Whiste-Blower Protections (AU0001)

Objective and description: Australia will ensure appropriate protections are in place for people who report corruption, fraud, tax evasion or avoidance, and misconduct within the corporate sector. We will do this by improving whistle-blower protections for people who disclose information about tax misconduct to the Australian Taxation Office. We will also pursue reforms to whistle-blower protections in the corporate sector, with consultation on options to strengthen and harmonise these protections with those in the public sector. Status Quo: The prevention of corruption, waste, tax evasion or avoidance and fraud relies upon appropriate protections for people who report these wrongdoings. Australian public servants who act as whistle-blowers have some protection under the Public Interest Disclosure Act 2013 (PID Act). While there are also protections available to corporate whistle-blowers, those protections lag behind the PID Act and protections available to whistle-blowers in other countries (such as the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 in the United States, and the Public Interest Disclosure Act 1998 (amended in 2013) in the United Kingdom). Current protections in the corporate sector are overly narrow and make it unnecessarily difficult for those with information to qualify for protections. In the 2016-17 Budget, the Government also announced it would introduce whistle-blower protections for people who disclose information about tax misconduct to the Australian Taxation Office. A research project into public interest whistleblowing, Whistling While They Work 2, is currently being led by Griffith University and is looking into improvements across the public and private sectors. The project is partly funded by the Australian Research Council, and its initial survey of organisational processes and procedures is now available at http://www.whistlingwhiletheywork.edu.au. Ambition: To reduce corruption, waste, tax evasion or avoidance, and fraud by ensuring protections are in place for people who report such activities. Relevance: This commitment will advance the OGP values of public accountability and transparency by: encouraging, protecting and compensating whistle-blowers whose information reveals artificial tax structures and misconduct; and reducing other forms of corruption, fraud and misconduct by ensuring corporate whistle-blowers are also encouraged, protected and compensated. OGP Grand Challenge: Increasing Corporate Accountability More Effectively Managing Public Resources; Timeframes December 2016 – June 2018; Lead agency Treasury (whistleblowers@treasury.gov.au); Other actors involved: Government - Australian Taxation Office, Australian Securities and Investments Commission, Australian Prudential Regulation Authority, Attorney-General’s Department, Department of the Prime Minister and Cabinet and other relevant agencies, state and territory governments, Parliament of Australia; Non-government: Corporations, peak industry bodies (including Law Council of Australia, tax advisors, other law and accounting bodies), non-government organisations (including Australian Open Government Partnership Network, Transparency International Australia, Accountability Round Table), Board of Taxation, academia, and whistle-blowers

1. Improve whistle-blower protections in the tax and corporate sectors

Commitment Text:

Australia will ensure appropriate protections are in place for people who report corruption, fraud, tax evasion or avoidance, and misconduct within the corporate sector.

We will do this by improving whistle-blower protections for people who disclose information about tax misconduct to the Australian Taxation Office. We will also pursue reforms to whistle-blower protections in the corporate sector, with consultation on options to strengthen and harmonise these protections with those in the public sector.

[…]

Milestones:

1. Establish Parliamentary inquiry.
2. Treasury to release a public consultation paper covering both tax whistle-blower protections and options to strengthen and harmonise corporate whistle-blower protections with those in the public sector.
3. Development and public exposure of draft legislation for tax whistle-blower protections (informed by consultation). Recommendation to Government on reforms to strengthen and harmonise whistle-blower protections in the corporate sector with those in the public sector (informed by consultation).
4. Finalise and introduce legislation for tax whistle-blower protections.
5. Introduce legislation to establish greater protections for whistle-blowers in the corporate sector, with a parliamentary vote no later than 30 June 2018.

Responsible institution: Treasury

Supporting institution(s): Australian Taxation Office, Australian Securities and Investments Commission, Australian Prudential Regulation Authority, Attorney-General’s Department. For a full list of agencies, please see the Australia National Action Plan

Start date: December 2016 End date: June 2018

Editorial Note: This is a partial version of the commitment text. For the full commitment text, see the Australia National Action Plan available at https://www.opengovpartnership.org/wp-content/uploads/2001/01/Australia_NAP_2016-2018_0.pdf

Context and Objectives

This commitment seeks to establish whistleblower protection in the corporate and taxation sectors. Current whistleblowing protection at the Commonwealth level is either limited to the public sector or to contraventions of particular legislation. This commitment will extend protection of wrongdoing by or within corporations as well as providing protection for breaches of taxation legislation.

The Public Interest Disclosure Act 2013 (Cth) protects against reprisals for the disclosure of information about suspected wrongdoing within a Commonwealth government agency, by a public official or by entities that have contracts with the government to provide goods or services. It emphasizes ‘disclosures of wrongdoing being reported to, and investigated within, government.’^[1] States and Territories have legislation with similar objectives.

The Corporations Act 2001 (Cth) extends limited protection to corporate actors who disclose information about an actual or potential contravention of the corporations legislation. Similar protections apply to disclosures about misconduct in a range of institutions regulated by the Australian Prudential Regulatory Authority (APRA), including banks, insurers and superannuation providers.^[2] However, these existing whistleblower protections are limited to contraventions of particular legislation. There is no broad protection that may cover disclosure of corporate corruption, bribery, fraud, money laundering, terrorism financing or other serious forms of misconduct. There are no whistleblower protections in Australian tax laws.

During passage of amendments to the Fair Work (Registered Organisations) Act in November 2016 to include protection against reprisals for people who report corruption or misconduct in unions and employer organisations, the government committed to supporting a Parliamentary inquiry to look at extending these protections to the corporate sector.^[3] The calls for a parliamentary inquiry follow a large number of previous inquiries and academic reports on whistleblowing protection in Australia.^[4] One such report concluded that ‘the scope of wrongdoing covered is ill-defined, anonymous complaints are not protected, there are no requirements for internal company procedures, compensation rights are ill-defined, and there is no oversight agency responsible for whistleblower protection.’^[5] These inquiries have recognized that whistleblowing is one of the most effective ways to expose and remedy corruption, fraud and other forms of misconduct.^[6]

Overall, this commitment stands to have moderate potential impact. By reiterating the commitment to establishing a parliamentary inquiry, the commitment provides a means to examine increasing the scope of whistleblower protection in the private, public and non-profit sector. The wide-ranging inquiry will also provide a specific opportunity for public participation. Enhancing protection of whistleblowers within the corporate sector has the potential to substantially increase the accountability of corporate actors against a wide range of misconduct, including tax fraud, and the effectiveness of government agencies in enforcing regulatory compliance. Whistleblowing protection can also help to establish a culture of accountability and integrity, helping to ‘empower citizens’ against misconduct, corruption and fraud.^[7]

The milestones to release a public consultation paper covering both tax whistle-blower protection, and then to progress the results of that consultation to legislation, are not as specifically defined. As Jessie Cato from Publish What You Pay Australia suggested, several of her member organisations were unclear about how the parliamentary inquiry related to the Treasury consultation on Corporate and Tax whistleblowing.^[8] A number of people interviewed for this report were concerned that focusing on tax and corporate reforms, and attempting to legislate them separately, might complicate and perhaps restrict the scope of the whistleblowing protections, with any uncertainty over the coverage potentially affecting a potential whistleblower’s willingness to come forward.^[9]

Completion

Milestone 1.1: This milestone was completed. The Parliamentary Joint Committee on Corporations and Financial Services (‘PJCCFS’) established an inquiry to examine whistleblower protections in the corporate, public and non-profit sectors on 30 November 2016.^[10] The Committee invited submissions on its website for more than two months.^[11] Over 75 submissions were received.^[12] The Joint Committee held public hearings in Brisbane, Melbourne and Canberra.^[13]

After extensions of the original reporting date of 30 June, the Committee reported in September 2017 (Parliamentary Joint Committee on Corporations and Financial Services, or ‘PJCCFS Report’),^[14] after the period of implementation considered in this report. The Committee’s recommendations included bringing private sector whistleblowing protections into a single Act and aligning those protections with public sector protections, and that the Commonwealth, States and Territories should harmonise whistleblowing protection across Australia. It also recommended that a reward system be introduced in proportion to any penalty imposed as a result of whistleblowing disclosures, and that a Whistleblower Protection Authority be established.^[15]

Milestone 1.2: This milestone was completed. Treasury released a consultation paper reviewing tax and corporate whistleblower protections in Australia on 21 December 2016.^[16] The paper called for submissions on reforms to existing protections under the Corporations Act and similar provisions as well as a proposal for specific protection under tax legislation. The paper included consideration of the scope of the reforms including whether the information to be covered should be comprehensive across Commonwealth legislation, the range of whistleblowers and agencies to whom disclosures can be made should be expanded, anonymous disclosures, requiring companies to put in place internal systems for internal disclosures, and establishing an oversight agency. The consultation paper also stated that it was intended to complement the Parliamentary Inquiry with submissions made available to the parliamentary committee.[17]

The department advertised the consultation paper on its website.^[18] It received 34 submissions from corporate bodies and peak organisations, religious and non-profit organisations, civil society organisations and individuals and published on that website.

Milestone 3: This milestone saw limited completion as of 30 June 2017. A draft of a proposed Treasury Laws Amendment (Whistleblowers) Bill 2017 was released for public comment on 23 October 2017, with submissions due by 3 November 2017.^[19] This draft included feedback on the range of submissions received as part of the consultation process.

Milestones 4 and 5: These activities were scheduled to begin in the second year of implementation of the action plan and had not started as of June 30, 2017.

Other than the submissions received as part of the consultation process, there was no evidence of results of this commitment as of the time of writing this report.

Next Steps

The commitment as framed concentrates on exposing wrongdoing within the corporate sector or in relation to taxation. Civil society stakeholders interviewed for this report all commended extending the scope of any reforms beyond corporate and tax whistleblowing as reflected in the scope and recommendations of the PJCCFS inquiry. The next steps could therefore include:

• Establishing a process of evaluation of the implementation of any legislative reforms introduced under the commitment;
• Responding to the recommendations of the PJCCFS, including reforms to the Public Interest Disclosure Act and other elements of public sector whistleblowing, including collaboration through a multistakeholder group.

Commitment 1. Improve whistle-blower protections in the tax and corporate sectors

Commitment Text:

Australia will ensure appropriate protections are in place for people who report corruption, fraud, tax evasion or avoidance, and misconduct within the corporate sector.

We will do this by improving whistle-blower protections for people who disclose information about tax misconduct to the Australian Taxation Office. We will also pursue reforms to whistle-blower protections in the corporate sector, with consultation on options to strengthen and harmonise these protections with those in the public sector.

[…]

Milestones:

1. Establish Parliamentary inquiry.
2. Treasury to release a public consultation paper covering both tax whistle-blower protections and options to strengthen and harmonise corporate whistle-blower protections with those in the public sector.
3. Development and public exposure of draft legislation for tax whistle-blower protections (informed by consultation). Recommendation to Government on reforms to strengthen and harmonise whistle-blower protections in the corporate sector with those in the public sector (informed by consultation).
4. Finalise and introduce legislation for tax whistle-blower protections.
5. Introduce legislation to establish greater protections for whistle-blowers in the corporate sector, with a parliamentary vote no later than 30 June 2018.

Responsible institution: Treasury

Supporting institution(s): Australian Taxation Office, Australian Securities and Investments Commission, Australian Prudential Regulation Authority, Attorney-General’s Department. For a full list of agencies, please see the Australia National Action Plan

Start date: December 2016                          End date: June 2018

Editorial Note: This is a partial version of the commitment text. For the full commitment text, see the Australia National Action Plan available at https://www.opengovpartnership.org/sites/default/files/Australia_NAP_2016-2018_0.pdf

Commitment Aim:

This commitment sought to establish whistleblower protection in the corporate and taxation sectors. Current whistleblowing protection at the Commonwealth level is either limited to the public sector or to contraventions of particular legislation. This commitment sought to extend protection of disclosure of wrongdoing by, or within, corporations and provide protection for people who disclose breaches of taxation legislation. To do this, the commitment included establishing a parliamentary inquiry to examine whistleblower protections in the corporate sector, and to establish a consultation process covering tax and corporate whistle-blower protections leading to legislation being introduced.

Status

Midterm: Limited

This commitment had limited completion by 30 June 2017, the midterm of the national action plan.

Milestone 1: The Parliamentary Joint Committee on Corporations and Financial Services established an inquiry in November 2016 to examine whistle-blower protections in the corporate, public, and non-profit sectors.

Milestone 2: The Treasury Department released a consultation paper in December 2016 reviewing tax and corporate whistleblowing protections in Australia, thereby fulfilling milestone 2.

The other milestones were not due for completion and had not been completed as at the midterm report. For more information, please see the Progress Report 2016-2018.

End of term: Substantial

Milestone 1: As described in the Progress Report, the Parliamentary Committee reported in September 2017. Its recommendations included that private sector whistleblowing be brought under a single piece of legislation aligned with public sector protections, that a reward system be introduced, and a protection authority be established. [1] During the course of its inquiry, the Committee held public hearings in Queensland, Victoria, and the ACT in the first half of 2017, which included more than 30 witnesses from outside of government. [2] In addition, the inquiry received 75 submissions (including some that were common to the Treasury consultation process completed as part of milestone 2). The hearings and submissions were publicly available, except where witnesses or submitters wished for their material to be kept confidential. [3]

Milestone 3: A draft of a proposed Treasury Laws Amendment (Whistleblowers) Bill 2017 was released for public comment on 23 October 2017, with submissions due by 3 November 2017. [4] This draft included feedback on the range of submissions received as part of the consultation process. 34 responses were published on the consultation website. [5]

Milestones 4 and 5: The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 was introduced into Parliament on 7 December 2017. The Bill provides for a single whistleblower protection regime covering the corporate, financial, insurance, superannuation, and credit sectors. It will also establish a new tax whistleblower protection regime to encourage and protect tax misconduct disclosures. The Bill was referred to the Senate Economics Legislation Committee, which reported on 22 March 2018, making three recommendations including that the Bill be passed. [6]

At the end of the period of the first national action plan, the Enhancing Whistleblower Protections Bill had not been considered by Parliament or put to a parliamentary vote as provided for in the final commitment milestone. For the action plan assessment period, this commitment was therefore only substantially complete. The Bill, however, with some amendments, was passed by both houses on 19 February 2019 and received assent on 12 March 2019. [7]

Did It Open Government?

Civic Participation: Marginal

As set out in the midterm Progress Report, the government had committed to a parliamentary inquiry into extending whistleblowing protection to the private sector prior to its inclusion in the national action plan. The commitment followed a large number of previous inquiries and academic reports on whistleblowing in Australia. The parliamentary inquiry did, however, increase public awareness of the issue and encouraged a broad range of submissions and hearings on the subject from any interested persons. [8] As detailed in the previous section, public hearings held as part of milestone 1 received 75 submissions; the public consultation on the draft Treasury Laws Amendment received 34 responses, and the government-provided feedback on the range of submissions received.

By seeking feedback from the public through the release of a consultation paper and draft legislation, the Treasury Department engaged in a form of consultation which had been adopted previously in relation to corporate law and tax reform. [9]

In addition to the range of consultations engaged in as part of the commitment, on 28 September 2017 the government established an expert advisory panel on whistle-blower protections outside of the commitment. [10] The panel was established to review and comment on the tax and corporate whistle-blower draft legislation as well as recommendations made by the Parliamentary Joint Committee for legislative reforms to enhance whistle-blower protections in the private, not-for-profit, and public sectors. The panel comprised senior government agency representatives, academics, and practitioners with expertise in tax law, corporations law, governance, and whistle-blower protections generally.

In an interview with Professor Brown, [11] a member of the panel, he indicated that the panel represented an opportunity to work with the government in enhancing whistleblower protections generally, going beyond corporate and tax whistleblowing as provided for in the consultation paper and draft legislation introduced. The expert panel was able to bring a wide variety of views and expertise to be considered in development of further reform proposals.

The commitment, therefore, promoted civic participation by continuing to use public hearings to consult on specific issues and the creation of the expert advisory panel. However, considering the limited evidence on how citizen input was used by the government, change in practice is coded as marginal.

Carried Forward?

This commitment was not carried forward to the second national action plan. Recommendations of the Parliamentary Joint Committee not implemented in the draft legislation are currently under consideration by government, with input from the expert panel.