Factsheets · Energy & Climate

NAIF board members: managing conflicts of interest

04 April, 2017

EDO Qld's latest community legal factsheet outlines the management of conflict of interest issues in the Board of the Northern Australia Infrastructure Facility (NAIF).

This Factsheet is for general information purposes only, it is not legal advice. Important legal details have been omitted to provide a brief overview of this area of the law. If you require legal advice relating to your particular circumstances contact EDO or your solicitor.  © EDO (Qld) This factsheet is current as at 4 April 2017 

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Key points

While there are limited provisions in the NAIF Act applicable to conflicts of interest in regards to Board members, the Public Governance, Performance and Accountability Act 2013 (PGPA Act) applies to NAIF and imposes duties which include:

  • not improperly using their position to gain advantage for themselves or any other person;
  • disclosing details of any material personal interest that relates to the affairs of the entity, subject to the Rules; and;

If a Board member contravenes those duties, the Minister may terminate their appointment, however the Minister’s power is discretionary.

 

Contents

  1. Does the NAIF Act or relevant policy provide any measures to address conflicts of interest?
  2. Can a NAIF board member be removed for a matter relating to a conflict of interest?

 

1.  Does the NAIF Act or relevant policy provide any measures to address conflicts of interest?

Legislative overview of the Northern Australian Infrastructure Facility.

The Northern Australian Infrastructure Facility Act 2016 (Cth) (The NAIF Act) was enacted to establish the Northern Australian Infrastructure Facility (NAIF),[1] and for related purposes. 

The NAIF Act has limited provisions for dealing with conflicts of interest. In particular it prevents:

    a) Full-time CEOs from engaging in outside work without the Chair’s approval; and

    b) Part-time CEOs from engaging in any work which conflicts with the performances of their duties.[2]

The NAIF Act also empowers the Minister to terminate an appointment of a Board member for the following:

    c) misbehaviour; or

    d) if the member is unable to perform the duties of his or her office because of physical or mental incapacity; or

    e) if the Minister is satisfied that the member’s performance has been unsatisfactory.[3]

The NAIF Act itself (and publicly available subordinate instruments[4] and policies under it) do not provide further measures to address conflicts of interest.

However, the Public Governance, Performance and Accountability Act 2013 (PGPA Act) creates the following general duties of officials of ‘Commonwealth entities’ in Subdivision A of Division 3 of Part 2-2:

25  Duty of care and diligence

    (1)     An official of a Commonwealth entity must exercise his or her powers, perform his or her functions and discharge his or her duties with the degree of care and diligence that a reasonable person would exercise if the person:

          (a)  were an official of a Commonwealth entity in the Commonwealth entity’s circumstances; and

          (b)  occupied the position held by, and had the same responsibilities within the Commonwealth entity as, the official.

    (2) The rules may prescribe circumstances in which the requirements of subsection (1) are taken to be met.

26  Duty to act honestly, in good faith and for a proper purpose

An official of a Commonwealth entity must exercise his or her powers, perform his or her functions and discharge his or her duties honestly, in good faith and for a proper purpose.

27  Duty in relation to use of position

An official of a Commonwealth entity must not improperly use his or her position:

    (a)  to gain, or seek to gain, a benefit or an advantage for himself or herself or any other person; or

    (b)  to cause, or seek to cause, detriment to the entity, the Commonwealth or any other person.

28  Duty in relation to use of information

    (1) An official of a Commonwealth entity who has a material personal interest that relates to the affairs of the entity must disclose details of the interest.

    (2) The rules may do the following:

          (a) prescribe circumstances in which subsection (1) does not apply;

          (b) prescribe how and when an interest must be disclosed;

          (c) prescribe the consequences of disclosing an interest (for example, that the official must not participate at a meeting about a matter or vote on the matter).

29  Duty to disclose interests

    (1) An official of a Commonwealth entity who has a material personal interest that relates to the affairs of the entity must disclose details of the interest.

    (2) The rules may do the following:

(a) prescribe circumstances in which subsection (1) does not apply;

(b) prescribe how and when an interest must be disclosed;

(c) prescribe the consequences of disclosing an interest (for example, that the official must not participate at a meeting about a matter or vote on the matter).”

‘Commonwealth entity’ is defined in s 10 to include “a body corporate established by a law of the Commonwealth”.[5]

Pursuant to s 6(2)(a) of the NAIF Act (a law of the Commonwealth), NAIF is a body corporate, therefore NAIF is a Commonwealth entity to which section 27 and 29 of the PGPA Act applies.

Accordingly ‘an official’ of NAIF must comply with the obligations in ss 25-29 of the PGPA Act, including disclosing personal interests and not using their position for personal gain.

An official of a Commonwealth entity is defined in s 13 of the PGPA Act to include:

    (a) a person who is, or is a member of, the accountable authority of the entity; or

    (b) a person who is an officer, employee or member of the entity; or

    (c) a person, or a person in a class, prescribed by an Act or the rules to be an official of the entity.

The ‘accountable authority’, for body corporates such as the NAIF is defined in s 12 of the PGPA Act as “the governing body of the entity, unless otherwise prescribed by an Act or the rules”.

‘Rules’ are defined in s 8 to be those made under s 101 of the PGPA Act by Finance Minister and relevantly include the Public Governance, Performance and Accountability PGPA Rule 2014 (the Rules).  Those rules do not make any particular prescription for NAIF.

Accordingly, a person who is a member of ‘the governing body’ of NAIF is ‘an official’ for the purposes of ss 25-29 of the PGPA Act.

In our view it is tolerably clear that the board of the NAIF is the governing body such that a member of the board is ‘an official’ to which ss 25-29 of the PGPA Act apply.

 

2.  Can a NAIF board member be removed for a matter relating to a conflict of interest?

Conflicts of Interest and NAIF Board Members

Pursuant to section 30 of the PGPA Act, an ‘appointer’ may terminate the appointment of another person (the appointee) to a position in a corporate Commonwealth entity if:

    a) the appointer holds the position that is responsible for appointing the appointee; and

    b) the appointee is, or is a member of, the accountable authority of the entity; and

    c) the appointee contravenes ss 25-29 of the PGPA Act[6]in relation to the entity; and

    d) the termination is in accordance with any requirements prescribed by the rules.[7]

Under the NAIF Act the Minister is responsible for appointing members of the board.[8]; Accordingly the Minister is the ‘appointer’ responsible for board members and may terminate their position if they contravene their obligations under ss 25-29 the PGPA Act.

Therefore, under the PGPA Act Board members of NAIF may be terminated by the Minister for using their position to gain a personal advantage or fail to disclose any material personal interests that relate to the body’s affairs.[9]


[1] NAIF Act, s 6(1). 

[2] NAIF Act, s 34. 

[3] NAIF Act, s 21(1). 

[4] For example the Northern Australia Infrastructure Facility Investment Mandate Direction 2016. 

[5] PGPA Act, s 10(1)(d); see also s8. 

[6] Note that Subdivision A includes ss25-29 of the PGPA Act. 

[7] PGPA Act, s 30. 

[8] PGPA Act, s 15(1). 

[9] PGPA Act, s 27, 29.