Whistleblower Protections, the recent report from the parliamentary joint committee on corporations and financial services, is a comprehensive and important document. It draws extensively on the published work of others, notably the research conducted over many years by Professor A. J. Brown of Griffith University and his colleagues. It also quotes liberally from submissions made to the inquiry by interested parties and experts. Having canvassed the opinions of others, the committee then argues carefully and sensibly for its own recommendations on a range of topics related to the present state of legal protection for whistleblowers.
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Like most expert commentary, the committee takes a broader view of whistleblowing than is implied in the everyday notion of going public with an accusation of wrongdoing in one's workplace. It also includes internal disclosure within an organisation, or confidential reporting to a relevant external authority.
As one would expect from the committee's focus on corporations and financial services, the report's main emphasis is on whistleblowing in the private sector. The inquiry is a response to recent scandals in the banking and financial services sector, which revealed inadequacies in the support and legal protection offered to those seeking to expose serious wrongdoing in their organisations.
The committee also notes that many of the same issues affect potential or actual whistleblowers in the public sector. While Australian public servants are generally better served than their private sector counterparts in terms of formal legal protections – for example, at the federal level through the Public Interest Disclosure Act – in practice the protections offered to whistleblowers are often equally inadequate. In particular, both the public and private sectors seem unable to deal with the vexed issue of reprisals; that is, retaliatory actions taken by managers and colleagues against those who make disclosures. Under current legislation, it is nearly impossible to protect whistleblowers from reprisals, to hold those responsible for reprisals to account, or to seek recompense for those who were victimised.
In extending its conclusions to whistleblowing on the public sector, the committee had the benefit of Philip Moss's Review of the Public Interest Disclosure Act, completed in mid-2016. Moss reported that, overall, the experience of whistleblowers under the act was not a happy one. Some felt their disclosure was not adequately investigated and many experienced reprisal as a result of raising their concerns.
Moss made several criticisms of the federal government's whistleblowing regime. In particular, he noted that the processes for making disclosures were cumbersome and legalistic, and discouraged potential whistleblowers. He also found the bulk of disclosures made under the legislation concerned personal employment-related grievances, rather than instances of major wrongdoing or malfeasance. He suggested that the range of disclosable conduct was too broad and should target the most serious integrity risks, such as fraud, serious misconduct or corrupt conduct. Employment-related grievances would be better dealt with through less elaborate processes. In addition, Moss noted that the Commonwealth Ombudsman was unable to provide the necessary level of scrutiny and oversight, and recommended that the ombudsman's powers be strengthened.
Confirmed in its view that the problems of whistleblowing are common to both public and private sectors, the committee then raises asks whether the same legislative regime could be applied to all sectors – private for-profit and not-for profit, as well as public – as several submissions recommended. The committee strongly supports the case for greater harmonisation and consistency. It rejects the view that the public sector must be held to higher standards of accountability and therefore requires stronger legal protection for whistleblowers. Allowing looser provisions to apply to the private sector overlooks the fact that many private organisations now provide public services (think nursing homes and vocational education) and also that wrongdoing in the corporate sector and the non-profit sector is as contrary to the public interest as wrongdoing in the public sector.
However, though the substance of the law applying to each sector should be aligned as far as possible, the committee is not convinced of the need for a single act, at least at this stage. Its main reasons appear to be practical, based on the different legal regimes applying to each sector; for example, with businesses operating under corporations law and government agencies under their own set of statutes. Instead, the committee wants to concentrate on a first stage of consolidating all private-sector whistleblower legislation into a single act.
Given the variation between different jurisdictions and industries, achieving uniform legislation in the private sector would be a major task in itself, requiring significant political commitment. Adding the public sector could make the task even more unmanageable. However, as several submissions pointed out, postponing harmonisation with the public sector runs the risk that, in the meantime, the public-sector regime could develop independently in different directions, making the holy grail of a single, uniform legislative framework even more elusive.
In the search for uniformity, the report looks in depth at complex issues where agreement would need to be reached. Only a few can be touched on in a short article. One is the vexed question of the legal definition of disclosable conduct: that is, which actions, if disclosed, can justify protecting the discloser. Here, there is considerable variation ranging from the more restricted definition in the Corporations Act, through a much broader version in the Fair Work (Regulated Organisations) Act to an even more extensive list in the Public Interest Disclosure Act. The committee adopts an expansive approach not only to what can count as disclosable conduct but also to whom can be classed a whistleblower, including former and current employees, as well as contractors and volunteers. It also recommends that protection in the private sector follow the public sector in extending protection to those who make internal disclosures within their organisation as well as to those who blow the whistle to outsiders.
At the same time, the committee expresses caution about Moss's suggestion that employment-related grievances be removed from the Public Interest Disclosure Act's protection. Such an exclusion could run the risk of preventing whistleblowers from seeking redress when they suffer adverse consequences from making disclosures. Reprisals, after all, can usually be classified as employment-related grievances and combatting reprisals is one of the legislation's key objectives.
Another issue is the institutional framework for overseeing and enforcing whistleblower-protection laws. At present, there is a patchwork of relevant external authorities, with the Commonwealth Ombudsman playing a major role in the federal public sector and parts of the private sector covered by the Fair Work Ombudsman and various courts and tribunals. Expert opinion appears to be divided on the best arrangements. Some support strengthening existing institutions, such as the relevant ombudsmen, with others back Britain's reliance on tribunals. The committee favours a single authority, a "whistleblower-protection authority", which would replace the Commonwealth Ombudsman for the public sector but also have jurisdiction over the private sector. The authority would have extensive powers to investigate reprisals, referring criminal cases to police and prosecutors, while taking other non-criminal cases to relevant tribunals. If necessary, the authority could impose its own remedies. The authority's main purpose would be to offer whistleblowers genuinely independent and inexpensive protection from actual or threatened reprisals imposed by their organisations.
Creating yet another legal authority may seem extravagant. But, in the interests of economy, the committee recommends that the authority be housed within an appropriate existing institution. Moreover, if the thrust of the reforms is to move whistleblower protection to a more "principles-based" approach and away from a dependence on ever-more detailed and complicated rules, a high-powered independent authority with the capacity to reach its own judgments is the most efficient administrative instrument. The same rationale applies to the recently established Independent Parliamentary Expenses Authority, which is intended to wean politicians off their box-ticking approach to work-related expenses. In addition, an expert authority, if established relatively early in the reform process, could guide the way past the remaining, more intractable problems of harmonisation.
Perhaps the committee's most controversial proposal is its support for a reward or bounty system as practised in some other countries, notably the United States but also in Canada and some European countries. Under such schemes, whistleblowers are rewarded with a share of any funds recovered as a result of their disclosures. Bounties operate mainly in the corporate sector but can also apply in government; for example, to revenue-raising agencies such as the Australian Taxation Office. In the US, bounties have led to a flourishing litigation business, with lawyers specialising in securing substantial payouts for their clients. They have been responsible for retrieving large amounts of misappropriated funds.
In Australia, parliamentary committees have considered bounty systems several times previously, most recently in 2009, and each time have recommended against them, as has the British parliament. The main objections focused on the wider ethical effects of incentivising selfish gains as a consequence of doing the right thing. Whistleblower regimes are intended to foster a concern for honest and law-abiding behaviour and to encourage a sense of ethical conduct. Most whistleblowers act from a sense of altruism and the public interest. Introducing a blatantly self-interested motive undermines this broad purpose.
Most submissions to the committee expressed similar reservations. Unsurprisingly, some of Australia's well-known law firms expressed support, though many of their legal colleagues were opposed. It is a mark of this committee's radicalism that it rejected the caution of its predecessors and came down in favour of introducing bounties, though with certain safeguards, including a cap on payouts. Adjudicating on fair recompense would be one of the new whistleblower protection authority's tasks.
The ethical dimension raised by critics of bounties also impinges more broadly on the committee's overall ambition of seeking to improve and harmonise the legal regime applying to the protection of whistleblowers. All legal experts in the field stress the importance of encouraging ethical behaviour within organisations as the main purpose underlying the laws. Yet a sceptic may wonder whether the massive effort involved is worth it. Will the new framework dramatically increase staff's willingness to report on their colleagues' misbehaviour? Will it offer genuinely effective protection against reprisals for those who dare to speak up? As the Moss report revealed, the experience of the Public Interest Disclosure Act in the Commonwealth public sector has been underwhelming, with most activity concentrated around work-related grievances.
In the case of reprisals, no amount of legal protection will prevent resentful colleagues from making a workplace unbearable for someone seen as a snitch. As Simon Longstaff of the Ethics Centre told the committee, the main need is for a strong ethical culture that encourages people to speak up on any matters of concern in an atmosphere of trust. A formal whistleblower regime, with its legalistic and adversarial stance, should not be front and centre of an ethical program that is designed to instil trust and mutual respect for the common interest. At best, it should be treated as a mechanism of final resort, to be used only when more informal and cooperative processes have broken down.
By all means let the lawyers devise the best legislative framework possible. But, as with the proposal for a federal anti-corruption commission, don't let them oversell it as a recipe for honest and open government.
Richard Mulgan is an emeritus professor at the ANU's Crawford School of Public Policy. richard.mulgan@anu.edu.au
