10.4.4 Conflicts of interest, predetermination and bias

1. The general rule

   • It is a general rule of law that all council decision-makers should make decisions for a proper purpose, unaffected by personal interests. This principle gives rise to the rules about conflicts of interest and bias. 

   • A decision-maker should not participate in a decision in which they might have a financial or non-financial conflict of interest.

     i) For elected members, the rules about conflicts of interest are contained in the Code of Conduct for Elected Members, the relevant standing orders for the decision-making body they are on, and (for financial interests only) the Local Authorities Members Interest Act 1968. They are also found in general public law. Guidance on these rules can be found in the Office of the Auditor-General’s Guidance for members of local authorities about the Local Authorities Members Interest Act 1968.
     ii) For other decision-makers, the rules about conflicts of interest are derived from general public law, the council’s policies and any specific requirements of the legislation under which they make a decision. Guidance about the general principles can be found in the Office of the Auditor-General’s Managing conflicts of interest: Guidance for public entities.

   • Conflicts of interest are natural and unavoidable; they will inevitably arise from time to time in a country as small as New Zealand. The important thing is to manage them effectively.

   • Public perception is important when managing conflicts of interest. Decision-makers should ensure their decisions are unaffected by personal interests and that it appears that way to reasonable members of the public. This protects the integrity and reputation of the council as a decision-maker.

   • For this reason, potential conflicts of interest should be looked at from the point of view of the informed, fair-minded observer. In assessing conflicts of interest, the overarching question is [1]: 

   • Would a fair-minded observer reasonably think the decision-maker might not bring an impartial mind to the relevant decision? That is, the decision-maker might unfairly regard with favour or disfavour a particular view because of his/her interest?

2. Types of interest

   • The council groups interests into two categories [2]:

     i) A financial conflict of interest is one where a decision or act of the governing body or local board could reasonably give rise to an expectation of financial gain or loss to an elected member and is not in common with the public.
     ii) A non-financial conflict of interest does not have a direct personal financial component. It may arise, for example, from a personal relationship or involvement with a non-profit organisation, or from conduct that indicates prejudice or predetermination. 

3.  Predetermination and statements by decision-makers

   • Predetermination is a special type of interest and may arise when a decision-maker makes comments that suggest he/she made up his/her mind prior to considering all relevant views or consideration.

   • All public decision-makers should be careful when commenting on decisions, before and after they are made.

   • Any public statements that suggest the decision-maker made up his/her mind in advance, or took into account something they should not have, may lead to allegations of predetermination or bias.

   • The strictness with which these principles are applied depends on the context.

     i) When making quasi-judicial decisions, decision-makers are required to meet a higher standard of impartiality and objectivity.  (Generally, regulatory decisions are more likely to be quasi-judicial decisions.)
     ii) In other contexts, e.g. when elected members are making policy decisions, it will normally be more acceptable for the decision-maker to express a preliminary view in public and even express strong personal views about the matter [3]. (Generally, non-regulatory decisions are more likely to be policy decisions.)

   • Elected members should not criticise governing body or local board decisions in council-funded communications [4]. Elected members and staff should also avoid publicly criticising decisions made by staff, especially when such criticism may reflect on the employee’s competency [5]. Concerns of this nature should be raised with the chief executive.

 

 

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