Sect 4.11 Conflict of interest
Relevant Values and elements of the Code of Conduct
- The APS is apolitical, performing its functions in an impartial and professional manner.
- The APS has the highest ethical standards.
- The APS delivers services fairly, effectively, impartially and courteously to the Australian public and is sensitive to the diversity of the Australian public.
APS Code of Conduct
- An APS employee must behave honestly and with integrity in the course of APS employment.
- An APS employee must disclose, and take reasonable steps to avoid, any conflict of interest (real or apparent) in connection with APS employment.
- An APS employee must not make improper use of: (a) inside information or (b) the employee's duties, status, power or authority, in order to gain, or seek to gain, a benefit or advantage for the employee or for any other person.
Avoiding and managing conflict of interest
Public confidence in the integrity of the APS is vital to the proper operation of government. Confidence may be jeopardised if the community perceives a conflict of interest. APS employees need to be aware that their private interests, both financial and personal, could conflict with their official duties. Agencies' procedures for managing real and apparent conflicts of interest may cover:
- employees' responsibility to notify managers about real or apparent conflicts of interest
- managers' responsibilities to decide whether:
- there is, or could be, a conflict of interest
- to ask the person to divest the interest
- to change the person's duties or to transfer the person to another position where there is no conflict
- to allow the person to continue their duties.
During a selection process, applicants may be asked to declare any real or apparent conflict of interest. Before engagement, it may sometimes be necessary to require successful applicants to divest interests that present real or potential conflicts in the performance of their duties.
Ultimately it is the agency head's responsibility to determine what action should be taken where there is a conflict. While avoiding a conflict is best, it is not always practical. Agencies need to establish processes that will ensure the management of conflicts in such situations will withstand scrutiny. Processes may outline how:
- the conflict is declared
- the conflict will be managed
- stakeholders are informed about the conflict.
An agency head should declare any personal conflict to the Minister.
In whose interests?: Preventing and managing conflicts of interest in the APS28 is a short guide that outlines the requirements, and provides tips and scenarios to help public servants conduct themselves appropriately, make ethical decisions and prevent or manage conflicts of interests.
Bowen Report principles
The Report of the Committee of Inquiry: Public Duty and Private Interest (1979), known as the Bowen Report, sets out the principles that underpin public servants' obligations to disclose and manage conflicts. The report recommended a code of conduct, which was later endorsed by the Government:
- An office-holder should perform the duties of his office impartially, uninfluenced by fear or favour.
- An office-holder should be frank and honest in official dealings with colleagues.
- An office-holder should avoid situations in which his private interest, whether pecuniary or otherwise, conflicts or might reasonably be thought to conflict with his public duty.
- When an office-holder possesses, directly or indirectly, an interest which conflicts or might reasonably be thought to conflict with his public duty, or improperly to influence his conduct in the discharge of his responsibilities in respect of some matter with which he is concerned, he should disclose that interest according to the prescribed procedures. Should circumstances change after an initial disclosure has been made, so that new or additional facts become material, the office-holder should disclose the further information.
- When the interests of members of his immediate family are involved, the office-holder should disclose those interests, to the extent that they are known to him.
- When an office-holder (other than a Member of Parliament) possesses an interest which conflicts or might reasonably be thought to conflict with the duties of his office and such interest is not prescribed as a qualification for that office, he should forthwith divest himself of that interest, secure his removal from the duties in question, or obtain the authorisation of his superior or colleagues to continue to discharge the duties.
- An office-holder should not use information obtained in the course of official duties to gain directly or indirectly a pecuniary advantage for himself or for any other person.
- An office-holder should not:
- solicit or accept from any person any remuneration or benefit for the discharge of the duties of his office over and above the official remuneration;
- solicit or accept any benefit, advantage or promise of future advantage, whether for himself, his immediate family or any business concern or trust with which he is associated from persons who are in, or seek to be in, any contractual or special relationship with government;
- except as may be permitted under the rules applicable to his office, accept any gift, hospitality or concessional travel offered in connection with the discharge of the duties of his office.
- An office-holder should be scrupulous in his use of public property and services, and should not permit their misuse by other persons.
- An office-holder should not allow the pursuit of his private interest to interfere with the proper discharge of his public duties.
The inclusion of the Code of Conduct in the PS Act in 1999 reinforced the principles underlying the Bowen code.
In addition to public servants, s. 14 of the PS Act states that certain statutory office holders must also comply with the Code of Conduct.
Declaration of interests
Principles and background
The Code of Conduct at s13 of the Public Service Act 1999 requires that an APS employee must:
- behave honestly and with integrity in the course of APS employment;
- disclose, and take reasonable steps to avoid, any conflict of interest (real or apparent) in connection with APS employment;
- not make improper use of (a) inside information, or (b) the employee's duties, status, power or authority, in order to gain, or seek to gain, a benefit or advantage for the employee or for any other person.
The requirement to be aware of and to avoid or manage real and perceived conflicts of interest applies to all APS employees. Agencies should have procedures in place that:
- help all employees to understand the importance of avoiding real and apparent conflicts of interest in public employment;
- require all employees to notify managers about private interests, both financial and personal, where they could present a real or apparent conflict with their official duties;
- provide guidance to managers and employees on strategies and good practice in avoiding or managing conflicts of interest.
The origins of the declarations policy
While all APS staff are required by the Code of Conduct to behave with integrity and to avoid or manage conflicts of interest in their employment, agency heads and SES employees are subject to a specific regime that requires them to submit, at least annually, a written declaration of their, and their immediate family’s financial and other interests, that could involve a real or apparent conflict of interest.
The requirement to submit a declaration of interest arose from a decision in 1983 by the then government. This decision required all Ministers, Senators and Members of Parliament to submit an annual written declaration of their private interests as well as those of their immediate family – spouse and dependent children. The then government also decided that senior public servants, statutory office holders, senior staff of statutory authorities and all ministerial staff would be required to furnish a statement of their private interests similar to the public statement required by parliamentarians.
The purpose of the declaration
The purpose of the declaration is to ensure that heads of agencies are aware of any private interests or relationships of APS employees in leadership or other sensitive positions which could or could be seen to influence the decisions the employees are taking or the advice they are giving. These could include personal interests and relationships that could involve real or potential conflicts of interest in terms of the employee’s responsibilities. The completion of a declaration of interests also provides employees with the opportunity to consider whether any of their financial or personal interests might give rise to a real or perceived conflict with their duties and take action to remove or minimise the potential for that to occur.
Declarations of interests and security clearances
Agencies may apply security clearance requirements to jobs that deal with sensitive information and issues. The security vetting process may require employees to provide information on their personal financial and other interests that could make them vulnerable to outside pressure.
While there may be some overlap between the personal information collected as part of a security vetting and the personal information required to be declared under the declarations policy, the purpose of the security vetting process is to identify personal circumstances or relationships that could make an employee vulnerable to improper influence or otherwise compromise an employee’s integrity or ability to manage sensitive information.
Who is required to make a declaration?
Because of their leadership and decision-making roles, all agency heads and all SES employees, including those acting in SES jobs for longer than three months, are covered by the declarations of interests policy.
Many agencies will also have staff at non-SES levels whose responsibilities also require them to be particularly transparent about their private financial and personal interests. Agencies may also have professional staff who, while not specifically SES employees, are at similar levels and have similar decision making responsibilities.
Where practicable, agencies should also apply the declarations policy to these types of employees.
The extent to which the policy is applied to non SES employees in each agency will depend on assessments of the sensitivity of the work, the administrative and resource implications and the risks involved. It is important to remember that all employees are required to identify and manage conflicts of interest, irrespective of whether they are required to make a declaration.
Given the agency head’s responsibilities for managing his/her agency’s declarations process, it will be important that he/she has some ongoing control over the application of the policy to individual positions. It should therefore be the responsibility of the agency head to decide those non SES positions to which the declarations requirements should apply.
If this is not practicable in a large agency, then the approval process could be delegated to a senior employee, for example a Deputy Secretary, the Head of Corporate Services or an Area or State Manager, who would keep the agency head informed.
What should be covered in the declaration
There is no standard list of items that must be included in a declaration. Rather, it is the responsibility of employees to whom the declaration policy applies to consider and declare those private interests or relationships that could or could be seen to impact upon the decisions they are taking or the advice they are giving.
Factors to be taken into account in considering what to disclose include:
- the particular roles and responsibilities of the employee’s agency and its probity concerns;
- the particular roles and responsibilities of the employee.
Examples of organisations and situations where transparency and openness about private and personal financial interests are particularly important include:
- agencies, organisations and positions undertaking an investigatory or regulatory role;
- agencies, organisations and positions that allocate contracts or disperse Australian Government funds;
- agencies, organisations and positions that are responsible for the protection and management of sensitive policy, commercial or personal information.
The types of interests and relationships that may need to be disclosed include:
- real estate investments;
- trusts or nominee companies;
- company directorships or partnerships;
- other significant sources of income;
- paid, unpaid or voluntary outside employment
that could or could be seen to impact upon the employee’s responsibilities.
On the other hand, ownership of personal assets such as a personal or family home, works of art, jewellery, furniture, antiques etc are most unlikely to have any real or perceived impact on an employee’s responsibilities and would not normally need to be declared, since their possession is unlikely to involve a conflict of interest or any other threat to an employee’s probity, except in the case of people working in these fields.
Outside employment and declarations
The APS has policies on paid or unpaid outside employment that apply to all APS staff and which are set out in detail in Chapter 13: Outside employment. The basic principle underlying these policies is that employees should be able to take up paid or unpaid employment outside the APS, provided that it does not conflict with or adversely affect their duties. Agencies are required to have processes in place to manage outside employment, and most agencies require employees to seek permission to engage in outside employment.
Requests to engage in outside employment by employees covered by the declarations policy should normally be handled through these processes, although agencies would need to take into account the particular sensitivities of the employee’s work in considering whether to approve the request. Even when outside employment has been approved, it should still be disclosed in the declaration if it could or could be seen to impact upon work responsibilities.
While APS employees are not normally required to seek permission to undertake unpaid voluntary work, voluntary and community groups could have interests or aims in relation to APS policy development or programme implementation. In such situations, unpaid or voluntary outside employment can present the same potential for conflict of interest as paid outside employment and should be treated with the same level of importance as paid outside employment. Employees should disclose voluntary work or associations that could or could be seen to impact upon their work responsibilities.
Employees may have family or other personal relationships with people engaged in activities that could have an interest in issues the employee is dealing with. Examples could include media, lobbyists or people who have business dealings with their agency. APS employees are, of course, perfectly entitled to have such relationships, but staff covered by the declarations policy should be open about them. They should therefore disclose the names and activities of family and other personal relationships that could or could be seen to impact upon the employee’s responsibilities.
Agency head responsibilities
While it is the responsibility of employees to declare personal and private interests, it is the responsibility of the agency head to ensure that any conflict of interest or other threat to the integrity of the agency that is identified in the declarations is avoided or effectively managed.
This means that he/she will need to be appropriately aware of the contents of employee declarations.
In agencies with a large number of SES employees and/or those agencies where the declarations policy has been extended to non-SES employees in sensitive positions, it may not be logistically possible for the agency head to assess, review and retain every declaration. In these cases, the agency head may decide to put in place systems that give primary responsibility for reviewing and holding declarations to senior SES level staff, for example a Deputy Secretary, the Head of Corporate Services or an Area or State Manager.
Such systems and processes will need to:
- ensure the confidentiality of the declarations;
- bring any serious real or apparent conflicts of interest to the attention of the agency head.
How often should the declaration be made?
The declaration will remain relevant only if it is monitored and updated on an ongoing basis.
SES and other employees who are covered by the declarations policy are responsible for reviewing and where necessary revising and resubmitting their declarations whenever:
- there is a change in their responsibilities or in the issue or subjects on which they are required to make decisions or give advice;
- there is a change in their personal circumstances that could impact upon the decisions the employees are taking or the advice they are giving.
Agencies should have systems in place that encourage and support an ongoing declarations policy.
All SES employees and all other employees to whom the agency head decides the declarations policy should apply are required to submit a declaration of interests at least annually.
Declarations by the agency head
Declarations made by agency heads are usually submitted to the Minister. If the statement discloses a conflict, the Minister and the agency head must take steps to resolve the conflict.
Interests of immediate family members
The term ‘immediate family members’ applies to spouses and dependent children. Employees, as part of their disclosure responsibilities will agree that they will declare any private interests or relationships of their immediate family that they are aware of, where circumstances arise in which they consider that these interests could or could be seen to influence the decisions they are taking or the advice they are giving.
It would be necessary in those circumstances for the agency to obtain the family member’s direct consent to the disclosure in a manner that is consistent with the requirements of the Information Privacy Principles contained in the Privacy Act 1988. These requirements could be covered by the family member signing a notice to the declaration of their relevant interests as follows:
I am aware that my information has been collected for the purpose of identifying personal and other interests that could or could be seen to influence the decisions that the employee covered by the declarations policy is taking or the advice he/she is giving. I am aware of the Privacy Principles set out in the Privacy Act 1988 which authorise the collection and the third parties to whom my personal information may be disclosed. I consent to the collection of my personal information by (the relevant agency).
If consent was not given, then the employee should discuss with his/her agency head, in general terms, that he/she believes that there is an actual or potential sensitivity. The agency head can then decide what action may need to be taken.
The Declarations template can to be used by APS agencies as a basis for employee declarations. Agencies may add to or adapt the template to meet their particular requirements.
A similar format should be used for declarations by agency heads to their Ministers.
The template also contains a consent form for immediate family members should a declaration of their interests be considered necessary.
Conflicts with financial interests
Financial interests may cover such things as directorships, shareholdings, real estate or trusts, which have the potential to conflict with official duties. Examples of this type of conflict are where:
- an APS employee is the director of a family company that may be affected by policy changes being considered in his or her work area
- an APS employee may be assessing tenders from companies in which they or a relative have an interest.
Conflicts with personal interests
Personal and other interests may include personal relationships such as sporting, social or cultural activities as well as family, sexual or other relationships. Examples of where personal or other interests may conflict with official duties are where:
- an APS employee is in a position to assess grants to a community group to which they belong
- an APS employee in a selection panel has a personal relationship with an applicant for the position.
In carrying out their duties, APS employees should not allow themselves to be improperly influenced by family or personal relationships. Situations may arise where a decision has to be made and that decision would directly affect a person who has a relationship with the decision maker. In these cases APS employees should declare the conflict and should refer the matter to their manager who should be asked to make the decision on the merits of the case.
In the case of a personal relationship within a work group, it may be desirable for one party to move to another work area. While it is not uncommon or wrong for couples or other family members to be working in the same agency, it is not usually appropriate for one to have any line responsibility over another. Despite the sensitivities involved, it is also important that other staff feel able to raise with more senior managers any concerns about perceptions of conflict of interest resulting from family members working in the one agency.
Using information or position
APS employees must not improperly use information or their position to gain personally or benefit any other person (Code of Conduct s. 13(10)). For example, APS employees should not use information obtained at work to speculate on the share-market. Where APS employees feel there may be an opportunity to benefit from information that they have access to at work, they should discuss the issue with their manager or another suitable person in the agency.
Boards and committees
Government boards and committees play an important strategic role in providing leadership, direction and accountability across the public sector. There are many types of government boards and committees including:
- boards of public trading enterprises
- boards of statutory authorities
- policy coordination committees
- research committees
- registration boards
- appeal boards
- public trusts
- advisory committees.
Government boards and committees have four main purposes:
- to guide and direct an organisation
- to determine, monitor and regulate practices, grant licences and investigate complaints
- to coordinate policies, plans or projects across portfolios
- to advise and make recommendations to ministers and agencies about government programmes and policies.
APS employees are sometimes required to serve on government boards and committees.
Some APS employees working in departments such as Health and Ageing or Broadband, Communications and the Digital Economy, may serve on boards of Commonwealth entities established in their portfolio. Employees serving on boards should be aware of the potential for conflicts of duty, leading to conflicts of interest. For example, a conflict of duty may arise where an employee is involved in purchasing services from an entity, and that employee also sits on the board of the entity. A conflict of interest may follow if the employee's performance is in part measured by the successful outcome of that purchasing arrangement.
Frequently employees serving on boards will do so as a direct result of their responsibilities within the department, and this may involve inherent conflicts of interest or duty that need to be managed. Departments and boards should establish processes to deal with such situations. This might involve, for example, the employee absenting from certain discussions and decisions. Real or apparent conflicts need to be declared and openly discussed by board members. If the board cannot resolve the issue satisfactorily, the matter may need to be raised with the relevant Minister.
The potential also exists for conflicts of interest or duty in committees established by agencies, particularly where a Minister appoints the chair and/or members and the committee can significantly influence decisions.
It is important for agencies to establish procedures to alert committee members to the need to identify and avoid conflicts of interest. This may include committee members providing written declarations of interests that relate to activities of the committee, and making conflicts of interest a standing agenda item for committee meetings.
Members of selection teams will often know one or more applicants. Where a selection team member has a relationship with an applicant that might give rise to a conflict of interest, it should be declared to the chair and any other selection team members (or to the delegate and other selection team members if the chair is making the declaration). It should then be decided whether the selection team member should stand aside from the process or the consideration of the particular candidate.
If a selection team member needs to provide referee comments on an applicant, this can usually be managed by the member providing the comments before accessing information on other applicants, and making other committee members aware of the particular circumstances.
28 Available at www.apsc.gov.au/ethics