The dangers of codifying a conflict of interest

By Simon Longstaff

A version of this article was first published: The Australian Financial Review - 16 October 1996

In an ideal world we would not need a proliferation of formal codes governing the behaviour of our elected representatives. Our politicians would be trusted to act with integrity, placing self-interest behind that of the duty always to act in the public interest.

Unfortunately, we do not live in an ideal world. Instead, there is widespread cynicism about the ethical standards of our elected representatives and the practice of politics in general. Somewhat paradoxically, a majority of citizens seem to believe they have elected people who naturally tend to the belief that the end justifies any means, including lying, cheating and so on.

This is unfortunate because, properly understood, politics is a noble calling – its defining purpose being to make a good society. Men and women who take up this responsibility should be honoured. The whole system depends on their making decisions on our behalf, as people whose independent judgement we trust. The Prime Minister, Mr Howard, probably had this in mind when he drafted his Ministerial Code and told the people of Australia that the election of a Coalition Government would usher in a new era of probity.

The hallmarks of Mr Howard's vision for the future of federal politics seemed to be accountability, ministerial responsibility and transparency. Responding to a fairly broad sense that the web of influence spun by the previous government had biased judgement of how government patronage should be distributed, the Prime Minister set in place practical measures designed to correct both the reality and the perception of behaviour.

Among the provisions of the code is a requirement that ministers divest themselves of any interest that might generate a conflict (or a possible impression of a conflict) concern personal interest and publicity. The Prime Minister clearly intended that the cost of holding power would include the acceptance of measures limiting the normal property rights and interests of those who choose to accept a position in the ministry.

This may seem harsh – especially when most conflicts of interest can be resolved by declaring them and obtaining the approval of the affected parties to continue to act. Mr Howard has used his code to establish a fairly absolute set of standards, showing how seriously he saw the problem.

No one is compelled to put themselves forward for election to Parliament, nor to accept the offer of a ministry. Given the early promulgation of Mr Howard's Ministerial Code, one assumes that the decision to accept power was made knowing the obligations that would have to be met.

It is therefore surprising that the incidents involving Senator Short were handled so inappropriately. It might be that Mr Howard's failure to secure an immediate resignation was motivated by a genuine sense of compassion. However, the more compassionate response would have been to have Senator Short act, and be seen to act, with the highest standards of integrity from the outset. Instead, there will always be a lingering doubt (whether justified or not) over Senator Short's failure to resign as soon as it became evident that the Ministerial Code had been breached.

Inadvertently perhaps, Mr Howard may have harmed the person he sought to help. He has damaged his own reputation and raised doubts about the level of his commitment to the standards he set out. Finally, he has damaged the public trust in government – the very thing that he sought correctly to bolster.

The case of Mr Costello is somewhat different. There seems to have been a breach of the code, but the relevant interest is held by Mrs Costello. She is not a mere appendage of her husband and should be treated with the respect she deserves in her right. This would seem to suggest a need for caution before concluding that her property necessarily influences the mind of the Treasurer. However, Mrs Costello also has independent obligations as a citizen.

The task of securing trust in government is not one for government alone. Every citizen has to play a role, so Mrs Costello has obligations of her own to consider. If her shareholding causes real damage to the polity, then she may have an independent obligation to help correct the situation.

The real world of hard cases demonstrates that the area of black and white solutions is narrow. Ultimately, ethical judgements must honour basic principles and values. Rules are of limited use, but to move beyond them requires trust – a commodity in short supply today. In an ideal world, the Prime Minister would not need his code.

Perhaps it is foolish to think an ideal world will ever be attained but, unfortunately, recent events may have made its achievement even more remote.