26 February 2019
A significant part of the community pressure that led to the Federal Government establishing the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Banking Royal Commission), after initially opposing it, came from whistleblowers.
This, combined with the fact that the Banking Royal Commission uncovered many instances of conduct that that did not meet community expectations, has solidified Australian voter support for whistleblower protection to be enhanced.
In this context, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 (Bill) was first introduced into the Australian Senate in December 2017 and immediately referred to the Senate Economics Legislation Committee for further consideration and consultation.
The report of the Committee, which was issued in late March 2018, demonstrated that, while there was widespread support for the Bill, many contributors to the debate considered that the December 2017 version of the Bill did not go far enough in providing adequate protection for whistleblowers.
A significantly amended version of the Bill was passed by the Senate in December 2018. As that amended version of the Bill had bipartisan political support it quickly passed the House of Representatives when it was introduced in the first sitting period of 2019. The Bill is now waiting for royal assent.
Scope of new regime
The new whistleblower legislation applies to the corporate and financial sectors. The new legislation replaces existing regulation, which was criticised for providing inadequate protection and also for not covering all relevant areas of potential corporate misfeasance. For example, under existing law only current officers, employees and contractors may make disclosures and there is no regime for the protection of whistleblowers who disclose breaches of tax laws or tax related misconduct or breaches of Australia’s consumer credit laws.
Under the new regime, which will be implemented primarily via amendments to the Corporations Act 2001 (Cth) (Corporations Act) and Taxation Administration Act 1953 (Cth) (Tax Act), whistleblowers will receive protection if they report corruption, fraud, tax evasion or avoidance and misconduct.
The legislation does not deal with the public sector. There is separate legislation that provides for a whistleblower regime for the Commonwealth public sector (in particular, under the Public Interest Disclosure Act 2013 (Cth) – which has some similarities to the new corporate and financial sector regime). There are State and Territory based public sector disclosure regimes.
Some of the key provisions of the Bill are:
Persons to whom disclosures may be made
Types of matters that may be disclosed:
Protections for whistleblowers
Compensation for whistleblowers and penalties
The Minister will be required to undertake a review of the whistleblower regimes five years after implementation of the Bill. This review will consider the effectiveness of the regimes and whether any changes should be considered.
Requirement for whistleblower policies
One interesting aspect of the new regime is the requirement, incorporated in the Corporations Act, that public companies (and certain proprietary companies) establish whistleblower policies that set out internal systems to appropriately deal with whistleblower disclosures. These policies will need to be in place six months after the new regime commences and should cover, for example, protections available to whistleblowers, how (and to whom) disclosures may be made, how investigations will be conducted and the like. The intention of imposing this requirement is to assist in improving corporate culture and governance. These policies will need to be in place six months after the commencement of the new regime.
The new legislation will commence in the short term, probably from 1 July 2019. This means corporates have a short window to review the effectiveness of their existing whistleblower policies and procedures. Even those corporates who are not required by the new legislation to have a formal whistleblower policy should consider implementing one to ensure they are fully in compliance with the new regimes.
When announcing the passage of the legislation, the Assistant Treasurer, Stuart Robert MP, stated “(o)ur package of reforms will help to put an end to the significant personal and financial loss that can result from blowing the whistle on misconduct by increasing protections, remedies and sanctions for whistleblowers. These reforms are advanced by international standards.”
Even though this is the Government’s view, the Labor Opposition has indicated that, if it wins the next election, it would introduce further legislation in this area, including to provide for rewards to be available to whistleblowers.
Therefore Australia may be in for further change in this area in the near future.
Authors: Angela Flannery & Christopher Yong
Angela Flannery, Partner
T: +61 2 8083 0448
Dan Pearce, Partner
T: +61 3 9321 9840
T: +61 7 3135 0642
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.