Andrew Murray (WA, Australian Democrats) Share this | Hansard source

In the normal course of events, I might have been a bit alarmed at the process we have just gone through and the fact that the second reading speech has only just been circulated. However, I have the benefit of having sat on the Senate Standing Committee on Economics, which has considered this bill; therefore, for me to claim ignorance of the government’s position would be stretching things a little far. So I am quite happy for it to be introduced and to proceed on this basis.

The Financial Sector Legislation Amendment (Simplifying Regulation and Review) Bill 2007 has four schedules containing a range of measures, including proposed changes to streamline and simplify prudential regulation in the financial sector—changes intended to ensure that, where a superannuation fund has suffered loss as a result of fraudulent conduct or theft, financial assistance is made available on a more equitable basis. The bill has undergone extensive review, with a proposals paper, exposure draft, industry roundtable and a Senate inquiry. May I compliment the government on that process. That is by far the preferable process for legislation. It is not always the process with respect to legislation, but I must say that, when you have a proposals paper, an exposure draft, an industry roundtable and, finally, a Senate inquiry, you have pretty well dotted the i’s and crossed the t’s and done the right things in terms of process. So please accept my compliments.

On these four schedules, as I said, the first one covers streamlining prudential regulation. I do not intend to go through its elements. The second one covers financial assistance. The third one covers accounts, audit and reporting obligations with respect to a number of acts. The fourth one covers technical amendments. A Senate committee report noted the following key issues: firstly, that the bill introduces a consistent framework of protection for whistleblowers across the prudential acts. However, this framework is generally not consistent with the Corporations Act, nor does it adequately provide discretionary power to a whistleblower to disclose, and questions remain as to the degree of protection afforded to such individuals.

The breach-reporting provisions as drafted have the potential to result in uncertainty and confusion as to which, if any, breaches need to be separately reported to ASIC. The stakeholders that had particular viewpoints that deserve noting in this debate were IFSA and the Chartered Secretaries of Australia. IFSA supports the extension of the whistleblower provisions but considers they should be aligned with existing requirements under the Corporations Act. May I respectfully remark that I disagree with them. It may be that the Corporations Act needs to catch up with these provisions because, whilst you need to have harmonisation of whistleblower provisions, you actually need to keep advancing provisions in light of experience and, in fact, improving the nature of legislation.

The point of that remark is that it is incumbent on government to examine all these sets of whistleblower provisions in the private sector—which, as I have said, are in Corporations Law, workplace law and, indeed, in the aged-care area—and ensure that, as far as possible, public disclosures of that kind, the protections that are intended and the contributions towards uncovering wastefulness, mismanagement or fraud are properly promoted and that people get the support that is necessary in what is a very difficult situation when you blow the whistle on an organisation or about an organisation with which you have a connection.

IFSA says the bill seeks to attract the same level of protection to a person who discloses information to one of the named persons—for example, APRA, the auditor, the actuary, a director or senior manager—but that having two tests to be met introduces subjectivity into the prudential acts. These tests are: firstly, that the information concerns misconduct or an improper state of affairs or circumstance in relation to the regulated entity; and, secondly, the discloser considers that the information may assist the person to whom the disclosure is made to perform the person’s functions or duties in relation to the regulated entity. May I say again, with respect, that subjectivity is indeed a part of public disclosures of these kind. It is not necessarily a criticism that that element is within the legislation.

I note, by the way, that the Australian Bankers Association welcomed the simplification and clarification of some operational matters but said that others require clarification and further regulatory guidance. I would suggest to the government that this bill, which does intend to simplify regulation, will need monitoring. There are inevitable consequences to changing regulation, and you will inevitably get complaints from market participants. The intent of the bill is right. Its achievements are mostly in the right direction. The Australian Democrats certainly support this bill.