Abstract
A law is more than a mechanism for arbitrating right and wrong. A law creates a market of compliance underwritten by the disincentives for non-compliance and the incentives for compliance. Like any market, it is the efficiency of a compliance market that is most relevant to the framing of legislation. A compliance market with no prosecutions is like a financial market with no transactions; it is highly inefficient. With no prosecutions, Australian whistleblowing legislation provides an example of such inefficiency.The US False Claims Act (FCA) is one of the few laws where incentives to blow the whistle are prescribed by a monetary entitlement. Like no other legislation, the FCA has formalised whistleblowing as a public-private partnership. In this paper, modifications to Australian whistleblowing law are considered, using the FCA as a basis. Estimates of the effect of incentives are provided using projections of fraud recovery and deterrence, illustrating that legislation can be made more efficient through incentives.
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