Designing a whistleblower rewards scheme is the next step for reform in Australia

Following several recent high-profile whistleblowing cases, Australia must now reckon with its flawed whistleblower protections regime and seek to do better. A single policy solution stands to make a big impact.

A whistleblower reward scheme for Australia has long been debated, but has always been nipped at the bud, citing concerns that rewarding whistleblowing is fundamentally ‘un-Australian’, and that it may encourage bad faith claims and unreliable information. But, as other countries, including the United States, Canada, and South Korea, continue to reap the benefits of whistleblowers reward schemes, these concerns can no longer stand up to scrutiny. Indeed, whistleblower reward schemes are rapidly proliferating around the world – with the United Kingdom just the latest jurisdiction to adopt such a scheme.

The insider information needed to investigate and bring enforcement action against wrongdoers is expensive and difficult to attain. By actively providing this insider information, whistleblowers save time and money for under resourced and overstretched regulators. It stands to reason that this benefit should be acknowledged.

Rewards are recognition of the benefits whistleblowers bring to regulators and to the public. And whistleblower information has been proven to lead to enforcement: whistleblowers in the US have helped regulators recover more than A$100 billion over the past 35 years, while whistleblowers have been rewarded approximately A$13 billion.

Rewards are also necessary incentives to compel whistleblowers to bring forth useful information. The majority of whistleblowers face some sort of retaliation for their actions, ranging from termination of employment to criminal prosecution. The professional, personal, and financial impact of whistleblowing is immense, and it is no longer enough to rely on goodwill and public mindedness to motivate whistleblowing. Good information is good information, no matter what the motivation was for bringing forth that information – so why not do all that we can to incentivise it?

Critically, where co-conspirators and witnesses are incentivised to blow the whistle, people and organisations are less likely to misbehave. Incentivising whistleblowing therefore also has a deterrent effect, encouraging ethical and compliant behaviour in the long term.

Put simply, rewards schemes are good investments. Done right, they are powerful policy tools with which we can create a more effective regulatory and enforcement system.

Considering the resistance against whistleblower rewards schemes, how a scheme might practically be adopted in Australia has not previously been explored in depth. In light of ongoing reforms to the federal public sector whistleblowing regime and the private sector whistleblowing regime, now is an opportune time to examine how we can design a uniquely Australian whistleblower reward scheme that is fit for purpose.

Australia stands at a great advantage. Comparable jurisdictions, most notably the US and Canada, have been testing and fine-tuning their whistleblower rewards schemes for decades. Other jurisdictions are in the process of expanding the presence of these schemes in their regulatory regimes – the United Kingdom, for example, has recently strengthened its tax whistleblower reward scheme to target large-scale tax fraud, and is exploring other programs.

Australia can learn from the mistakes that other jurisdictions have made, and adopt the principles and models that work for our legal system and existing regulatory landscape. For instance, we could adopt the US qui tam model, where whistleblowers can pursue legal action directly against wrongdoers.

We could also integrate the ‘tip-off’ model into our existing whistleblowing pathways, such that regulators have the ability to reward whistleblowers who provide them information that lead to enforcement.

Australia also has the liberty to create a system that is equitable and reflective of Australia’s enforcement and regulatory priorities. It is no secret that whistleblower rewards schemes overwhelmingly address economic wrongdoing. With careful design and consideration, we could create a rewards scheme that not only rewards economic whistleblowing, but also whistleblowing on wrongdoing with no monetary penalty attached, such as human rights abuses, endangerment of people and the environment, and discrimination. These are examples of how rewards schemes might be tailored to reflect Australia’s context and needs.

As whistleblowing reform continues in the year ahead, I say that the time to debate the merits of a whistleblower rewards scheme has passed. Plain and clear – rewards schemes are good policy that have been repeatedly proven to work around the world. Our policymakers must now look towards designing a whistleblower rewards scheme that works for Australia.

This is an edited extract of Professor Allan Fels’ foreword to the new report from the Human Rights Law Centre, Rewarding Australian Whistleblowers: Design Options for Whistleblower Incentive Programs.

Professor Allan Fels AO is an Australian economist, lawyer, and public servant. He was previously chairman of the Australian Competition and Consumer Commission.