Thursday, 14 September 2017
Corporations and Financial Services Committee; Report
This committee, the Parliamentary Joint Committee on Corporations and Financial Services, has landed a unanimous report on whistleblower protections in the corporate, public and not-for-profit sector, and that is no small feat. Of all the parliamentary inquiries that I've done, I'd say this is one that has certainly done some significant heavy lifting for a vital change that's required in our community.
Before I go to my more deep comments about the report, I'd like to thank the chair, Mr Steve Irons, from the other place, and the Liberal senators and members, including Senator Williams. I would particularly like to thank my Labor colleagues on the team with me: Mr Matt Keogh, Ms Terri Butler and Senator Ketter. We were also joined by Senator Xenophon on this inquiry. Everyone worked together toward a really great outcome in a context that is often maligned here.
Evidence to the inquiry, as well as consideration of existing laws, indicates that whistleblower protections remain largely theoretical, with little practical effect in either the public or private sectors. This is due in large part to the near impossibility under current laws of protecting whistleblowers from reprisals, holding those responsible for reprisals to account, effectively investigating alleged reprisals, and of whistleblowers being able to seek redress for reprisals.
I'd like to thank at the outset the brave Australian men and women who have already blown the whistle and the whistleblowers who came to speak to us as a committee, both publicly and privately. You've helped to detect misconduct across the public and private sectors. You've done so despite a systemic culture of cover-up, a highly toxic culture of not speaking out and an incredibly uneven power imbalance. Whistleblowing has involved great risk for you and your families, and you've often paid a very high price for simply doing the right thing, not just for your own personal sense of satisfaction of telling the truth but for community benefit as well. Sadly, whistleblowers have been forced out of their jobs, intimidated, harassed and have even faced death threats, so I sincerely thank our whistleblowers for coming forward. I think the lesson is that we must do more to protect them.
Currently, whistleblower protections are simply not working. They're inadequate and are rarely used, especially in the corporate sector. Whistleblowers are not coming forward, and that is because we have failed to protect them. I want to acknowledge one whistleblower in particular, Mr Jeff Morris, who is well-known to the Australian public for matters regarding Commonwealth Bank and CommInsure. He paid a very high price for that civic action. Let me read you a small part of his submission to the committee. He said:
Talk of "shooting"—
And I mean guns.
… made me wonder if I had put my family at risk of being collateral damage. The fact that the CBA management had apparently decided not to pass on a warning sickened me and made me realise the full extent of the evil I had confronted.
Jeff and his family suffered incredibly for speaking out. He lost his job. He received death threats, which I have reported here. His wife ended up in hospital from the stress. He was diagnosed with PTSD. He lost his family. These are things that should not happen to somebody simply taking right and proper civic action.
The question is always: how do we break such a culture of silence and how do we protect whistleblowers such as Jeff? This committee has put forward a number of recommendations. For Jeff and for the many others who fought the culture of cover-up and have come forward, I hope that this gives them some comfort. Sadly, they have not been able to have their losses redressed. No longer will whistleblowers pay the high price for doing the right thing.
I would like to turn your attention to one of the recommendations of the report—that is, a reward system. We have heard the cultural practices of some organisations—like, sadly, our big banks—have become so oppressive and corrupt that the only way that we could get people to blow the whistle was to incentivise them in a way that attends to their personal safety, their professional reputation and the security of their family and also in a way that deals with the fiscal reality of the risk that they're taking on and the implications for their family's personal wealth, safety and security. We're at a point where whistleblowers are so at risk that we have to create a structure to provide some type of additional financial protection.
We heard about the experiences of other jurisdictions with whistleblower financial rewards systems. We know that reward systems do exist in a number of other jurisdictions that are similar to Australia, including the UK, the US and Canada. A reward system to motivate whistleblowers to come forward with high-quality information on misconduct and information that would otherwise be difficult to obtain is a key recommendation. The reward system also motivates companies to improve internal whistleblower reporting systems and to deal proactively with illegal behaviour. There will be significant productivity gains, cultural gains and—on this R U OK? Day, dare I say it—mental health gains in the workplace when people are not being forced into practices that they know are unethical and being told to keep quiet about it or lose their job—that has to change.
Some evidence was presented to the committee about the US Dodd-Frank bounty system, suggesting that unethical incentives had been introduced. To mitigate against those findings, with regard to the US Dodd-Frank bounty system, the reward system recommended by the committee has three key features. It will have a limit or a cap on the reward being paid to the whistleblower, it will be reflective of the information disclosed and it will be determined against a number of criteria. Mindful of the personal cost borne by many of this who have blown the whistle, we have recommended a wage replacement commensurate to the whistleblower's current salary if there is a reprisal action or the whistleblower is suffering abuse. That will protect them and their family. Whistleblowers shouldn't have to weigh up sending their children to school and paying their mortgage against actually taking ethical and civic action.
I thank the Labor members and also Greens members. I thank Senator Whish-Wilson also for his contribution to landing this report. The report is unanimous, but Labor members of the committee wanted to combine all of the whistleblower protections into one single act. We didn't quite get there; we got pretty close. We consider that significant inconsistencies exist not only between the various pieces of Commonwealth, public and private sector whistleblower legislation but also across the various pieces of legislation that apply to different parts of the private sector. The committee has recommended that the public sector whistleblower protection legislation remain in a separate act and that all private sector whistleblower protection legislation be brought together within a single act.
The vast majority of evidence presented to this committee strongly supported greater consistency and harmonisation across public and private sector whistleblower protection legislation. There is much, in our view, to be gained from a single act. We would urge the government to move continuously in that direction. It would provide simplicity and consistency, reduce compliance burden and make it easier and more efficient for the body of legislation to be maintained into the future.
One of the committee's other significant recommendations is the establishment of a whistleblower protection authority. Such an authority would—once legislated and enabled by the government—support whistleblowers, assess and prioritise the treatment of whistleblowing allegations, conduct investigations into reprisals and oversight the implement of a whistleblower regime for both the public and private sectors. We consider this to be an essential ingredient of an effective whistleblower protection system.
By its very name, the whistleblower authority would be a very important contribution to the public sphere. People who have no other contact with government agencies and don't know where to go would know that, if they were wanting to blow the whistle, they could go to the whistleblower protection authority to get guidance about which entity might be the appropriate one to which they could make their disclosure. As we heard time and time again during the committee proceedings, whistleblowers and their families are suffering very serious reprisals for doing the right thing and speaking up. Embedded toxic cultural practices are preventing people from advancing information in the public interest.
The recommendations in the committee's reports are, in our view, a necessary step to making it safe for Australian people to go into workplaces, act ethically, be good citizens and, if they see something illegal or wrong happening, have adequate protection to blow the whistle and continue to live their lives without the sort of disadvantage that has been the signature of whistleblowers in Australia up to this date.
Finally, thank you to the committee in toto and thank you to the secretariat for bringing this together. It was quite an arduous process. I feel very pleased that we are tabling this committee report today in the Senate.
I endorse essentially everything that Senator O'Neill has said. At least we can agree on something today, and that is the protection of whistleblowers. This has been a terrific committee in that it has been not just bipartisan; crossbench colleagues, the Greens and I, Labor and the government have gotten together to produce a very good report. There's one small point of difference, and that's whether we have parallel bills or one bill to protect whistleblowers, but that is a question of form rather than substance. I see Labor's point and I don't take issue with it.
I just want to focus on this issue, because I think Senator O'Neill has well traversed the reason why we need whistleblower protection and these reforms. This committee was convened to report on this issue as a result of agreements I reached with the government last year. Senator Dastyari isn't here, so he can't call it a dirty deal. But I hope he doesn't call it a dirty deal, given the very good work that's been done in a non-partisan way to strengthen the protection of whistleblowers. The agreement reached with the government last year made it very clear that this was the first step in bringing about significant, sweeping whistleblower reforms of the type we have never seen before in this country. The undertaking from the government was that there would be this report, with a reporting date of 13 June 2017. The report has been delayed, and that will delay other timetable aspects. But an expert panel will be set up to examine this report and make recommendations as to the type of legislative changes we need for the protection of whistleblowers in the corporate and the public sectors, because we don't have that in any comprehensive way. We have public interest disclosure. It's not comprehensive. It's not adequate. It doesn't give the compensation. It doesn't give the protection. It doesn't give the necessary rewards to those people who put everything on the line to tell the truth and uncover wrongdoing and malfeasance.
There will be an expert panel. I'm very pleased to say that the Assistant Treasurer contacted me this morning to indicate that the expert panel will be established and that the government is keeping their word to me on this. That is a very good thing. Legislation will be introduced. It may not by December 2017, but I would imagine the timetable may see it introduced by February 2018. The bills will be debated and put to a vote by June 2018, and the government has committed itself to these sweeping reforms. They've done so with the registered organisations legislation, so we have a template for reform. These reforms will actually go further. These reforms will finesse the registered organisations reforms and fine-tune them, but I think that what we did in the registered organisations legislation was a good start.
Finally, we have here a historic opportunity to bring about protection and reforms, the likes of which this country has never seen before. It will mean better protection for whistleblowers. It will mean better corporate governance, better public sector governance, less waste in government, less abuse by corporate officers and less abuse of corporate responsibility. This will unambiguously be a very good thing for this nation. I look forward to this report being the template for further reform.
Very briefly, I would also like to congratulate the committee for all their fantastic work. Unfortunately, I wasn't able to participate in a lot of the hearings, but they did a really good job. This is an extremely important matter. It takes a lot of courage to blow the whistle, no matter where you are. It takes even more courage, and something entirely different, to rage against the machine, because that's inevitably what you are going to have to do. By machine, I mean significant resources, very deep pockets.
One thing I was particularly pleased about with this report was that the committee considered and recommended a financial reward scheme, a bounty-style scheme. My experience is that, once you blow the whistle, effectively, you should almost be pensioned off. It's going to be that difficult to stay in an organisation or even get employment again. It is a very significant matter for a lot of people. The financial rewards and compensation, essentially, are to provide you with an annuity until you're old—because that's what you're going to need. If you look at the statistics about what happens to whistleblowers, that is exactly what you will need. You will virtually have to be pensioned off, not to mention all the medical bills, the duress, the stress, the mental health issues and other issues that you are going to face. We need to provide every possible incentive we can to protect whistleblowers within a framework that balances the risk for the organisations that those whistleblowers are blowing the whistle on. We need to do everything we can to provide a framework and good legislation.
My final comments would be that we do some great work in this chamber, we really do, along with our staff, who are all here today—the committee staff, the ministerial staff. We do some fantastic work but, so often, the work we do doesn't get put into legislation. So we have a great report before us and, no doubt, all of us are going to have to continue to work and hustle so that we can actually get this legislation through. I look forward to seeing the government's response. I seek leave to continue my remarks.
Leave granted; debate adjourned.