrong. At least there's a willingness of people to believe that now, and to believe it easily. You can see it in social media. Someone suggests something and this wave of belief sweeps through the community, without the community really considering whether or not it's true. I think that reflects a growing sense of unease and mistrust on the part of the community in government, in major institutions and in the corporate sector.
We know that for people who do speak out there are some appalling consequences, but we also know that most people who would like to speak out actually don't. We know that. We know that people sometimes sit for years before they finally work up the courage to do it, and we all know of people who quietly call us and anonymously tell us things, because they're not prepared to put their name to things.
This sense of a loss of trust that our community is feeling actually weakens our capacity as a nation to make decisions, so we should take it very, very seriously. If people lose trust in major institutions, in federal, local and state governments, if they lose trust in the decisions that those organisations make, it weakens the nation's capacity and the community's capacity to make decisions in its own interest, because people walk away, they back off, they become suspicious and they don't engage in the way that they need to.
The government, as I think many people know—I doubt that Deputy Speaker Hastie agrees with me—has a bit of a reputation for a lack of transparency, and, in many cases, for quite aggressive attempts to silence voices. I can refer, for example, to the two-year jail term for doctors who spoke out about the medical conditions of people on Manus and Nauru. I can talk about seemingly lesser things, but extremely important things, like gag clauses for organisations that receive grants. These were abolished by a Labor government and reintroduced by a Liberal-National coalition. Rightly or wrongly, there are perceptions that there are two standards of behaviour: one for ministers of the government and one for those who work for them. Again, rightly or wrongly, there is a perception of this lack of transparency and of a cracking down on people who are outspoken and critical of the government.
In circumstances like this, it's incredibly important that governments act to re-establish trust. There are three major issues that need to be addressed. The first is the federal anticorruption commission. I know the government has put up a proposal. We on this side don't believe it goes anywhere near far enough. We've been calling for a federal anticorruption commission for well over a year. Secondly, we need substantial whistleblower protection. This bill begins that process, but doesn't go far enough. Thirdly, we need higher penalties for corporate crime. Those three things are absolutely essential at this point, and it's good to see even this piecemeal attempt to improve one of them, which is whistleblower protection.
I want to talk briefly about the history of this. This bill implements, to some degree, some of the recommendations of the September 2017 report of the Parliamentary Joint Committee on Corporations and Financial Services into whistleblowing protections in the corporate, public and not-for-profit sectors. The establishment of the inquiry was actually part of a deal done between the government and Nick Xenophon and Senator Hinch to pass the Fair Work (Registered Organisations) Amendment Bill in November 2016. Way back then, the government established this joint committee to look into this issue. That was 2017. In the last sitting week of 2017, shortly after that, the government introduced the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017, designed to strengthen protections for corporate whistleblowers and introduce protections for tax whistleblowers. That was way back in the last week of 2017. We're well over a year later and we're now beginning debate on this important bill. That alone says a great deal about this government's priorities and the importance that it places on this bill, which it really only agreed to deal with because of the deal it did with the crossbenchers. And here we are a year later and the bill is here.
The bill does make some key improvements. It broadens the conduct about which disclosures can be made. It allows for anonymous disclosures. It removes the requirement that a whistleblower makes a disclosure in good faith. It allows for disclosures to lawyers for the purpose of obtaining legal advice. It strengthens restrictions of obtaining the whistleblower's identity. So it does make a number of improvements. The bill has been improved further by negotiations and amendments by Centre Alliance. I would like to thank the crossbench in the House and the Senate for working so hard to improve this bill, because it is an incredibly important area.
But the bill has been criticised. Professor A J Brown, a leading expert in Australia on whistleblower protections and a member of the government's own expert panel, reportedly called this bill a 'limited step' and 'a more sideways than a forward step on key issues'. The bill has been criticised in relation to the compensation arrangements and for only protecting disclosures to the media and parliamentarians in very limited circumstances. So there's quite a bit of criticism. But, again, while it might be a side-step, it is a step—a step a year later and a step under pressure, but a step nevertheless.
Labor, on the other hand, has announced policies that go much, much further than this. But, for a government that fought the royal commission into banks for so long, that argued against the royal commission into child sexual abuse, that held off against a royal commission into aged care, that voted against a royal commission into disabilities just last week, that is heavy-handed towards people that speak out, that lacks transparency and that has to be led kicking and screaming to all those areas, this is a step forward, and it is well improved by the amendments made by Centre Alliance—and, once again, I would thank those.
Labor's policy in this area goes much further than this. It sets up quite a new system. It sets up a whistleblower reward scheme; it establishes a whistleblower protection authority; it overhauls our whistleblowing laws with a single whistleblowing act; and funds a special prosecutor to bring corporate criminals to justice. That is a significant change to the way this nation handles whistleblowing and the protection that it provides. The banking royal commission, as we know, highlighted the appalling and even criminal conduct in the banking sector, and it was only possible because brave whistleblowers and bank victims came forward and Labor listened. The Liberal government did everything they could to protect the banks from that.
Right now, blowing the whistle on crime and misconduct is incredibly difficult, and whistleblowers often face reprisals and some are never able to work again. There are serious consequences to livelihood, mental health and reputation for whistleblowers. For many Australians who see wrongdoing and want to stop it whistleblowing is simply not worth the risk. That shouldn't be the case. So Labor will establish a whistleblower reward scheme to make it easier for good people to come forward and report instances of crime and misconduct. The scheme will allow whistleblowers to receive a percentage of the penalties arising out of wrongdoing that they reveal. Once a crook is hit with a financial penalty as a result of whistleblowing, the whistleblower reward scheme will allow a proportion of the penalty to be given as reward to the whistleblower. The relevant investigative or law enforcement agency will have discretion to determine the level of reward within a legislative range.
Labor will also strengthen protections for whistleblowers through the establishment of a whistleblower protection authority—literally, a one-stop shop to support and protect whistleblowers. The authority will have dedicated staff to advise whistleblowers on their rights, assist them through the disclosure process and help them access compensation if they face reprisals. A person sitting within a major corporation, expert in their field, may not know the process and the protections that they are entitled to if they are a whistleblower. This will provide an expert staff to help them through that process.
Labor believes that all whistleblowers should be treated the same regardless of the type of workplace they're in, but right now our whistleblower laws are opaque and inconsistent and depend entirely on where you work. A Shorten Labor government will also create a single Australian whistleblower act, consolidating all of the mainstream whistleblowing legislation into one location so that whistleblowers can readily understand how they are protected. This will be a major shake-up of Australia's whistleblowing regime. We will undertake detailed design work to make sure that the new laws, the proposed reward scheme and the whistleblower protection authority are powerful and effective.
Labor is commit committed to cracking down on misconduct and corruption in the banking and financial services sector. These announcements build on our commitment to a banking royal commission implementation taskforce and to deliver an extra $25 million over the next two years for the Commonwealth Director of Public Prosecutions to tackle corporate crime. As part of this funding, Labor will also appoint a special prosecutor to crack down on corporate criminals.
The difference in approach to this between the government and the opposition are clear. The government has been dragged by the Centre Alliance through a deal to support another bill and into looking at this area. Over a year later, they finally brought the bill to this House. It is a piecemeal approach; it is a sidewards step. As I said, we will support it; but the difference between this government's approach and Labor's approach is clear. Labor will establish a coherent, transparent, easy-to-understand and navigable process for whistleblowers that will assist people who have identified corporate crime or government crime to come forward and serve their community in the way that we need them to. Once again, we will support this bill, but there's much, much more to be done. I would seriously urge the government to look at Labor's proposal and consider it very seriously.
I rise to enter the debate to speak on the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018. I follow on from the member for Parramatta, who has had a long interest in small business matters and particularly in the areas of consumer and regulatory protections. I want to continue on a couple of points that she made. One of the horror stories that we've heard as a result of the banking royal commission has been the fact that whistleblowers in in country haven't been empowered—or haven't felt the ability—to know where to go for information. As we've heard from the shadow minister, we will be supporting this bill tonight. But I do want to enter the debate and also reflect on this side of the chamber and how we would offer greater protections. Whilst we have heard that this is a step in the right direction, the Labor opposition believe there is much, much more we can do in this space.
The bill, as we know, implements to some degree some of the recommendations of the September 2017 report of the Parliamentary Joint Committee on Corporations and Financial Services into whistleblower protections in the corporate, public and not-for-profit sectors. As we know, the establishment of this inquiry and this bill was part of a deal done between the government and then Senator Nick Xenophon and Senator Hinch to pass the Fair Work (Registered Organisations) Amendment Act 2016. The difficulty we have with this is that, in some sense, this wasn't the pure intention of what the government was doing. It was a hybrid in terms of how it ended up in this space.
I will go through the improvements, as we see then, before I offer some constructive advice to the government. The key improvements are that the new regime significantly broadens the conduct about which disclosures can be made; the new regime covers misconduct, an improper state of affairs or circumstances in relation to the entity or related body corporate; and disclosable conduct is also specified to include conduct that represents a danger to the public or financial system, disclosures about a breach of any Commonwealth law subject to a term of imprisonment of over one year and breaches of other specified acts.
By contrast, the current protections in the Corporations Act only cover disclosures about breaches of the corporations legislation. It allows for anonymous disclosures, and I guess one of the difficulties that we've seen that the existing regime requires that a whistleblower provides their name when making a disclosure in order to qualify for protection, which is contrary of the issue of being a whistleblower in the first place.
This removes the requirement that a whistleblower makes a disclosure in good faith. This requirement has been found to create un certainty and, more importantly, a risk for whistleblowers. This change means that protections and remedies are based on the objective reasonableness of the whistleblower's grounds to suspect that information disclosed indicates misconduct or other disclosable matters. It expressly allows for disclosures to lawyers for the purposes of obtaining legal advice and strengthens restrictions of the revealing of a whistleblower's identity.
One of the things I have seen as a member of parliament is the horrific stories in my own community of those people who have been ripped off and taken advantage of by the banking sector system in Australia. Late last year I was privileged to sit with a number of victims of banks in Australia in my own electorate and held my own roundtable of victims. I'll be honest: I wasn't quite sure what was going to come out of that roundtable. I knew there had been problems in the industry. I'd heard from people at mobile offices and street corner meetings about their experiences, but opening up to the ability to listen to people firsthand was a difficult experience but a very worthwhile experience for me as a member of parliament.
We know that the Morrison government fought against a banking royal commission every step of the way and that they agreed reluctantly not because the government thought it was the right policy decision; they believed they were going to lose a vote on the floor of parliament with the member for Dawson wishing to cross the floor, and there was the subsequent announcement of the royal commission.
Many members of parliament on this side held similar roundtables, so I'm not on my own there. One of the consistent themes and disclosures that occurred at those—and I know the member for Paterson and the member for Newcastle held similar roundtables to hear firsthand. One of the tragedies I heard from a number of people was that they felt they had nowhere to go to tell their story. In fact, they felt no-one would believe them. They felt that the power imbalance was so great that there was no point in telling their story. They thought, 'Well, that's just the system that we have. That broke my heart, but I resolved from listening to those stories that we needed a greater mechanism and, clearly, a greater pathway for people to be able to tell their story but also to bell the cat when it comes to improper practices, when people felt the deck was stacked against them.
I guess tonight in this parliament we're dealing with only a very small facet of that. As I said, the Labor Party will be supporting this bill tonight, but we fundamentally believe there are greater protections that should be in place and a greater, more open procedure when it comes to these issues. That's why I was delighted that the Leader of the Opposition and the shadow minister for financial services and the shadow minister for justice, Clare O'Neil, have put forward a bold proposal of positive ideas to deal with the issue of banking whistleblowers.
In the time remaining, I will highlight a couple of those issues because I do want to associate myself with this policy. After meeting with victims, after listening to their stories, there is nothing more important that I think this term of parliament can deal with than ensuring that those people—and in many cases we know, not just in my community but right across Australia, people put themselves on the line at great personal cost to their own careers, to their family circumstances and, in some cases, their own financial circumstances. So I am pleased that, if privileged to be elected, a future Shorten Labor government will establish: an Australian whistleblower act to strengthen, expand and, for the first time, consolidate the public and private sector whistleblower regimes under a single set of laws overseen by a new and independent whistleblower protection authority; a whistleblower reward scheme, which has had some debate, but is something that I strongly support to enable whistleblowers to receive a percentage of a penalty awarded by a court arising out of conduct that they blew the whistle on; and a whistleblower protection authority to help whistleblowers understand their rights and disclosure processes. The other thing I heard very clearly from people was that people didn't understand how they could access the current regime. I think that those three highlights of our whistleblower policy in particular will give that certainty that many, many people are demanding. I will spend a couple of minutes in my time remaining tonight to highlight the fact that Labor will provide $3.2 million over the forward estimates to immediately set up the whistleblower protection authority within the Office of the Commonwealth Ombudsman and it would house five full-time positions dedicated to assisting whistleblowers through the disclosure process.
There's been some commentary surrounding the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 tonight. We heard from the member for Parramatta regarding the comments of Professor AJ Brown, a leading expert in Australia on whistleblower protections and a member of the government's own expert panel. He's called this bill a 'limited step' and, as we heard, more of a sideways than forward step on key issues. So in my books, it makes it difficult when we're trying to create a path way forward that we're skirting around those issues. As we said before, this is a step in the right direction but we really believe that there is more to be done.
Professor Brown, as we know, is a powerful voice on the government's own expert panel. He's a leading authority on whistleblower laws and he spearheaded a landmark research project on whistleblowing entitled: Whistling While They Work 2. The project surveyed of 702 organisations and its preliminary research found almost one in four organisations had no particular system for recording and tracking wrongdoing concerns and 'did not currently have any strategy, program or process for supporting and protecting staff who raise concerns'. The survey also found that only 40 per cent of organisations provided potential whistleblowers with access to a management-designated support person inside the organisation to ensure the people who needed to disclose information had a pathway to do that. So in my opinion, this spells out clearly that Australia needs to get on and create a holistic approach to dealing with whistleblowers. One of the issues we've got this with this legislation tonight is that it is a patchwork approach to dealing with this issue rather than a holistic approach.
I wanted to speak on this bill tonight because of the people that I have met and the stories that I have heard. I know the heartache that they have endured. I know the difficulties that they have expressed to me as their representative about having to provide the information, not in an open and transparent way, but in a very difficult or somewhat clunky way. I will never forget their stories. I certainly hope that tonight's bill that we're debating, if it is passed as law, will begin some ways to providing that initial pathway, providing some improvements to those people who deserve an open and transparent process to ensure that the misconduct of the past, the horrific circumstances that we've seen in the banking and financial industry in Australia will never, ever happen again.