Public Interest Disclosures Act 2022 (NSW): The good, the difficult and the confusing
16.7.2024
Maintaining integrity within the public sector is an integral component of responsible and good government. Theories of deviance suggest that as long as there are rules, there will be rule-breakers. Without proper or robust accountability mechanisms, public trust in government institutions would decline. Serious wrongdoing within the public sector, such as corruption, fraud or maladministration, is not within the public interest. Therefore, the inclination of public sector employees to speak up against serious wrongdoing is of vital importance in maintaining integrity within the public sector. The protections available for public sector whistleblowers must be strong enough to protect them from any possible detriment that may follow as a result of speaking up.
Public sector whistleblowing, also referred to as making a Public Interest Disclosure (‘PID’), is the action of identifying and reporting serious wrongdoing that affects the public sector. The Public Interest Disclosures Act 2022 (NSW) (‘new PID Act’) is one tool that can be used to ensure accountability and integrity are maintained within the public sector.
The new PID Act offers whistleblowers certain legal protections for reporting serious wrongdoing. The new PID Act came into effect on 1 October 2023 and brought significant reform to the way that the NSW public sector manages PIDs. Although the ‘vibe of the thing…’ is similar to that of its predecessor, the new PID Act is a complete re-write to the Public Interest Disclosures Act 1994 (NSW) (‘previous PID Act’) and introduces new requirements for NSW public sector agencies (‘Agency’ or ‘Agencies’). Nine months after the new PID Act’s implementation, it appears that while many of these new requirements are of great benefit to whistleblowers, in some instances Agencies are struggling to understand and implement the requirements. This post will discuss these new requirements and what they mean in practice.
What’s new?
There are many additions to the new PID Act which include:
Placing a positive duty or obligation on managers to disclose reports of serious wrongdoing to Disclosure Officers if an employee discloses serious wrongdoing to them: s 51(1) new PID Act. Disclosure Officers are nominated employees within an Agency who are trained to receive reports of serious wrongdoing,
Increased criminal penalties for detrimental action (i.e. victimisation or reprisal action) against whistleblowers, from two to five years’ imprisonment, along with an increase in potential fines: s 33 new PID Act,
Placing a positive duty on Agencies to mitigate risks of detrimental action being taken against whistleblowers: s 61(2) new PID Act,
Lowering the threshold for the kinds of disclosures that will receive protection and be accepted as a PID: s 26(1) new PID Act. Under the previous PID Act only current public sector employees could make a PID, whereas under the new PID Act former public sector employees can make a PID,
The introduction of three new categories of PIDs, being,
(1) Voluntary PIDs (where whistleblowers report serious wrongdoing of their own accord),
(2) Witness PIDs (where a person receives protection for disclosing information to a PID invesigtator), and
(3) Mandatory PIDs (where a person has a legal obligation to report serious wrongdoing or where reporting serious wrongdoing is a requirement of their position, such as a manager, auditor, or lawyer): s 21 new PID Act.
All categories of PIDs receive the same protection, the only exception being that Agencies are not required to protect the identity of Witness PID or Mandatory PID makers as they are with Voluntary PID makers,
The whistleblower protections outlined in Part 9.4AAA of the Corporations Act 2001 (Cth) (‘Corporations Act’) no longer apply to Agencies: s 12 new PID Act. This means that public sector whistleblowers will not be able to find protections under the new PID Act and the Corporations Act as they could previously. However, this also reduces legislative inconsistency and provides greater clarity on what protections are available to whistleblowers,
Under the previous PID Act, there were five sub-categories of serious wrongdoing. The new PID Act introduces a new sub-category for privacy contraventions: s 13(e) new PID Act. This refers to Agency breaches of the Privacy and Personal Information Protection Act 1998 (NSW) or the Health Records and Information Privacy Act 2002 (NSW), and
Placing a positive duty or obligation on Agencies to train managers, Disclosure Officers, and the Agency Head in their responsibilities and obligations under the new PID Act: s 48(2) PID Act.
The good
The reform of the previous PID Act was necessary as there were significant gaps and shortfalls in the protections for public sector whistleblowers. For example, under the previous PID Act whistleblowers had to be current employees of an Agency for the protections to apply: s 4A previous PID Act. This meant that public officials who may have been afraid to speak up whilst being employed by an Agency, could not retrospectively speak up against serious wrongdoing once they had left the public sector. Although this requirement is the same in the new PID Act, a feature of the new PID Act is that Agencies now have the power to deem a report of serious wrongdoing to be a Voluntary PID where it would not previously have qualified as such: s 29 new PID Act. This means that Agencies have the authority to grant whistleblowers protection from detrimental action being taken against them, even if they are not under the employ of Agencies. This is a significant step in the right direction.
Further, under the new PID Act, whistleblowers can now report serious wrongdoing to their ‘manager’: s 27(1)(c) new PID Act. Once reported by the whistleblower, the obligation now rests with the manager to ensure that the disclosure is communicated to a Disclosure Officer: s 51(1) new PID Act. The definition of a ‘manager’ is quite broad. Further guidance found in the Guidelines by the NSW Ombudsman’s Office reinforces that the term should be interpreted broadly, to include people who hold managerial positions on a shift or duty rotation when they supervise employees whilst on this shift. This means that public officials can (and in most cases will) have more than one manager, increasingly the number of people to whom they can make a disclosure. Under the previous PID Act, public officials could only report serious wrongdoing to nominated Disclosure Officers: ss 8(1) and 14(2)(a) previous PID Act. This is a significant and positive change for whistleblowers as under the previous PID framework nominated Disclosure Officers would typically be senior-level management. This effectively created a barrier for entry for junior-level public officials who may feel uncomfortable contacting someone so senior in the Agency.
The new PID Act also removes duplication with the Corporations Act which previously applied to certain Agencies such as universities. Under the previous PID Act, some whistleblowers (i.e. university employees) could call upon the protections provided by both the previous PID Act and the Corporations Act. Under the new PID Act, the whistleblower protections found in Part 9.4AAA of the Corporations Act no longer apply to all NSW public sector whistleblowers and Agencies: s 12 new PID Act. Although this could be seen as taking whistleblower rights away, in practice, this puts a stop to the confusion about what protections apply to what part of the disclosure. Under the previous PID Act, certain Agencies were under an unnecessary and complex onus to determine what components of the disclosure were protected under the Corporations Act or the previous PID Act, or both. In addition, certain Agencies had to work out any overlapping or inconsistent provisions between the Commonwealth and State legislation for every disclosure received, and then attempt to communicate this to the whistleblower in a way that they would understand. The removal of this unnecessary and complex requirement means that whistleblowers will now receive more timely, accurate and clear communication. Agencies now no longer face the risk of misinterpreting or incorrectly applying the relevant whistleblowing framework.
The difficult and the confusing
While the enactment of the new PID Act has brought many positive and necessary changes, there are some elements of the new PID Act that are causing confusion for Agencies in its implementation.
An addition to the new PID Act is that Agencies are now required to embed specific clauses into any contract that the Agency enters into where the contractor is to ‘provide services’ on behalf of an Agency or ‘exercise functions’ of an Agency: ss 14(1)(f) and 82(1) new PID Act. These clauses mandate that by entering into the contract, the contractor agrees that the new PID Act applies to them and that they will be a NSW public official whilst undertaking the piece of work for the Agency. Contractors fall within the new PID Act’s definition of a public official and are thus protected under the new PID Act. While the intention to extend PID protections to contractors is commendable, from my discussions with other NSW public sector universities and Agencies, many continue to struggle to implement this requirement and fully understand the nexus of ‘provide services’ or ‘exercise functions’. Whereas some services and functions are easily identifiable, for example garbage collection or water rate checking contracted out by a local government council, the nexus of ‘provide services’ or ‘exercise functions’ is less clear for larger Agencies with more complex governance arrangements. Although the Guidelines drafted by the NSW Ombudsman’s Office provide for some interpretation assistance, the onus is on Agencies to determine this themselves.
As discussed above, under the new PID Act Agencies have the power to determine that a disclosure made by someone other than a public official is a voluntary PID even if the disclosure would not otherwise be a voluntary PID: s 29 new PID Act. This means that if someone who is not a public official reports serious wrongdoing to an Agency, the Agency has the power to provide that person with the same protections as a public official would receive for speaking up. Even though this new deeming power is a positive mechanism in the new PID Act, the practicality of it calls into question the relevance of forcing Agencies to embed specific requirements into contracts in which they engage. One potential solution is for Agencies to rely more heavily on the new PID Act's voluntary PID option. As noted above, this option gives Agencies much greater flexibility in the type of person they can accept a PID from. This may be useful in instances where there is uncertainty or ambiguity around whether a contractor is 'providing services' to or 'exercising functions on behalf of an Agency'. Another potential solution to resolve the complexity would be to remove the requirement for Agencies to embed specific clauses in their contracts from the new PID Act completely. Instead, legislative drafters should consider using similar wording to ss 125A and 125B of the Fair Work Act 2009 (Cth). These provisions state that the Fair Work Ombudsman is to prepare an information statement on casual employment and that employers are to provide this statement to new employees. A similar provision could be adopted for the NSW Ombudsman and Agency contractors under the new PID Act rather than forcing Agencies to embed specific wording in contracts. This will also provide contractors with more consistent communication and information on their rights, responsibilities and available protections under the new PID Act.
Under the previous PID Act only public sector whistleblowers were offered protection; these protections did not extend to those who may have witnessed serious wrongdoing, but did not make a disclosure. This meant that if these witnesses later gave information to PID investigators to assist with the investigation, they did so without any protection under the Act. This presented a barrier for people who wanted to assist PID investigators but feared any reprisal action for attempting to help. In the new PID Act this gap has been bridged by the introduction of ‘Witness PIDs’: s 22 new PID Act. During a PID investigation, the PID investigator can now provide witnesses similar protections to those provided to whistleblowers: ss 30 and 40 new PID Act. There is no doubt that witnesses to serious wrongdoing deserve protection in providing information to PID investigators. The core issue here, however, lies with the wording of the Witness PID definition in section 22 of the new PID Act:
In this Act, witness public interest disclosure means a disclosure of information, in an investigation of serious wrongdoing, at the request of or in response to a requirement of a person or agency investigating the serious wrongdoing, whether or not the investigation: (a) relates to or arises from the making of a voluntary public interest disclosure, or (b) constitutes dealing with a voluntary public interest disclosure.
Although not immediately obvious from the wording, this new definition means that the alleged wrongdoers themselves are also afforded Witness PID protections. The notion that alleged wrongdoers receive protections could be misleading and confusing, particularly for the wrongdoer who is the subject of the misconduct allegations. Even though the wrongdoer receives Witness PID protections, they are not protected against liability from their own past conduct: s 41 new PID Act. This means that an Agency can still discipline the wrongdoer, despite Witness PID protections being in place. This occurs through the operation of s 31 in the new PID Act where Agencies are not prevented from taking ‘reasonable management action’ against a wrongdoer. Reasonable management action can include things like appraisals of employment, disciplinary action, suspension, reclassification, or even termination of employment. As a result, Agencies must pay particular attention to the wording of any allegation letter being sent to the wrongdoer in a PID investigation (particularly, in communicating the Witness PID protections available), as failing to communicate this complex notion may mislead the wrongdoer into thinking that they are absolved from any misconduct they have engaged in.
Conclusion
Despite the challenges and complexities around the implementation of the new PID Act for Agencies, overall, whistleblowers are better off for it. The addition of Witness PIDs in particular is an extremely important component of the new PID Act, as witnesses no longer need to fear reprisal action for assisting in a PID investigation. The power to deem a disclosure as a voluntary PID is also another excellent tool to protect those speaking up about serious wrongdoing.
From my experience working under both the previous PID Act and the new PID Act, the new PID Act is much clearer and easier to comprehend, thereby reducing the risk of misinterpretation or misapplication of the statutory requirements. In addition, far more resources are being provided to Agencies by the NSW Ombudsman’s Office to assist Agencies with all things PID. Although it has not been a simple journey to implement the new PID Act, I am confident we will get there.
Riley O’Keeffe is the Manager of Disclosures and Complex Investigations within the Conduct and Integrity Office at the University of New South Wales. He is responsible for investigating public interest disclosures received by the University as well as other complex matters such as gendered violence, modern slavery, and foreign interference.
Suggested citation: Riley O’Keeffe, ‘Public Interest Disclosures Act 2022 (NSW): The good, the difficult and the confusing’ (16 July 2024) <https://www.auspublaw.org/blog/2024/7/public-interest-disclosures-act-2022-nsw-the-good-the-difficult-and-the-confusing>