Billions of dollars rorted from taxpayers could be recovered with US-style laws offering ''spotter's fees'' to whistleblowers, a Canberra lawyer says.
A local version of the US False Claims Act would entitle Australian citizens or public servants who exposed fraud or corruption against the Commonwealth to a share of money recovered.
Writing in The Public Sector Informant on Tuesday, Norton Rose partner Ben Allen says the US government under this law has recovered up to $US40 billion in the past 25 years. Australia's leading whistleblowing authority and the federal police union agree.
An Australian version of the legislation would have helped protect against some ''embarrassing historical frauds'', such as those seen under the home insulation scheme and the school buildings program, Mr Allen says.
The Australian Institute of Criminology's latest fraud survey suggested about $496 million was lost to external fraud against the federal government in 2009-10.
Only about 40 per cent of that money, $196 million, was recovered and $87 million was from small-time Medicare and Centrelink scammers.
A much greater threat, Mr Allen believes, is corporate rorts in government contracts, such as capital works, and the amount lost in Australia is likely to be grossly underestimated.
The lawyer cautiously welcomed the proposed new federal law to protect whistleblowers, but says much more must be done to combat rorts committed by third parties.
''An even more holistic view needs to be taken of the effect of fraud and corruption on the public purse,'' Mr Allen said.
''There has been a lot of focus on corruption and mismanagement within the public sector but, financially speaking, far more resources are lost through fraud committed against the government by those outside the public service.''
Mr Allen says the US laws could help recover billions of dollars lost to fraud by ''incentivising'' citizens and public servants to blow the whistle on corruption.
The False Claims Act allows any US citizen to bring a claim on behalf of their government and be entitled to up to 35 per cent of the amount recovered.
Professor A. J. Brown of Griffith University's Centre for Governance and Public Policy said he, too, would like to see false claims laws in Australia, but warned they would not be a ''cure-all''.
''This has got real potential,'' he said. ''In articles comparing our laws with US laws, I've predicted that we would go down this road sooner or later as part of our law reform.
''It wouldn't replace anything that we're doing now.
''It would be additional, supplementary.''
The whistleblowing expert also said it was unlikely this country had a corruption problem on anything like the scale in the US, and spectacular effects should not be expected.
The Australian Federal Police Association has been urging the federal government to adopt false claims laws since 2010.
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