Paul Scarr (Queensland, Liberal Party) | Hansard source

I'll first observe your role, Acting Deputy President Colbeck, in relation to the examination of matters relating to PwC. I acknowledge the service which you've provided through your committee memberships, in terms of exposing that dreadful, egregious conduct. And here we have, unfortunately, another piece of egregious conduct, this time engaged in by senior—that must be emphasised—members of KPMG.

At the outset, I'd like to acknowledge Senator Barbara Pocock's passionate pursuit of these issues and her forensic examination at the committee hearing last Friday. I think Senator Pocock has provided great service to the people of Australia, in terms of pursuing these issues, and I commend her for it. I also agree with Senator Pocock that there is a need for reform, and I'll provide some comments in that respect in my remarks. I'd also like to acknowledge Senator O'Neill, of course, who has provided outstanding leadership of the Parliamentary Joint Committee on Corporations and Financial Services.

This has to be emphasised: but for the fact that Senator O'Neill took seriously the disclosure made to her by the whistleblower—and, through Senator O'Neill, to the Parliamentary Joint Committee on Corporations and Financial Services—this matter would not have come to public light. But for the fact that a Senator in this place had to give a speech in the Australian parliament, KPMG would not have taken appropriate action. The chief executive officer of KPMG would still be in his position. The chief operating officer of KPMG would still be in her position. The head of audit would still be in his position. The relevant audit partners would still be in their positions. The chairman of the board of KPMG Australia would still be in his position.

But for the fact that the whistleblower made the relevant disclosures and Senator O'Neill gave that speech in March of this year—but for the fact that the whistleblower blew the whistle—ASIC wouldn't be engaging in the investigations it's engaging in now and Chartered Accountants Australia and New Zealand wouldn't be engaging in the investigations they're engaging in now. A whole raft of other responses wouldn't have been set in train.

We've got to ask ourselves the fundamental question. What is wrong with the system when someone who is seeking, and is doing, the right thing, within, in this case, KPMG and is trying to get their concerns taken seriously, both within KPMG Australia and by going through appropriate avenues to bring it to the attention of KPMG International—why did it take Senator O'Neill giving that speech for this matter to come to light?

That is the reason why reform is necessary, and this reform is urgently required. Why? Because the whistleblower has told us that if they knew, back when they made their initial disclosure, what they would be going through over the last 12 months—the personal toll, the financial toll and the toll on their career—they wouldn't have blown the whistle, because of the huge cost they have incurred. That's not good enough. There are systemic failures that must be addressed.

I think—and Senator O'Neill has made this point repeatedly—that the audit function is integral to trust in our financial system. From large superannuation funds to listed public companies to government owned entities, audit is absolutely crucial as a function. It's a key check and balance in our financial system, and it provides everyone associated with the financial system, including investors, shareholders and creditors, with confidence in the system. Once you undermine that confidence, you are undermining trust in our financial system.

We heard the gravity of the situation in the comments made by the chairman of Lendlease, who said, in essence—these are my words, not his—'Given KPMG used our information the way they used the information, in breach of the terms under which they were given that information, how can we trust KPMG? They've undermined our trust.' Lendlease has moved to terminate the engagement of KPMG as its auditor after over 60 years. That, to me, underlines the importance of pursuing these issues.

The second point I'd make is that it is clear there are huge gaps in our regulatory system. KPMG is a large partnership, and our corporations law is simply not fit for purpose in regulating a large partnership and holding to account those in large partnerships who are engaging in misconduct. Reform is necessary; there's no doubt about that. That reform extends to the provisions in the Corporations Act relating to whistleblower protections, because in a situation, as was the case here, where a whistleblower is hired by a service company, but that service company is part of the puzzle of a large partnership, there are serious questions as to how the provisions relating to protections for whistleblowers respond. I personally believe there are good arguments that those protections did apply to the whistleblower, given the whistleblower was hired by a service company. That's my view. But there shouldn't be any doubt about this. It was absolutely shameful. I said this last week in my questions directed to the leadership of KPMG, and I'll say it again: it was absolutely shameful that KPMG presented the situation as if it was the whistleblower's fault that the whistleblower didn't provide information when KPMG asked, without emphasising the fact that KPMG could not or would not give comfort to the whistleblower that they had the benefit of those protections under the Corporations Act. That was absolutely shameful. I say that again here this evening.

So there are gaps in the regulatory regime. What the actual regulatory response to that should be is still, in my view, with all due respect to Senator Pocock, somewhat of an open question. There must be one. There must be reform. There must be change. This must never be allowed to happen again. I agree, and I'll passionately advocate in that regard. I commend Senator Pocock for bringing this motion forward to provide me and Senator O'Neill, whose contribution I'm looking forward to, the opportunity to provide remarks in relation to this matter. There needs to be reform. There needs to be change. Whether that means a break-up, which is the phrase used in the motion, or whether there's some other reform needed here, there certainly has to be reform in terms of the regulatory oversight so that ASIC has appropriate authority to regulate large partnerships such as KPMG. But what that reform actually looks like is still an open question in my mind. I'm sure it's a question which we as a committee will be pursuing over the course of the next few weeks.

I say to the government that they don't have to wait for us. They should be looking at this now. I do note there's a Treasury consultation paper open on whistleblowing laws. It's good that there is, and I'll make some comments in relation to that in a moment. The government needs to get moving on this. We can't let this happen again. And it's not just the responsibility of the Labor Party. Labor's in government, but I think it's the responsibility also of everyone in this chamber, including the coalition, including my party, the Liberal Party, in this place to make sure we engage constructively in relation to this reform process. Reform must occur. There's no question about that. There must be reform, and all of us need to constructively engage in that.

The last area I want to talk about is the whistleblower. Once again I place on the record: thank you to the whistleblower. In my view, whistleblowers are the great civic heroes of our society. They're the people who, at great personal cost, are the ones who step forward when others don't. When others either engage in misconduct or are prepared to turn away from that misconduct and not raise red flags, the whistleblower is the person with the courage to step forward and to make sure that the egregious misconduct comes to light. This whistleblower should be congratulated for that.

But it's not enough for us just to do that, just as it wasn't enough for KPMG to say on a mere piece of paper that they were sorry. It doesn't cut it. We must introduce protections for whistleblowers. Whistleblowers deserve a standalone statutory authority, a whistleblower protection authority, that is there to serve their interests and to look out for them. This whistleblower was left adrift. KPMG could go out and hire the biggest commercial corporate law firms Australia has—and they hired a number of them. KPMG International hired some of the leading Magic Circle firms to provide them advice. We found out last Friday that some of the people who have resigned, who admitted that they could have done better, had the benefit of their own independent legal advice, paid for by KPMG. But what about the whistleblower? Who's in the whistleblower's corner? Who's standing up for the whistleblower? We've done our best, but there needs to be a standalone regulatory authority that's there in the whistleblower's corner from day one.

I want to quote from a exchange I had with Mr James Shelton, a whistleblower who blew the whistle in relation to the foreign bribery offences committed by Securency and Note Printing Australia; they basically went overseas and bribed overseas officials to use Australian technology in terms of banknotes. James Shelton is an Australian hero who blew the whistle and suffered terribly for it. In an exchange I had with him in relation to amendments to the public interest disclosure legislation, I asked him about the need for an independent whistleblower protection authority. I want to end this contribution with his words: 'An independent whistleblower protection authority which could provide a guide, a way forward and a pathway on what you will experience, what's going to come up and what you will feel, and also provide some support services, would have made the world of difference to me. It's too late for me, but for others who come after, yes, 100 per cent, there needs to be an independent whistleblower protection authority that covers both the private and public sectors.'

It was too late for James Shelton. It's now too late for the KPMG whistleblower. It should never be too late for future whistleblowers. They should have the benefit of a whistleblower protection authority. They should have the benefit of that support. They should have someone standing in their corner as they go on this journey of doing right, acting in the public good for the benefit of all Australians. Each senator in this place, in my view, owes them a moral obligation to make sure that this reform occurs and that whistleblowers in the future have the benefit of a whistleblower protection authority standing up for them and protecting their interests.