Conflict of Interest

The Code 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 Act)
• 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 Act).

Agencies have a responsibility to ensure that APS employees are aware of the circumstances in which conflict issues may arise and of how to resolve these issues. More commonly, conflict issues will arise where private interests, financial or personal, could conflict with official duties. Cases can also arise where employees have conflicting duties—particularly if an employee performs more than one role. Agencies must ensure employees are aware of 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 including service providers, consultants and people supplied by labour hire firms.

Public confidence in the integrity and impartiality of the APS may be jeopardised if the community perceives that actions of APS employees may have been influenced by conflicts of interest. While the desired course of action is to avoid conflict, this is not always practical and agencies also need to have processes to manage situations where a conflict of interest or duty arises.

Policies and procedures for APS employees

Overall, the agency survey found a significant improvement in agencies’ provision of support for employees in relation to their conflict of interest obligations. An increasing percentage of agencies (55%) are providing learning and development activities relating to conflict of interest to particular groups of employees—compared to 48% in 2003–04 and 38% in 2002–03. Agencies were not asked to identify the particular groups.

It is government policy that senior public servants (including those working in statutory authorities) and statutory office holders (as well as Ministers and ministerial employees) provide written statements of their private interests. The percentage of relevant agencies requiring written statements of interests from their SES employees has risen to 87% in 2004–05 from 80% in 2003–04 and 75% in 2002–03. The proportion of all agencies with specific policies and procedures in place on the acceptance of gifts and benefits, including hospitality, has also increased from 84% in the two previous surveys to 90%.

Last year’s report noted that the Review of the Corporate Governance of Statutory Authorities and Office Holders by John Uhrig (the Uhrig report)¹¹ had highlighted the scope for conflicts of duty to arise where APS employees sit as representatives on boards or committees. While the progressive implementation of the recommendations of the Uhrig report accepted by the Government should reduce the scope for such conflicts of duty for employees sitting on the boards of statutory authorities, APS employees must continue to exercise considerable care in identifying, declaring and managing conflicts of interest and conflicts of duty. Over the last three years, the proportion of agencies with procedures for alerting employees who sit on boards or committees of the need to declare and manage any conflict of interest, has continued to increase from around half to nearly three-quarters (49% in 2002–03 and 74% in 2004–05), with a further 7% of agencies currently developing measures in this area.

Policies and procedures for non-APS employees

Non-public servants are increasingly providing direct 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 involving the expenditure of public money. Agencies are expected to include provisions in tender documentation and contracts alerting prospective providers to the public accountability requirements of the Commonwealth.

The Values and the Code are particularly relevant where contractors are delivering services to the public on behalf of the APS. When establishing relationships with providers, agencies need to consider how the Values and the Code might be relevant, how they will be drawn to the attention of contractors (and their employees), and how compliance is to be monitored.

Since last year’s agency survey, there has been an increase from 77% to 85% in the percentage of agencies reporting and communicating to non-public servants the agency’s expectations that they would behave in accordance with the relevant Values and the Code. Of these agencies, 69% did this through information set out in tender documentation; 70% reported using general clauses in contracts referring to the Values and the Code; and 49% reported including specific contractual clauses regarding only relevant aspects of the Values and the Code. This year there has been a decline in agencies using information in tender documentation and including general clauses in contracts but a corresponding increase in the use of specific contractual clauses.

Twenty-four per cent of relevant agencies reported using non-contractual arrangements such as briefing sessions, protocols, the provision of information and training.

Policies and procedures for both APS employees and non-APS employees

As part of promoting the Values, agencies also need to ensure that contractors are aware that APS employees are bound by the Values and the Code, and that contractors do not place public servants in a position where their impartiality or professionalism may be compromised.¹² 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 in contracting out is to develop and promote agency policies dealing with the issue of avoiding conflict of interest when taking up employment after leaving the APS. Over the last three surveys, the proportion of agencies with such arrangements in place has increased from 30% to 48% with a further 15% of agencies reporting measures under development in 2004–05.

The use of contractual restrictions on the employment of key participants in the tender process by successful tenderers has risen to 50% of agencies. This follows a fall from 52% in 2002–03 to 44% in 2003–04. In 2004–05, there has been a large increase in the proportion of agencies reporting having policies (other than the contractual provisions above) for employees involved in market testing and contracting out processes to manage conflicts of interest from 45% to 60%.

11 J. Uhrig, Review of the Corporate Governance of Statutory Authorities and Office Holders, June 2003, <http://www.finance.gov.au/governancestructures/docs/The_Uhrig_Report_July_2003>

12 Australian Public Service Commission, APS Values and Code of Conduct in Practice: A Guide to Official Conduct for APS Employees and Agency Heads, 2003, <http://www.apsc.gov.au>

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