Zed Seselja (ACT, Liberal Party, Assistant Minister for Treasury and Finance) Share this | Hansard source

It's good to follow my good friend Senator Duniam. I join with him in thanking all of those senators who have played a part in bringing us to this point where we will be passing a very important piece of legislation, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017. This bill amends the Corporations Act 2001 and the Taxation Administration Act 1953 to strengthen Australia's corporate and tax whistleblower protections. Corporate crime is estimated to cost Australia more than $8.5 billion a year and account for approximately 40 per cent of the total cost of crime in Australia. Whistleblowing plays a critical role in uncovering this criminal activity as well as misconduct. It may also improve poor compliance cultures by ensuring that companies, officers and staff know the risk of misconduct being reported is far higher. Strengthening protections to allow whistleblowers to come forward will assist regulators to receive information earlier, to investigate contraventions, to take appropriate enforcement action, to limit the risk of loss to investors, and to ensure trust and confidence in the integrity of the corporate and financial system.

However, whilst legislative protections have formed part of the Corporations Act since 2004, they have been used sparingly and are increasingly perceived as being inadequate given recent advances in whistleblower protections in the public sector and overseas. Independent reviews of corporate sector whistleblowing provisions in Australia have found that they lag those of the public sector and those of comparable overseas jurisdictions. There was an independent evaluation of G20 countries' whistleblowing laws which was undertaken in 2014, and a separate assessment of those same laws was undertaken by the Senate Economics References Committee as part of its 2014 inquiry into the performance of ASIC. They both found that the current corporate whistleblower protections are overly narrow and make it unnecessarily difficult for those with information to qualify for protections.

The committee made a number of recommendations. It recommended a comprehensive review of Australia's corporate whistleblower framework, which would bring it closer to Australia's public sector whistleblower framework under the Public Interest Disclosure Act. To remedy these inadequacies, the government committed, in December 2016, as part of the Open Government National Action Plan, to ensuring appropriate protections are in place for people who report corruption, fraud, tax evasion or avoidance, and misconduct within the corporate sector. In order to achieve this, the government committed to improve whistleblower protections for people who disclose information about tax misconduct to the ATO. It also committed to pursuing reforms to whistleblower protections in other parts of the corporate sector, with consultation on options to strengthen and harmonise these protections with those in the public sector available under the Public Interest Disclosure Act.

Further, there are no specific protections for tax whistleblowers, and the range of secrecy and privacy provisions relied upon are incapable of guaranteeing absolute protection. That is why the government announced, in December 2016, as part of the Open Government National Action Plan, that it would ensure appropriate protections are in place for people who report corruption, fraud, tax evasion or avoidance and misconduct within the corporate sector. To be very specific, the government committed to introducing whistleblower protections for people who disclose information about tax misconduct to the Australian Taxation Office and strengthening and harmonising corporate whistleblower protections with those available in the public sector.

The commitment in the Open Government National Action Plan also reaffirmed the very important 2016-17 budget announcement made by the Liberal-National government that it would introduce new arrangements to better protect individuals who disclose information to the Australian Taxation Office on tax avoidance behaviour and other issues and to further strengthen the integrity of Australia's tax system. I'm very pleased to say that the bill that we are debating today in the Senate delivers on those commitments. Given the lack of protections for tax whistleblowers and the need to strengthen protections for other whistleblowers in the corporate sector, the government is progressing these reforms in parallel, including introducing them as part of the same legislation. This will ensure consistency in protections where it makes sense to do so.

Part 1 of this bill will strengthen protections for corporate whistleblowers by expanding protections to a broader class of persons. It will expand disclosures that can be protected. It will extend protections to cover emergency and public interest disclosures, subject to preconditions and excluding from protection disclosures of purely personal work related grievances. It will also improve civil remedies for whistleblowers, creating new civil penalties to make enforcement action easier and introducing a whistleblower policy requirement for all large companies. The bill amalgamates these protections from several acts into the Corporation Act, which is a good piece of consolidation. The consolidation will cover the Corporations Act, the Australian Securities and Investments Commission Act 2001, the Banking Act 1959, the Insurance Act 1973, the Life Insurance Act 1995 and the Superannuation Industry (Supervision) Act 1993. As well as this, it will add protections for conduct that contravenes the National Consumer Credit Protection Act 2009 and the Financial Sector (Collection of Data) Act 2001, which are not covered under the existing law. It's a significant consolidation across a range of Commonwealth legislation. Part 2 of this bill will introduce new protections for tax whistleblowers under the taxation law. These protections are broadly consistent with the enhanced protections under the Corporations Act and will facilitate disclosures about tax misconduct.

Together, these reforms will help to protect whistleblowers who may, in some circumstances, expose themselves to significant personal and financial risk in return for their critical role in the early detection and prosecution of misconduct in businesses and the avoidance or evasion of tax liabilities. Benefits will also be derived by the Australian business community, as we believe the reforms will encourage improved corporate governance and integrity, through the whistleblower policy prescription for large companies, and increase the likelihood of misconduct being reported. It will lead, hopefully, to better standards and better governance.

The measures contained in this bill have been extensively consulted upon and have the very strong support of a number of peak industry bodies and regulators, including ASIC, the Australian Taxation Office and the Australian Federal Police. The government welcomes the further consideration of the adequacy of the government's legislative, institutional and policy framework for addressing whistleblower protections by the Parliamentary Joint Committee on Corporations and Financial Services and the good work that was done by that committee in its inquiry into whistleblower protections in the corporate, public and not-for-profit sectors.

The Parliamentary Joint Committee on Corporations and Financial Services report, Whistleblower protections, which was tabled in the parliament on 13 September 2017, with a corrigendum tabled on 14 September 2017, made 35 recommendations. The Australian government acknowledges the committee's observation that effective whistleblower protection frameworks foster integrity and accountability while deterring and exposing misconduct, fraud and corruption.

The government is committed to strengthening the whistleblower frameworks for the public, corporate and tax sectors and welcomes evidence based discussion of opportunities to enhance whistleblower protections and effective handling of allegations of wrongdoing at the Commonwealth level. This bill addresses many of the recommendations made in this report. The government is considering the remaining recommendations of this report and will respond to all recommendations in due course.

I would like to take this opportunity to acknowledge the support and dedication of Senator Rex Patrick, who has—as Senator Duniam pointed out in his contribution—worked very closely with the government to bring about several of the government amendments to the bill. It's evident that Senator Patrick is aligned with the government's commitment to improve the protections available to whistleblowers, who provide an invaluable service to the wider community.

In summary, we believe that this is a very important reform. It's a long overdue reform. It will involve significant consolidation of a number of pieces of legislation. We think it will improve the ability of whistleblowers to blow the whistle on misconduct and fraud. I want to thank those who have contributed to the bill and I want to thank those who have contributed to this debate. I commend this bill to the Senate.

Question agreed to.

Bill read a second time.