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Economics Legislation Committee
06/03/2018
Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017

CARRUTHERS, Mr Ben, Senior Manager Litigation, Australian Prudential Regulation Authority

DAY, Mr Warren, Senior Executive Leader, Australian Securities and Investments Commission

DE WIND, Mr Les, Assistant Commissioner, Lodgement Strategy and Delivery, Intermediaries and Lodgement, Australian Taxation Office

PRICE, Mr John, Commissioner, Australian Securities and Investments Commission

CHAIR: Welcome. I remind officials that the Senate has resolved that an officer of a department of the Commonwealth or of a state or territory shall not be asked to give opinions on matters of policy and shall be given a reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how the policies were adopted. Thank you all for appearing before the committee today. I invite you to make a brief opening statement should you wish to do so. We might start with you, Mr De Wind.

Mr De Wind : I have primary responsibility for the tax evasion and referral centre, which is the area that actually receives most of the information relating to non-compliant behaviour from the community. I have a brief opening statement. Within the organisation we look to build confidence and trust in the tax system and we look to facilitate and foster willing participation from the community. As part of our broader intelligence gathering function within the office, we have processes in place to actively support and receive information from the community in respect of non-compliant tax behaviour. To give you a sense of context, in 2016-17 we received 46,000 pieces of information along those lines. By far the majority of that information is provided to us anonymously—approximately 90 per cent of that information.

We receive that information through various channels. We have some electronic forms on our website where people can record that information, and we get about 70 per cent of our information through that channel. Similarly there is an information line where people can provide that information, and we receive about 15 per cent of that through there. Through normal mail we receive 15 per cent. I just want to give you a sense of context of how that operates. We centrally receive that information, we record it and we make some general assessments about the quality of that information. In turn, we refer that information to other business areas within the organisation to make a more detailed risk assessment about the use of that information.

I'll just generally comment on the type of information. The quality of information is very variable. More often the information provided by an informant is less detailed and more subjective. As part of our risk assessment processes to select cases for further client engagement activities for further review, the ATO considers the information provided in tax evasion allegations in conjunction with other intelligence and sources of information. It's not an exclusive process that we use to determine whether we do a review of that. The ATO utilises all sorts of information to select cases. Again, I'm just providing you with a broad context of what information comes through into our systems and what we do with it. We rely on our confidentiality clauses at the moment, which look to protect the informant. Similarly, we do not make any comment specifically back to the actual informant about what we do with that information, again, by virtue of the confidentiality provisions.

CHAIR: Thank you, Mr De Wind. Mr Carruthers?

Mr Carruthers : I didn't intend to make an opening statement—and I'm happy to answer questions—but, perhaps, just for context, rather than 46,000 cases a year, APRA generally receives around 20 or 30 whistleblower-type disclosures a year. Of that small amount, a lot of them are provided without providing their name or are provided by former employees of the organisation. Only a small percentage would qualify for formal protections under the current regime.

CHAIR: Thank you, Mr Carruthers. Mr Day and Mr Price?

Mr Price : Thank you, Chair, for the opportunity to appear today. Let me start by saying that ASIC considers transparent and effective whistleblower policies and processes as essential elements of good corporate culture. I also want to acknowledge the work of this committee and the government's proposed reforms to strengthen the whistleblower protection regime. We believe at ASIC that it's critical that the regulatory framework adequately supports and protects whistleblowers, who play a very important role in uncovering behaviour that's caused consumer harm.

Finally, I also want to briefly mention that over the years ASIC itself has also taken a number of steps to encourage whistleblowing. For example, ASIC has established an office of the whistleblower and enhanced its internal processes for dealing with whistleblower reports, including training of ASIC staff involved in the handling and actioning of whistleblower matters and also the very important task of communicating with whistleblowers themselves. We also continue to support academic research. For example, ASIC's a member of the 'Whistling while they work' research project led by Griffith University's Professor AJ Brown and supported by both local and international research collaborators. We've also supported industry initiatives on corporate whistleblowing—for example, the Australian Banking Association's guiding principles in relation to whistleblowing. We're also keeping abreast of various international regulatory developments in this area. We look forward to the committee's questions.

CHAIR: Thank you, Mr Price. Mr Day, do you have anything to add about the capacity in which you appear today?

Mr Day : I also have the honour of leading our office of the whistleblower.

CHAIR: Thank you very much, Mr Day. This is slightly awkward asking all of you the same question, but let's try and keep the answers of all three agencies as tight as possible, unless you feel that there is a desperate need to embellish or extrapolate an answer. Do you believe that the bill before us will improve the situation of whistleblowers? Mr De Wind, shall we start with you?

Mr De Wind : Certainly the bill before us will facilitate better handling of that information.

CHAIR: Mr Carruthers?

Mr Carruthers : Yes, I think the bill before you is quite an improvement on the current regime.

CHAIR: Mr Day and Mr Price?

Mr Price : Yes, we think that the bill will improve the lot of whistleblowers.

CHAIR: Can I ask you, given your answers were quite brief, how you feel these reforms compare internationally. Would you say that they meet international best practice, and in what way would they do so? Mr De Wind?

Mr De Wind : I don't have a position on that.

CHAIR: Mr Carruthers?

Mr Carruthers : I'm probably not qualified to answer that either, sorry.

CHAIR: I'm hoping that Mr Day or Mr Price might be then!

Mr Day : My answer is probably not much better, other than to say that it would be foolish, when you've had academics who are leaders and experts in their field speak to you already today about what that is, for me to say anything different than probably what they said. If you look at the Australian context, it's clear that the current circumstance, before the bill potentially moves forward, does not provide for the types of practices we would like to see. What we've got at the moment is definitely not world's best practice.

Does the bill meet what other jurisdictions and other international agencies enjoy, in terms of whistleblower provisions? The answer to that in some respects is no. I know that a subject of discussion so far this morning has been about the position of reward schemes. Whether or not that's best practice is not for me to say. As we set out in a previous submission to the PJC that looked into whistleblowing, we've said that the position about rewards is one that has to be looked at in context: is the Australian circumstance one that's ready for that, in terms of where the level of penalties are? ASIC has said that we think there will be a point potentially where we can consider moving to that, but at this time what we would rather see, which I think the bill goes a long way to doing, is a more comprehensive compensation regime. The bill does provide that.

CHAIR: Can I ask you then specifically about a bounty system. Do ASIC and the ATO, and I suppose APRA as well, support the idea of a bounty system for Australia?

Mr Price : I think what we said in our public submission on this topic was that we're certainly not averse to the idea of a bounty system, but we think it's too early at this stage. The success of bounty systems overseas have been tightly linked to the civil penalties that are available overseas. There's only just been a recent review conducted by the Treasury and the government in relation to civil penalties here in Australia—the ASIC enforcement review. That probably needs to bed down. For my own view, I think probably the more important and pressing area to address in the Australian regime are issues around antidiscrimination and compensation actions for discrimination that whistleblowers can bring. I think there's a real need for that in the Australian regime and I do think that the bill addresses that well.

CHAIR: Mr De Wind, do you have a comment on the bounty system?

Mr De Wind : We're aware of the schemes in operation in other jurisdictions. No, we don't really have a position, recognising that at the moment we do receive quite a bit of intelligence from the general community.

CHAIR: Mr Carruthers?

Mr Carruthers : No position from APRA, thank you.

CHAIR: Can I ask you about a single act—whether ASIC, the ATO and APRA also support the proposal for a single private sector whistleblowers act, and, if so, why?

Mr Price : In some ways it's a bit of a question of form over substance. Really, the way I would prefer to look at this is: what is the outcome for people who are blowing the whistle, whether that be via a single act or multiple pieces of legislation? From my point of view, I'd focus on the outcome and what that means in practice for the treatment of whistleblowers.

Mr De Wind : A similar comment.

Mr Carruthers : The current regime has different protections and different industry acts regulated by APRA. We haven't had any issues with that aspect of the current regime. If a single act or the merging of protections into one act like the Corporations Act is considered, I think that's a matter of policy for the government.

CHAIR: Can I ask you about a dedicated whistleblower authority. Do ASIC or the ATO or APRA have a position on whether they support or disagree with that particular proposal?

Mr Price : Again, that's a policy matter for government. But, again, I would hark back to my earlier comment. I think it's very important to focus on the outcomes for whistleblowers. I think a system whereby there are various authorities administering these laws can work quite well, as long as there's good coordination between the authorities. But really the focus should be on what the practical outcome and experience for whistleblowers is rather than necessarily the form that's around that.

CHAIR: Similar?

Mr Carruthers : I support those comments, yes.

Mr De Wind : Yes, I support those comments.

CHAIR: ASIC currently has a whistleblower office within its operations. Do you think, if ASIC were appointed the sole whistleblower authority, it would be able to fulfil that role?

Mr Day : In some respects, the bill proposes something akin or close to that in any event. There will be extra work and extra need—much as Commissioner Price said—for us to work more closely and more intensely with other agencies about that. I know that's been the subject of discussions already between ASIC and APRA. It's also been the nature of discussions between us and other agencies such as the Fair Work Ombudsman and so on. I would imagine we'll have the same types of discussions with the ATO and the ACCC, if the bill becomes law.

The position of a single body means it does carry a lot of responsibility to make sure it is triaging those in the right places, and that does require a lot of knowledge about what's going in other places for whoever deals with that. But that's the case now. We still get things that come to us that belong more properly with the AFP in relation to bribery of foreign officials. We've had to do a lot of work and, again, this committee has heard a number of submissions and asked a lot of questions about our work with the AFP in that area. What that required—and the committee was quite staunch and pushing for that as well—is that there needs to be closer relationships in that instance between us and the AFP to make sure we're pushing that information along nicely and quickly, and the right stuff to them as well.

CHAIR: So you don't see any particular reason why the bill should be delayed until a single act or a new authority proposal is considered by government?

Mr Day : That's a matter for others—that's a matter for probably your side of the table, Senator.

CHAIR: I know, but I was pushing my luck. I want to ask quickly about the Jeff Morris case and then I'll turn over to Senator Ketter. Is it your view that the bill in its current form would not have provided protection to Mr Morris, had it been enacted at the time when he blew the whistle?

Mr Price : I'd like to reflect on that and go back through the facts and circumstances of Mr Morris and also have a look at the bill. It would be very difficult to answer.

Mr Day : I might offer a couple of observations. ASIC has provided information about the handling of information in previous submissions to previous inquiries around some of that material. What this bill does do is give protection and support to anonymous disclosures, which the current circumstance doesn't. In circumstances where someone may have in the past given an anonymous disclosure, it would give them protection, which is not there at the moment. In relation to protections while employed or even as a past employee, that has been improved by this bill as well.

I heard some of the discussion this morning around the point of going to media—I think that's a difficult question. Again, that's probably a question of policy and a matter for government and yourselves. Should disclosures to media obtain protections about that? The only thing I would say is: we want the system to work, so we want companies showing good culture, receiving feedback, receiving criticism internally, and improving the circumstance and dealing properly with the information they receive. Similarly, if the whistleblower—if I can use that phrase—doesn't believe they're getting the right traction, doesn't believe they're getting the right response, that should be a matter for the regulator. I can definitely see—and Mr Morris probably makes his point better than anyone—that, if a regulator is not doing the right thing with that information, they might feel duty-bound to then take it to the media in that place to make things move on. I still say, though, there still needs to be a reasonable opportunity—and the act talks about a reasonable opportunity—for that hierarchy of steps, if you like, to work its way though. That would be the only view I would offer about that, Senator Hume.

CHAIR: Can you say with any certainty that Jeff Morris would have lost his protection when he went to the media, had this bill been enacted back then?

Mr Day : I'd have to reflect on the individual circumstances of that.

CHAIR: I don't want you to go into too many details, but obviously ASIC made some significant responses to Jeff Morris's disclosures. Would it be fair to say that Mr Morris was not fully aware of the actions that ASIC were taking, or was going to take, when he went to the media?

Mr Day : I think that's possible. It's certainly the case that ASIC's actions and investigations are often done in confidence, and it is difficult sometimes for what information we can share with the informant, be that a whistleblower or not, about that. We don't want to prejudice the nature of those investigations. Sometimes we've got to also be realistic that, if we do tell the informant what we're up to, we've lost control of that circumstance.

Mr Price : Senator, I wonder whether it might be useful for us to outline what our usual practice is in terms of regular communication with whistleblowers since we set up the Office for the Whistleblower.

CHAIR: That would be very useful.

Mr Day : It's the types of claims that Mr Morris and others have made about their handling by ASIC or other agencies for that matter. One of the things that we said in our follow-up submission to the Senate inquiry into ASIC's performance is that we've created the Office of the Whistleblower, and part of it is that we have dedicated liaison officers embedded in those teams that are handling the matters that are the subject of the information from the whistleblower. We require that, as a minimum, there is contact effectively every three to four months with those parties, telling them as much as we can. Obviously, we are trying to explain to them the limits that we've got as well. However, there may be circumstances where we except officers from having to make that communication because the person who is the whistleblower may in fact be a person of interest in that matter as well. There's some reasonableness about that. But we want to make sure that we're keeping them up to date and we're keeping in contact, so that they don't believe we've forgotten about them. One of the things that was said on a couple of occasions by Mr Morris is he just believed he'd been forgotten about. We want to make sure that they know that that's not the case, and we make a commitment to them at the conclusion of the matter, be it positive or no further action, that we will let them know what happened and why. That's a really strong thing. The other thing that happens internally is we are now reporting on that internally and giving transparency of that to the commission, so the commission can see all matters on hand, that all steps are being complied with, where we are at and where our handling is at with that. In fact, the commission was considering and discussing this morning.

CHAIR: Do you think just for the sake of the record you could summarise for us the actions that ASIC actually took with regard to Commonwealth Financial Planning in response to Mr Morris's case?

Mr Price : Commonwealth Financial Planning was a very significant matter. I don't think we'd do it justice trying to do it off the cuff. I'd prefer to actually go through that in some detail.

Senator BUSHBY: Nonetheless, Mr Morrison's whistleblowing did result in significant action by ASIC, ultimately.

Mr Day : Absolutely.

Mr Price : It did, and I would also make the point that it's been a matter that's been significantly ventilated both in this place and other parliamentary forums, through the media and through a range of circumstances.

CHAIR: Just finally, in ASIC's, the ATO's and APRA's view, does this particular bill strike the right balance between protecting whistleblowers from retaliation or reprisals and encouraging whistleblowers to make disclosures to companies and to regulators so that the matter can be resolved both internally and through regulatory action? Mr De Wind, do you want to start?

Mr De Wind : Yes.

CHAIR: Mr Carruthers?

Mr Carruthers : Yes, I think that's correct. Particularly, there's provision for companies to investigate, which was missing explicitly in the former regime.

CHAIR: Mr Price?

Mr Price : I think there's always a continuum upon which you can strike the balance. I think this strikes a reasonable balance. Ultimately, it's a question of policy.

CHAIR: Senator Ketter.

Senator KETTER: My first question is to ASIC. Do you have a view as to what is going to be the increase in the workload of the Office of the Whistleblower as a result of the passage of this legislation? And, specifically, have you given some thought as to the number of full-time equivalent staff you might need to increase by?

Mr Price : We're starting to do that now but much will depend on the final form of the legislation, as you would appreciate.

Mr Day : To give you some context, I think Mr De Wind mentioned some numbers and Mr Carruthers mentioned some numbers. In relation to full reports of misconduct or complaints that we get from the public in a year, ASIC receives about 10,000. Of those, we classify as whistleblowers anyone who comes to us who calls themselves a whistleblower, whether they actually meet the statutory definition or not, and those who don't call themselves whistleblower but do meet the statutory definition. We would say, of those matters, we only received in 2017 about 250 matters. That said, when you look at the breadth of the bill in terms of the wider things it covers—certainly some of the APRA material that it covers and others—we'd expect that that's going to grow quite significantly. As Commissioner Price says, we are looking at what that will take to service. Because it's not just about the handling, the triage, the processing and the liaison; it's also about the broader prosecution powers that are being attributed under the bill to ASIC to assist with protection of whistleblowers. It's not just about, if you like, the administrative handling or the communication process and liaison; it's very much that enforcement role as well that we have to take on.

Senator KETTER: Can you tell us how many disclosures you are estimating you might receive next year?

Mr Day : Again, I'd be basically licking my finger and sticking it in the air at that point. The good thing—and I think this is something that a number of academics have said—is that we just don't know. If you look at the PID Act in relation to government disclosures, we've now got data for the first time about how many of those are being made. We just don't know. Again, going back to the question about a central authority, you'd soon know through a central authority. Even under these bills, there'll be what goes to the ATO, there'll be what goes to APRA and there'll be what goes to us, so we'll start to get a better feel for that, I suspect, but in terms of the real number we just don't know. If the bill passes and you ask me again 12 months, we can start to have a discussion about data at that point.

Senator KETTER: What about resourcing? What extra resourcing will you be getting to assist?

Mr Day : At the moment that is the subject of discussions.

Senator KETTER: There's nothing that you can tell us about it at this stage?

Mr Day : Not at this stage.

Senator KETTER: Can you tell me how the disclosures would work? For example, if a whistleblower wanted to disclose a breach of competition law and they went to the ACCC, would they be protected under this bill?

Mr Day : I think Rod Sims at the ACCC has put in a submission and I don't think I need to repeat Rod's words. I think he's made the argument that he sees there are some issues around that. I think it's interesting the way he puts the argument, saying that he doesn't know that he wants the competition and consumer legislation put in as a prescribed piece of law. It would appear, from what Rod says, it's possibly the case that they're not covered at that point. But what I want to say is: already we quite often receive a disclosure to us that will traverse not just directors' duties issues and other Corporations Act issues but also competition issues. We're actually good at the moment about seeing those things and then referring them across if we need to and working together on that.

Senator KETTER: What about if a whistleblower went to the AFP with a breach of foreign bribery laws? Would they be protected?

Mr Day : My recollection—it's been some time since I've gone through the finer details of the bill—is I don't believe they're covered at that point. They have to come to us in the first place. My understanding is the AFP would prefer it to be that way, but they've also asked that we are in a position that we can move those matters to them as soon as possible.

Senator KETTER: Still with ASIC, in terms of the issue of the external disclosure to journalists, could you give us an example of the type of wrongdoing that would include 'a serious risk of harm or danger to the financial system' which would enjoy the protection of this bill?

Mr Price : I think those matters are to be determined by the courts. I would simply be hypothesising if I were to try and give an answer to that.

Senator KETTER: Something I've been exploring with other witnesses is the question of whether the big four accounting firms—which, as I understand it, are understood to be partnerships—are covered under the bill in terms of their employees who whistleblow under corporate whistleblowing in this bill?

Mr Price : That's a very good question. I wouldn't mind taking that on notice, actually.

Mr Day : I guess it will depend on what structure they're using, who they're employed with and what entity they're making the disclosure in respect of.

Mr Price : Even though they're partnerships, often you find with professional organisations there's a central company that employs the staff. I wouldn't mind reflecting on that. That's a very good question.

Mr Day : It is a good question.

Senator KETTER: Along the same lines to the ATO, are the big four accounting firms covered by this bill if they tax whistleblow on companies that they are auditing?

Mr De Wind : There are slightly different provisions in play under the proposed legislation given that most firms operate on a limited partnership basis. They probably will be caught, yes.

Senator KETTER: They will be covered under the act?

Mr De Wind : Yes.

Senator KETTER: Continuing with the ATO, how do you respond to concerns raised by Dr Zirnsak about the lack of a reward scheme for tax disclosures?

Mr De Wind : I'm not prepared to comment on that. I think that's a matter for government policy.

Senator KETTER: Are you receiving any new resourcing to implement this bill?

Mr De Wind : Again, that's not something I'm prepared to discuss, but clearly, depending on what gets passed by parliament, we'll need to redesign some of our business processes to better support the legislation.

Senator KETTER: Have you got any estimates as to how many additional disclosures you might receive as a result of the passage of the bill?

Mr De Wind : At this point in time we do receive considerable amounts of bits and pieces of information. There would be some expectation that there will be an increase, but it's very difficult to forecast. There is some question about whether we'll get some improved quality of information; again, that's difficult to forecast. But they're considerations.

Senator KETTER: Is there a risk that, with additional workload arising from the passage of this bill, other work the ATO does might go undone?

Mr De Wind : As a matter of practice, we operate on a risk assessment basis, so, ultimately, we need to risk assess everything that we do. So, to the extent that this does create some additional workloads, we may well need to reassess what implications it has. But, again, it's very hard to speculate at this point in time.

Senator KETTER: So there are discussions, are there, in relation to extra resourcing for the ATO?

Mr De Wind : No comment.

Senator KETTER: With APRA, can I just ask: if someone comes to APRA with a disclosure of a breach of the environmental laws, say, by a company, what would APRA do?

Mr Carruthers : We'd consider the disclosure in terms of our mandate—whether it covers any of the prudential aspects and financial stability aspects—and, if not, then we would need to work out who would be the right authority to refer it to.

Senator KETTER: So is there a danger the whistleblower wouldn't gain protection if they came to you?

Mr Carruthers : Under the current regime and the proposed regime, the broad definition of an eligible disclosure would cover 'an improper state of affairs', I understand. So, if the environmental issue falls under that category, it would be covered. But the proposed regime goes a little bit further, in that it's where a person has reason to suspect the improper state of affairs, where currently it's just that it is an improper state of affairs. So I think the proposed regime takes it a little bit further and provides a little bit more cover.

Senator KETTER: So how would the whistleblower gain protection under the new regime?

Mr Carruthers : By becoming an eligible discloser?

Senator KETTER: Yes.

Mr Carruthers : If the issue that was disclosed related to the improper state of affairs and/or the other elements were satisfied as well.

Senator KETTER: How many disclosures is APRA estimating that it will receive under the new regime?

Mr Carruthers : We haven't done a particular estimate of that. We do expect greater disclosures to be made. But we've been in discussions with our colleagues at ASIC and we expect that ASIC will probably receive more disclosures than APRA because the proposed regime puts all the protections into the Corporations Act, and we expect that if, for instance, someone was making a disclosure about banking, where, under the current regime, they would see the Banking Act protections and see APRA's role, they would now see the Corporations Act protections and see ASIC's role. So we'd expect, as a first port of call, they might go to ASIC.

Senator PATRICK: I will go firstly to ASIC. This whistleblower office you've established was, I presume, a result of the experience that you'd had with the Morris related matter?

Mr Day : Yes, it's an acknowledgement that we weren't doing as good as we could.

Mr Price : It really came out of several recommendations from a previous Senate inquiry.

Mr Day : That's correct.

Senator PATRICK: I must say that I think I may have been involved in a disclosure last year on behalf of a constituent. I must acknowledge that, in that instance, we got a very rapid response, and it actually did cause some good, so I suspect I may have experienced some of that. Presumably you accept that ASIC failed—and maybe there's a harshness in this; I apologise—in the original instance of Mr Morris when he came forward.

Mr Price : Senator, I think there's always an opportunity for us to improve on our work, and we're constantly looking at ways that we can do that.

Senator PATRICK: So, in hindsight, he was justified, and good came of the fact that he went to the media.

Mr Price : I think the question of when people can approach the media is really quite a difficult one of public policy, and I wouldn't like to tread into that area.

Senator PATRICK: Well, you said the words. Senator Ketter was talking about the threshold, and you said, 'Well, ultimately, the meaning of that threshold will be determined by the courts.'

Mr Price : Absolutely.

Senator PATRICK: But, in some sense, that's a concession that, if the ASIC commissioner can't work that out, how does the poor whistleblower work that out?

Mr Price : That's the case with any legislation. Whatever test you put into a piece of legislation, it will ultimately be up to a court to determine what the correct interpretation of that is. A regulator can venture a view or a member of the public can venture a view or a barrister can venture a view. Ultimately there's one view that matters—that's the view of the court.

Senator PATRICK: Sure. In some sense if the legislation is clear and readable by the public there is less chance that that becomes a controversy in the context of a court hearing. The courts tend to look at where there is an ambiguity or the evidence as it might apply to the law.

Mr Price : I don't disagree with any of that and that's why I think it's critical that parliaments reflect on these things and, as well as making sure that legislation is clear, making sure that explanatory materials are clear.

Senator PATRICK: If we accept that Mr Morris was warranted in going to the media, he's of the definite view that, at the point where he went to the media, he wasn't in a position where he would have met the current threshold that's in place. From what you say, it sounds like you've got this fantastic whistleblower office up and running and you're doing good work and you're communicating and giving outcomes to the extent that that is possible. That would indicate to me there would be no fear from you, provided there was a step where they had to come to you and say, 'I'm going to go to the media; I'm totally frustrated.'

Mr Day : We'd still have to—

Senator PATRICK: Sure. In those circumstances, Mr Day, how do you react to that? Do you attempt to seek injunctions?

Mr Day : No, not at all. We can't tell them what to do and we don't, if you like, try and talk them out of it. What we do is stick to what our approach and our policy about that is—to make sure we can give them the best information we can within the limitations we've got.

Mr Price : I think there's an important point to be drawn out here. Even with our commitment to communicate regularly to whistleblowers, there will inevitably be limitations as to what we can say. Much of the information we obtain is obtained in confidence and there are statutory provisions that govern that. There may be concerns in some instances about prejudicing future actions. There are a range of policy reasons that mean, while we regularly communicate with whistleblowers, we may not be able to share with them everything we know, and that's a challenge, but it's not one that I see can be easily resolved.

Mr Day : And we accept too that for the whistleblower themselves there's a lot going on in their life financially, personally, that they've got to deal with that we don't understand. We can try and support them as much as we can, and there are a number of whistleblowers that we will talk to about other support services, those types of things. That's what we try and do as well. But we can't stand in their shoes, and it would be arrogant for a public servant to say in those circumstances that we can. So they're going to make decisions that they're going to make about that.

Senator PATRICK: Following from that, I presume that any media organisation that was in receipt of what is now an emergency disclosure—I'm asking you to draw on your own experience without necessarily identifying any particular circumstance—or a journalist within the meaning of the current legislation or the proposed legislation, whereby it is not a blogger; it's probably someone under editorial control, would come to you and give you an opportunity to say, 'Hey, this would prejudice our investigation were you to publish.' I presume that happens.

Mr Price : Sometimes.

Senator PATRICK: Not always?

Mr Price : Not always.

Senator PATRICK: Sometimes you'll just get surprised?

Mr Price : Sometimes.

Mr Day : In fact, it's not often that they're presenting it in those types of ways, in those types of words. In fact, it's saying: 'Here's this. We've been told this. What do you say?' Or, 'Have you got anything to say about that?' So the course is well plotted by that stage. It's not, 'If we do this, is that going to cause you problems?'

Senator PATRICK: It's not beyond the commissioner or yourself to ring an editor and say, 'Look, this is going to cause some difficulties for us'?

Mr Day : I guess so. Anything is possible.

Senator PATRICK: On a slightly different tack, when you set up this office did you talk with Mr Morris about how that might go, using some of his experience?

Mr Day : We certainly spoke to other whistleblowers. I don't know that we—in fact, I'm pretty sure we haven't spoken to Mr Morris about that. I might say it might be that Mr Morris might not be inclined to speak to ASIC, but if he wants to I'm more than happy to have a chat. But we did speak to other whistleblowers about their experiences certainly in other public matters of note. The Commonwealth Bank situation that was raised by Mr Morris is not the only whistleblower experience of that time. We've had a discussion with a number of them about this in the way we go about it. To be honest, we've also had some other discussions with other professionals in dealing with people who are in crisis situations, about how we deal with people in those types of circumstances.

Senator PATRICK: Have you spoken to your colleagues, say, in APRA and the tax office about that? The way in which this is set up sounds like a good idea.

Mr Day : I don't know that I have spoken to Mr Carruthers or Mr De Wind about it, but certainly there are a number of agencies we have spoken with about what we've done in setting up our office of the whistleblower.

Senator PATRICK: Thank you, Mr Day. Mr Carruthers, do you have a similar regime or arrangement inside your organisation?

Mr Carruthers : Not quite a formal office of whistleblower, but we have dedicated officers who receive whistleblower complaints and who are responsible for distributing them to the appropriate place in the agency to follow them up.

Senator PATRICK: You may not be able to answer this, but in the case of the intelligent deposit machines were there any signals to you through that mechanism at all?

Mr Carruthers : I'm not able to answer that, sorry.

Senator PATRICK: Because of the investigation?

Mr Carruthers : No, I'm not aware of that, sorry.

Senator PATRICK: Mr De Wind, you said you get 20 to 30 and that you get 46,000 pieces of information. Of course, a whistleblower is someone internal who is making a disclosure. A bellringer is someone external making a disclosure. Of those 46,000 pieces of information, I presume some could be a neighbour dobbing on someone they think is not paying tax or—

Mr De Wind : Yes.

Senator PATRICK: Do you have better numbers that would take us to what you would perceive as whistleblowing?

Mr De Wind : We do have a preliminary estimate. On the basis of the current information as proposed, about 50 per cent of those numbers.

Senator PATRICK: ASIC is saying 250 matters and APRA is saying 20 to 30. You are saying up around 23,000—that's a lot. Is that pieces of information or an aggregation—

Mr De Wind : That's pieces of information that we receive. Some information relates to different types of non-compliant behaviour. It could represent two or three pieces of intelligence.

Senator PATRICK: Does the IGT ever get approached with this sort of information or a whistleblower allegation that gets passed to you, or is that mostly related to PID type activities?

Mr De Wind : The inspector-general does receive some of that information that is channelled through us, and there are typically follow-up issues where perhaps informants go to the inspector-general and try to find out what exactly has come from that information.

Senator PATRICK: Some of the 46,000 pieces of information may come from the IGT as well?

Mr De Wind : A relatively small proportion. Most of it, as I indicated, comes through our webpage, our smart forms—70 per cent of that. The proportion that comes from the inspector-general is very small. I don't have an exact number.

Senator PATRICK: In asking this question, I would ask for some latitude from the chair, because it may in some sense seek an opinion, but it is no different to the first question I asked. Do you believe the bill as it is before the parliament at the moment could be improved to get to world's best practice? I guess, Mr Day, your answer—

Mr Day : I think we've already answered that.

Senator PATRICK: Yes, you've answered that. What about the ATO and APRA?

Mr De Wind : In the context of world's best practice, as I indicated, I don't have a sense of the comparative regimes in detail to make an informed comment.

Senator PATRICK: You did say that. Mr Carruthers, I think you said that too?

Mr Carruthers : Yes, thank you.

Senator BUSHBY: Thank you, all of you, for assisting us today. Firstly, as has already been acknowledged today, there have been a number of criticisms of the handling of specific issues that have been raised with Australian regulators—and Jeff Morris is a prime example of that. There are all sorts of reasons why those criticisms were justified. We can argue that; it's ground that's been well gone over. But do you think that the current bill, if it's enacted, will improve the ability of your respective organisations to better deal with disclosures and increase the probability of you receiving valuable information from whistleblowers in a more timely manner?

Mr Day : For ASIC's part, we think we're doing a good job now. In terms of the way we handle them now, I think it doesn't change, necessarily, the types of risk assessments and the types of actions we take in that respect. So it doesn't mean that we're actually going to handle them a different way—that the outcome is going to be different, if you like—on the basis of that information. What it will do, and what it has done, is improve the nature of people who feel that they can come and tell us about this, and we can then support them. As I said, ex-employees are the perfect example. A number of times we've had ex-employees come to us and say, 'Well, I'm a whistleblower,' and we say, 'I think that, colloquially, yes, you're right, but the law doesn't actually recognise you at the moment as a whistleblower—that is, it does not extend protections to you.'

Senator BUSHBY: Essentially, it will improve the confidence and ability of whistleblowers to approach you with meaningful information?

Mr Day : I think it's certainly going to widen the pool. In terms of their confidence, these are people who may find themselves in a very anxious, isolated circumstance. Does it improve their circumstance of someone to hold their hand through the process in terms of, say, seeking compensation or seeking other forms of redress or protecting themselves from other places? There are some improvements in that space, but it still does put on the whistleblower themselves the need to take steps to get compensation and those things. But what it also does is give us an enhanced set of opportunities at ASIC to provide protection, certainly in circumstances where there are things we need to look at, to the whistleblower at that point.

Senator BUSHBY: ATO and APRA, any comments?

Mr Carruthers : I'd support comments made by Mr Day. Also, there will be an opportunity to improve internal policies to reflect the amended legislation, and that will include building on the significant good communication and relationship between different agencies as well, especially in the context where a lot of disclosures might, at first, go to ASIC.

Mr De Wind : In my opening statement, I referenced building trust and confidence in the tax system and encouraging people to willingly participate. They're our broad drivers now. This measure, I think, just looks to complement that.

Senator BUSHBY: That's very good. Related to that, we discussed Jeff Morris to some degree. This is probably a question for ASIC. Is one of the reasons why he was not informed and updated by ASIC on the status of the investigation that he was never a protected whistleblower, because he made an anonymous disclosure at the time and was no longer employed by CFP?

Mr Price : I'd like to go back over the circumstances, but certainly my understanding is that the initial disclosures that were made were anonymous, and of course that raises challenges in terms of communication.

Senator BUSHBY: Whereas, under the proposed legislation, people who make anonymous disclosures can be protected, as can ex-employees?

Mr Price : Correct, but I suppose—

Senator BUSHBY: Jeff Morris was an example, but somebody in that circumstance now is a lot more likely to have protection.

Mr Price : Yes. It's obvious in a way, but, if we don't have contact details in relation to an anonymous complaint, that ongoing flow of communication is clearly going to be hard.

Mr Day : Senator Bushby, just to pick up on your question, I think one of the things that's significantly changed since this is that the commission at the time looked at the circumstances of whistleblowers. It was very patchy in terms of our communication with them and keeping them updated and keeping them informed. I think Commissioner Price said at one point, in those internal discussions, that we are missing opportunities to tell people about the things we are actually doing, because, in a way—I won't say that we're hiding behind the confidentiality—a lot of our teams were reluctant to talk, even within the limitations of that, about what was going on and have those interactions. Since that point, the commission has been driving the need for teams to talk to people. It's one of our values as accountability—to talk to people about that. It's not necessarily about the protections; it's about the commission's desire to want to communicate with people better.

Senator BUSHBY: I guess you still have to balance that with the fact that your investigations—

Mr Day : Absolutely.

Senator BUSHBY: are going to impacted to some degree?

Mr Price : Yes.

Senator BUSHBY: What impact can public disclosure have on investigations?

Mr Price : Quite significant. Obviously, there are a range of considerations that go into thinking about an investigation: the strategy that might be used, the timing of approaching certain people and when you might want to serve compulsory notices to obtain particular documents—that can change if persons of interest believe that their interests might be under threat. Those are things that we do think about in terms of conducting investigations.

Senator BUSHBY: I know that you can't comment on where we land, but you can probably comment on this: it's important to get the balance right—

Mr Price : Oh absolutely, yes—

Senator BUSHBY: between the threshold at which a whistleblower is entitled to go to the public, if they feel that the matter hasn't been dealt with appropriately, and making sure that's at an appropriate place so that you can continue your investigations in a proper way while ensuring that the public's right to know is also protected.

Mr Price : I agree with that. As with everything, there is a continuum; there is a real balancing exercise about where you strike the particular point. In some ways, I think that in some ways this is one of the more difficult policy questions in this whistleblower debate.

Senator BUSHBY: It does deserve a lot of thought, to make sure we get that at an appropriate place.

Mr Price : Yes.

Senator BUSHBY: We've gone through the details of how many disclosures organisations receive. Obviously, the ATO takes the prize for the most and then APRA is less, with 20 or 30. But, nonetheless, you are all receiving regular disclosures. Is it the case that a delay in enacting this legislation would have an impact on those who do make disclosures to your organisations, who are legitimate whistleblowers and who have something that needs to be disclosed?

Mr Price : For my part, it would certainly be preferable to change some aspects of the current legislation which ASIC administers and that are recognised to be problems. Mr Day has alluded to the fact that former employees aren't covered. And I think that issues around victimisation or discrimination of whistleblowers are a problem in the current legislation. In my view, it would be desirable to review those things.

Senator BUSHBY: And, given that the ATO is receiving thousands a week—almost a thousand a week—and the others are receiving, maybe, one every two weeks, but still receiving regular disclosures, the sooner those protections are in place the better it will be for the people making those disclosures.

Mr Price : Certainly, I think that who the legislation covers and the expanded protections proposed under the draft bill are very important considerations.

CHAIR: Thank you very much to the officers of the ATO, APRA and ASIC. We'll let you go and I now welcome officials from the Department of the Treasury.