How Ministerial conflicts of interest were identified and managed in relation to Fast-track projects
The Auditor-General has decided to inquire into the systems and processes that help Ministers to identify and manage conflicts of interest, with a particular focus on Ministerial decisions about which projects to include in the Fast-track Approvals Bill. These terms of reference set out the background and scope for this work.
Background
A conflict of interest can arise where an individual’s responsibilities as an employee or office holder in a public organisation (including as a Minister of the Crown) are affected by some other interest in their private life. Conflicts of interest are common and do not present a problem if they are identified and managed well.
Ministers make a range of decisions about how to allocate public resources and, like other officials in the public sector, will have private interests that may conflict with their public roles.
The Cabinet Manual sets out expectations and processes for how Ministers should manage these conflicts of interest. These processes were updated in June 2023, and continue to evolve. The Cabinet Office plays a key role supporting the Prime Minister and working with Ministers to ensure that these processes operate effectively.
We set out in our Annual Plan 2024/25 that we would carry out work to look at how Ministerial conflicts of interest are managed.
On 6 October 2024, the Government announced a list of 149 projects that Cabinet had selected to include in the Fast-track Approvals Bill. We have decided to examine how any conflicts of interest were identified and managed by Ministers with support from the Cabinet Office when Ministers were making decisions about the projects recently announced for inclusion in the Fast-track Approvals Bill.
Why we are interested in this matter
New Zealand has one of the most trusted public sectors in the world, as recognised in reports from the OECD and Transparency International. Properly identifying and managing conflicts of interest is important to maintain trust and confidence in how public resources are used and to maintain our global reputation for transparency, accountability, and integrity.
It is crucial that there are appropriate systems and processes in place to support decision-makers to identify any relevant interests they might have, and to help them manage any conflicts that might arise. This is especially so when decisions are being made at the highest level of government (that is, by Ministers), or in relation to significant decisions about how public resources are used.
In circumstances such as this, it is important that there are systems to ensure that Ministers promptly identify all potential conflicts (including perceived conflicts) and take sufficient steps to appropriately manage them.
For these reasons, and the significant public interest in the Fast-track process, we have decided to carry out an inquiry.
The inquiry
The work will be conducted under section 18(1) of the Public Audit Act 2001. We will examine and report on the operation and implementation of systems and processes to support Ministers to identify and manage conflicts of interest in their decision-making.
In particular, we will examine how conflicts of interest were identified and managed in relation to Ministerial decisions about which projects to include in the Fast-track Approvals Bill.
Through our work we aim to gain a better understanding of, and provide assurance about, how well the existing systems to identify and manage conflicts of interest are understood and implemented, including:
- what systems and processes are in place to help Ministers identify and manage potential conflicts of interest;
- how well those systems and processes operated in practice when selecting projects for inclusion in the Fast-track Approvals Bill;
- whether there are any areas of potential improvement to the existing systems and processes, and what those improvements might be; and
- any other related matter that the Auditor-General considers it desirable to report on.
The focus of the inquiry is to gain a better understanding of, and provide assurance about, the overall systems and processes in place.
We will not examine or comment on policy decisions underpinning the Fast-track process, or the merits of individual projects or the decisions to include an individual project in the Fast-track Approvals Bill.
We will not make any public comment while our work is under way. We intend to publish a report once we have completed the inquiry.