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CONFLICT OF INTEREST

The Code of Conduct requires that an APS employee must disclose, and take reasonable steps to avoid, any conflict of interest (real or apparent) in connection with APS employment (s. 13(7) of the PS Act) and that an APS employee must not make improper use of inside information or 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 (s. 13(10) of the PS Act). Agencies have a responsibility to ensure that APS employees are aware of the circumstances in which their private interests, both financial and personal, could conflict with their official duties, and the procedures in place to support them in avoiding or managing such conflicts of interest. Agencies also have a responsibility for defining and communicating their expectations of ethical behaviour to non-APS employees.

POLICIES AND PROCEDURES FOR APS EMPLOYEES

Overall, the agency survey found a slight improvement in agencies’ support for employees’ handling of their conflict of interest obligations compared to 2002—03. Learning and development activities relating to conflict of interest provided to particular groups of employees are being provided in a larger proportion of relevant agencies (48% in 2003—04 versus 38% in 2002—03), and this is consistent with agency forecasts of development in this area in 2002—03.

It is government policy that Ministers, ministerial employees, senior public servants (including those working in statutory authorities), and statutory office holders provide written statements of their private interests. The percentage of relevant agencies requiring written statements of interests from their SES employees has risen from 75% to 80%. The proportion of all agencies with policies and procedures in place, apart from the APS Values and Code of Conduct, on the acceptance of gifts and benefits, including hospitality, remained stable at 84%.

The Review of the Corporate Governance of Statutory Authorities and Office Holders by Mr John Uhrig AC, commissioned by the Government and presented to the Prime Minister and the Minister for Finance and Administration in June 2003, has given prominence to the scope for conflict of interest where APS employees sit as representatives on boards or committees. In particular the report cites the potential for these employees to be primarily concerned with the interests of those they represent, rather than the success of the entity they are responsible for governing.⁸ The progressive implementation of the recommendations of the Uhrig report accepted by Government should remove some of the more intractable of these conflicts for employees sitting on the boards of statutory authorities. However, this is an area in which APS employees will need to continue to exercise considerable care in identifying, declaring and managing conflicts of interest (and conflicts of duty). In 2003—04 56% of agencies had procedures for alerting employees who sit on boards or committees of the need to declare and manage any conflict of interest, up from 49% in 2002—03.

The issue of possible conflict of interest also attracted public interest in the case of Professor David Flint, the then Chairman of the Australian Broadcasting Authority (ABA). Following media scrutiny, the Chairman expressed his regret to the Board of the Authority for not disclosing correspondence he had had with Mr Alan Jones, a Sydney talk-back radio host, before matters concerning Mr Jones came before the Board (these matters themselves related to allegations of conflict of interest within the radio industry, and of failure to declare interests). He also stood aside from some subsequent deliberations by the Board.

Professor Flint, as Chairman of the ABA, was an agency head under the PS Act, and was therefore bound by the APS Code of Conduct (s. 14) and required to uphold and promote the APS Values (s. 12). As the PS Commissioner’s functions include inquiry into alleged breaches of the Code by agency heads, the Commissioner wrote to the Minister for Communications, Information Technology and the Arts drawing attention to the relevant provisions of the PS Act. In light of the Board’s actions, and the pending completion of Professor Flint’s term of office, and in the absence of a formal request to undertake an inquiry, the Commissioner advised the Minister that he had decided not to initiate an inquiry at that stage.

The case nonetheless highlights the importance of all agency heads, including in particular those appointed from outside the APS, appreciating their legal obligations under the PS Act. There may be a role here for portfolio secretaries to ensure new agency heads receive appropriate induction support.

POLICIES AND PROCEDURES FOR NON-APS EMPLOYEES

Non-public servants are increasingly providing services to public sector agencies and government services to the general public, on behalf of APS agencies. The Commonwealth Procurement Guidelines specify that officials, departments and agencies are answerable and accountable for any plans, actions and outcomes that involve spending public money. Agencies are expected to include provisions in tender documentation and contracts that alert prospective providers to the public accountability requirements of the Commonwealth.

When establishing relationships with providers, agencies need to consider how the Values and Code might be relevant, and how they will be promoted and compliance monitored. Generally, the Values and Code are particularly relevant where contractors are delivering services to the public on behalf of the APS. In addition, since December 2001 each agency has been required, when entering into a contract on behalf of the Commonwealth, to ensure that the contract does not authorise an act or engage in a practice that would breach the Information Privacy Principles.

In 2003—04, 77% of agencies reported defining and communicating to non-public servants the agency’s expectations that they would behave in accordance with the relevant APS Values and Code of Conduct. Of these, 75% did this through information set out in tender documentation; 78% reported using general clauses in contracts referring to the APS Values and Code of Conduct; and 25% reported including specific contractual clauses regarding only relevant aspects of the Values and Code. Twenty-two per cent of relevant agencies reported using non-contractual arrangements such as briefing sessions, protocols and training.

POLICIES AND PROCEDURES AFFECTING BOTH APS EMPLOYEES AND NON-APS EMPLOYEES

Agencies are also expected to make sure that contractors are aware that APS employees are bound by the APS Values and Code of Conduct, and that contractors should not place public servants in a position where their impartiality or professionalism may be compromised. In particular, any action that would give rise to a real or apparent conflict of interest on the part of the agency decision maker must be avoided.

One means of minimising conflicts of interest around contracting out is to develop and promote agency policies, procedures or guidelines to deal with the issue of avoiding conflict of interest when taking up employment after leaving the APS. In 2002—03, 30% of relevant agencies had such arrangements in place. In 2003—04, the proportion rose to 44%. The use of contractual restrictions on the employment of key participants in the tender process by successful tenderers fell from 52% of relevant agencies in 2002—03 to 44% in 2003—04, with some large agencies that reported having such contract provisions in 2002—03 now reporting that they are being developed. Forty-five per cent of agencies reported having policies (other than the contractual provisions above) for employees involved in market testing and contracting out processes to manage conflicts of interest–up marginally from 43% the previous year.

8 Uhrig, J, Review of the Corporate Governance of Statutory Authorities and Office Holders, Report to the Prime Minister and Minister for Finance and Administration, June 2003, p. 43, <http://www.finance.gov.au>