Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017

Second Reading Speech

Mr TAYLOR (Hume-Minister for Energy)

I move:

That this bill be now read a second time.

This bill amends the Corporations Act 2001(Corporations Act) and the Taxation Administration Act 1953(taxation act) to strengthen Australia's corporate and tax whistleblower protections.

Firstly, it will extend the corporate whistleblower protection regime in the Corporations Act.

Secondly, the bill introduces new protections for tax whistleblowers not available under existing laws.

The importance of protecting corporate sector whistleblowers has been recognised for many years. However, legislative protections under the Corporations Act in place since 2004 have been sparingly used and are increasingly perceived as being inadequate, having regard to advances in whistleblower protections in the public sector, the registered organisations act and internationally.

As part of the government's tax integrity package, new arrangements to better protect those who blow the whistle on noncompliance with taxation laws were announced in the 2016-17 budget.

Together these reforms will help protect whistleblowers who often expose themselves to significant personal and financial risk, in order to help play a critical role in the early detection and prosecution of corporate or tax misconduct.

The secondary beneficiaries of these new laws will be Australian businesses, as corporate governance and integrity practices increase, with officers, employees and taxpayers aware that there is now a higher likelihood misconduct will be reported.

The amendments in part 1 of the bill extend protection to a broader class of people who interact with the corporate sector and expand the type of disclosures eligible for protection.

To protect whistleblowers coming forward, the bill strengthens the whistleblower regime in a number of ways including preventing companies from using the protections as a defence for failure to take action on a disclosure or not commencing an internal investigation. The bill makes it easier for a whistleblower to seek redress for detriment or damage and permits anonymous disclosures not protected under the existing law. In addition, the bill mandates that all large companies have a whistleblower policy. The reforms encourage the Australian business community to assess their corporate governance as well as offer an opportunity to all Australian businesses, particularly public and large companies to take stock of their current practices for dealing with whistleblowers and develop and improve their whistleblower policies.

Part 2 of the bill amends the taxation act to introduce tax whistleblower protections that are broadly consistent with the Corporations Act amendments.

This reform is aimed at introducing arrangements that protect individuals who report breaches or suspected breaches of taxation law or misconduct in relation to an entity's tax affairs. Importantly, the new protections provide clarity for whistleblowers with regard to who they can make protected disclosures to. Eligible recipients include the Australian Taxation Office or an eligible recipient who is able to take action or investigate the alleged misconduct, such as an entity's tax agent or auditor, or an authorised person within the entity whose tax affairs are the subject of disclosure.

The new tax whistleblower regime protects the identity of eligible whistleblowers through strict protocols on the sharing of a whistleblower's identity. The regime also allows for anonymous disclosures to be made.

The regime also protects whistleblowers from victimisation and provides them with access to remedies including compensation should they suffer detriment as a result of making a disclosure or if their identity is revealed.

The tax whistleblower regime is intended to encourage whistleblowers to disclose information relating to actual or suspected noncompliance with taxation laws to the ATO and eligible recipients who are able to take action or investigate the alleged misconduct.

Following introduction into the Senate, the bill was referred to the Senate Economics Legislation Committee, which tabled its report on 22 March last year. The government amendments will address many of the recommendations within the Senate committee report.

At this point I would like to acknowledge and thank Senator Patrick for his commitment to strengthen protections afforded to whistleblowers. He's worked closely with the government to bring about several of the amendments to this bill, and in doing so, will ensure that whistleblowers are encouraged to come forward and are protected when doing so.

The government amendments will improve access to compensation for whistleblowers who suffer victimisation. For example, whistleblowers will be able to make a claim for compensation when a body corporate breaches a duty it owes to the whistleblower to prevent a third person engaging in detrimental conduct towards them. Duties may include, for example, duties that arise under employment law or state and territory laws. Also, the amendments require a court to consider the period a person is likely to be without employment in circumstances where the detrimental conduct involved termination of employment.

To ensure the corporate regime operates as intended, disclosures solely about personal employment related matters will be excluded from protection.

The emergency disclosure provisions that allow for disclosures to parliamentarians and journalists have been amended to better align with those equivalent provisions in the public sector, as appropriate for the corporate context. For example, emergency disclosures can now be made for misconduct that represents a substantial and imminent danger to a person's health and safety, or the environment. A new limb has been introduced that allows for disclosures of misconduct based on a broad public interest test.

Furthermore, the definition of journalist is revised to ensure eligible disclosures made to journalists employed by the Australian Broadcasting Corporation or the Special Broadcasting Service are protected.

To reduce the compliance burden on companies an amendment is made to narrow the cohort of staff who are eligible to receive a whistleblower disclosure.

Amendments are made to revise the commencement date of the bill and the commencement date of the whistleblower policy requirement to ensure regulator effectiveness is not compromised and to provide certainty for businesses.

The bill also requires a statutory review is undertaken of the operation of the protections within both the Corporations Act and the taxation act, five years after the commencement date of the amendments.

Amendments will also be made to support the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 and have the effect of increasing financial penalties for offences under the whistleblower regime in the Corporations Act and the taxation act.

The amendments seek to increase consistency where practicable with other Commonwealth whistleblower legislation, namely the Public Interest Disclosure Act 2013 and the Fair Work (Registered Organisations) Act 2009.

The Legislative and Governance Forum for Corporations was consulted in relation to the bill and subsequent amendments and has approved them as required under the Corporations Agreement 2002.

Full details on the government amendments can be viewed in the government response to the Senate Economics Legislation Committee report into the bill, to be tabled at this time.

Full details of the measure are contained in the explanatory memorandum.

I commend this bill to the House.