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Public Service Act 1999—Report, dated 7 August 2018, of inquiries by the Merit Protection Commissioner under section 50(1)(b) of the Act to the Presiding Officers into alleged breaches of the code of conduct by the Australian Public Service Commissioner received on 11 January and 4 June 2018, and attachments


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Report of the Results of Inquiries by the Merit Protection Commissioner under Section 50(1)(b) of the Public Service Act 1999 to the Presiding Officers into Alleged Breaches of the Code of Conduct by the Australian Public Service Commissioner received on 11 January and 4 June 2018

TABLE OF CONTENTS

LETTER ............................................................................................................................ 1

REPORT ............................................................................................................................ 2

INTRODUCTION ................................................................................................................. 2

THE FIRST COMPLAINT (COMPLAINT NO. 1) ...................................................................... 2

THE SECOND COMPLAINT (COMPLAINT NO. 2) .................................................................. 2

CONDUCT AND REPORTING OF THE INQUIRIES ................................................................... 3

PROFESSOR MCMILLAN’S REPORTS AND OPINIONS .......................................................... 3

MY CONSIDERATION OF PROFESSOR MCMILLAN’S REPORTS AND OPINIONS..................... 4 MY CONSIDERATION OF MR LLOYD’S FURTHER SUBMISSIONS.......................................... 4

SUBMISSIONS THAT IT WOULD NOT BE A LAWFUL EXERCISE OF MY POWER TO CONCLUDE THAT MR LLOYD HAD BREACHED THE APS CODE OF CONDUCT ................................. 5

Denial of procedural fairness ..................................................................... 5

Bias ............................................................................................................. 9

Functus officio .......................................................................................... 10

Failure to have regard to a relevant consideration .................................. 10

Irrelevant consideration taken into account ............................................. 11

SUBMISSIONS THAT I SHOULD NOT CONCLUDE THAT MR LLOYD HAD BREACHED S13(11) OF THE APS CODE OF CONDUCT................................................................ 11

MY FINDINGS IN RELATION TO COMPLAINTS AGAINST MR LLOYD .................................. 12 COMPLAINT NO. 1 ................................................................................................... 12

COMPLAINT NO. 2 ................................................................................................... 14

NO RECOMMENDATION ON SANCTION ............................................................................. 15

ATTACHMENTS ........................................................................................................... 16

ATTACHMENT A - THE FIRST COMPLAINT ...................................................................... 16

ATTACHMENT B - MR JOHN LLOYD’S 13 APRIL 2015 EMAIL TO MR JOHN ROSKAM AND ATTACHMENT ................................................................................................................. 19

ATTACHMENT C - THE SECOND COMPLAINT .................................................................. 33

ATTACHMENT D - MR JOHN MCMILLAN’S REPORT NO 1 .............................................. 38

ATTACHMENT E - MR JOHN MCMILLAN’S REPORT NO 2 .............................................. 62

ATTACHMENT F - MS WAUGH’S PRELIMINARY VIEW LETTER TO MR LLOYD ................ 75 ATTACHMENT G - MR LLOYD’S RESPONSE TO MS WAUGH’S PRELIMINARY VIEW ........ 78 ATTACHMENT H - MR DAVIDSON’S LETTER TO MR LLOYD ON DECISION TO COMMENCE

AN INQUIRY AND STATEMENT OF REASONS 14 JUNE 2018 ............................................... 95

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The Hon. Mr Smith, MP Senator the Hon. Scott Ryan

Speaker of the House of Representatives President of the Senate

Dear Presiding Officers

I am pleased to provide you with my report on the results of two inquiries conducted under section 50(1)(b) of the Public Service Act 1999.

Yours sincerely

Linda Waugh Merit Protection Commissioner 7 August 2018

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INTRODUCTION This is my report on the result of two inquiries conducted under section 50(1)(b) of the Public Service Act 1999 (the ‘Public Service Act’). This function is:

…to inquire into alleged breaches of the Code of Conduct by the Commissioner and report to the Presiding Officers on the results of such enquiries (including, where relevant, recommendations for sanctions);

Note: Commissioner means the Australian Public Service Commissioner appointed under the Public Service Act.

The inquiries arose from two complaints briefly summarised below.

THE FIRST COMPLAINT (COMPLAINT NO. 1) The first complaint was received by my office on 11 January 2018. It was referred from the Department of the Prime Minister and Cabinet (who had received it on 13 December 2017). This complaint (Attachment A) concerned an email sent from Mr John Lloyd, the Australian Public Service Commissioner to Mr John Roskam, Executive Director of the Institute of Public Affairs (IPA) on 13 April 2015 with the subject title “Examples of generous arrangements in Commonwealth enterprise agreements”. Mr Lloyd attached to that email a thirteen page Australian Public Service Commission (APSC) document titled “Examples of ‘Soft’ Arrangements in Commonwealth Enterprise Agreements” (this email and attachment referred hereafter as the APSC Document are Attachment B).

The complainant essentially alleged Mr Lloyd, who had previously been employed by the IPA and remains a current member (at the time of this writing), had caused the production of the APSC Document for the purpose of an article to be later produced by the IPA, and that it was inappropriate for Mr Lloyd to have provided the APSC Document to the IPA.

The complainant alleged that Mr Lloyd’s actions amounted to:

 a breach of subsections 13(1), (7), (8), (10) and (11) of the APS Code of Conduct1

 a contravention of ss 26, 27, 28 and 29 of the Public Governance, Performance and

Accountability Act 2013

 an offence under section 142.2 of the Criminal Code 1995.

THE SECOND COMPLAINT (COMPLAINT NO. 2) The second complaint was received directly by my office on 3 June 2018. This complaint (Attachment C) concerned an email Mr Lloyd sent to Mr Roskam on 24 October 2017. The previous day (23 October 2017) Mr Lloyd had given evidence at a public hearing before the Finance and Public Administration Legislation Committee (Senate Estimates). Some of that questioning related to email exchanges, including the one referenced in the first complaint.

1 The APS Code of Conduct is contained in section 13 of the Public Service Act.

2

The email Mr Lloyd sent to Mr Roskam on 24 October 2017 had the subject title “PR for IPA” and Mr Lloyd wrote “More publicity for the IPA, including page 1 of Canberra Times, thanks to ALP questioning in Estimates yesterday”. The Canberra Times article Mr Lloyd referred to was “Public sector head defends IPA link”.2

The complainant alleged that it was a breach of subsections 13(1), 13(4), 13(7), 13(8), 13(10) and 13(11) of the APS Code of Conduct for Mr Lloyd to have sent the email.

CONDUCT AND REPORTING OF THE INQUIRIES In relation to both complaints the then Acting Merit Protection Commissioner (Acting MPC) determined that an inquiry should be undertaken.

Section 49(3) permits the Merit Protection Commissioner (MPC) to engage consultants to assist in the performance of the Merit Protection Commissioner’s functions. Professor John McMillan AO was appointed to conduct the inquiry in relation to the first complaint on 18 June 2018 and to conduct the inquiry in relation to the second complaint on 10 July 2018.

Professor McMillan submitted his completed reports on 31 July 2018:

 Report No 1 to Merit Protection Commissioner: Inquiry under s 50(1)(b) of the Public Service Act

1999 concerning the Australian Public Service Commissioner (the complete report is Attachment

D). This report concerns the first complaint.

 Report No 2 to Merit Protection Commissioner: Inquiry under s 50(1)(b) of the Public Service Act

1999 concerning the Australian Public Service Commissioner (the complete report is Attachment

E). This report concerns the second complaint.

In each report Professor McMillan sets out the background and scope of the inquiry, the evidence taken, his analysis of the evidence and his consideration of each complaint allegation. In relation to each allegation Professor McMillan provided his opinion as to whether Mr Lloyd’s actions breached or contravened the APS Code of Conduct. As both reports are attached, the detail and content is not replicated here.

PROFESSOR MCMILLAN’S REPORTS AND OPINIONS In Report No. 1, Professor McMillan concluded, based on the evidence that the allegation that Mr Lloyd has failed to uphold the APS Values and the good reputation of the APSC and the APS by his action of providing the APSC Document to the IPA on 13 April 2015 to be sustained, and constituted a breach of s 13(11) of the APS Code of Conduct. Professor McMillan found no other allegation to be sustained.

In Report No. 2, Professor McMillan concluded that none of the allegations were sustained. Professor McMillan commented that the action of Mr Lloyd in emailing Mr Roskam on 24 October 2017 was ill- advised but that the content of that email did not reach the threshold of crossing an ethical boundary and displaying a lack of integrity.

2 Canberra Times, Public sector head defends IPA Link, 24 October 2017.

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Both reports which contain Professor McMillan’s opinions on what could be concluded or found, have been provided to assist me in the performance of my functions. They do not represent my conclusions and findings on the allegations made against Mr Lloyd however it is open to me accept or adopt the opinions given by Professor McMillan if I agree with them after considering for myself all the available evidence. Alternatively I may reject any or all of those opinions and findings, or make different findings and conclusions based on the evidence and in consideration of submissions I receive. It is only my findings and conclusions as the Merit Protection Commissioner that have standing.

MY CONSIDERATION OF PROFESSOR MCMILLAN’S REPORTS AND OPINIONS I carefully reviewed the reports Professor McMillan provided to me on 31 July 2018 as well as other relevant evidence and information. I also gave careful consideration to Mr Lloyd’s written submission to Professor McMillan on draft Report No. 1 received on 30 July 2017 (which is contained in the Appendix of Report No. 1). Mr Lloyd submitted that once Professor McMillan had concluded that the APSC Document was created for APSC purposes, the inquiry could not examine any alleged breaches of the APS Code of Conduct relating to the provision of the APSC Document. Mr Lloyd’s position was that the decision contained in the Statement of Reasons (see attachment H) given by the then Acting MPC to commence the inquiry limited my inquiry to the question of whether the APSC Document was created for the sole purpose of providing it to the IPA. Mr Lloyd also made submissions that Professor McMillan’s suggestions of options for alternative ways to manage the IPA request were unacceptable, made submissions rejecting a comment by Professor McMillan that the language in the APSC Document may incite strong opposition by others, and submitted that the APSC Document would have been provided to any person or entity who asked for it.

After my initial review of both reports, Mr Lloyd’s submission to Professor McMillan on the draft reports (see Appendix of Report No. 1), and the evidence and materials, I formed a preliminary view that Mr Lloyd had breached s 13(11) of the APS Code of Conduct in relation to the first allegation by failing to behave in a way which upheld the APS Values and good reputation of the APSC and the APS. Accordingly I wrote to Mr Lloyd on 1 August 2018 informing him of my preliminary view, my reasons for forming that preliminary view, and responding to aspects of Mr Lloyd’s submission to Professor McMillan on the draft report. I advised Mr Lloyd that in my view my inquiry was not limited in the way he argued. I set out my response to the other matters and invited Mr Lloyd to make further additional submissions by 9:00am Friday 3 August 2018 (that letter is attachment F).

MY CONSIDERATION OF MR LLOYD’S FURTHER SUBMISSIONS On 2 August Mr Lloyd provided his further submissions (attachment G). They relate to Report No. 1 only and fall into two broad categories:

 submissions that it would not be a lawful exercise of my power to conclude that Mr Lloyd had

breached s 13(11) in the particular circumstances

 submissions that I should not conclude on the merits that Mr Lloyd had breached s 13(11) of the

APS Code of Conduct.

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Submissions that it would not be a lawful exercise of my power to conclude that Mr Lloyd had breached the APS Code of Conduct

Mr Lloyd has made five submissions that ground his argument that it would not be a lawful exercise of my power to find that he has breached the APS code of conduct. Below are my considerations of each of those submissions.

Denial of procedural fairness

Mr Lloyd contended that he had been denied procedural fairness because the way in which the allegations had been put to him by the Acting MPC on 14 June 2018 denied him an opportunity to properly present his case in respect of the allegation which was the subject of my preliminary finding (that Mr Lloyd had breached the APS Code of Conduct in relation to the management of the release of the APSC Document to the IPA as per my letter of 1 August 2018).

The power conferred on my position by s 50(1)(b) of the Public Service Act to inquire into alleged breaches of the Code of Conduct by the APS Commissioner and report to the Presiding Officers on the results of such an enquiry must be exercised in accordance with administrative law principles. Consequently I must ensure that the requirements to ensure procedural fairness have been afforded to Mr Lloyd. Where procedural fairness does apply to the taking of a decision (as it does here), what is required to satisfy the obligations of procedural fairness depends on the circumstances of the case including the nature of the inquiry, the subject matter and the rules under which the decision maker is acting.3 It is necessary then, to set the details and the circumstances of this case, and my considerations of those and the question of whether or not Mr Lloyd has been denied procedural fairness.

Mr Lloyd’s claim was premised on the following sequence of events.

Date Event

14 June 2018

The Acting MPC notified his decision to commence an inquiry under s 50(1 )(b) of the Public Service Act (attachment H). In his Statement of Reasons for that decision the Acting MPC accepted that the complaint raised two discrete allegations, first that Mr Lloyd had used APS resources to create the APSC Document for the sole purpose of providing it to the IPA, and second, that it was improper for Mr Lloyd to have provided the APSC Document to the IPA. The Acting MPC stated (emphasis added):

[23] In these circumstances I consider the Commissioner's assertion that provision of the Document by him to the IPA was consistent with, and authorised by (at least), the function conferred on him by paragraph 41 (2)(b) is correct. This does not necessarily answer the allegation that the provision of the Document by the Commissioner was a conflict of interest. But once I am satisfied (as I am) that provision of the Document to the IPA was consistent with the Commissioner's functions I would be very slow to conclude that he had failed to appropriately manage a conflict of interest (merely) by providing the Document to the IPA in circumstances where none of its contents were confidential and most of the information it contained was publicly available through other sources.

[24] But this does not answer the separate allegation that the Commissioner used the resources of the APSC to create the Document for the sole purpose of providing it to the

3 Kioa v West (1985) 159 CLR 550 (at 584).

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Date Event

IPA. ... in my view if the allegation that the Commissioner caused APSC resources to be used to create the Document for the sole purpose of having it provided to a think tank of which he was a member was established this would raise a real question about [whether the APS Commissioner had complied with the Code of Conduct].

The Acting MPC's Statement of Reasons recorded his decision to commence an inquiry under s 50(1 )(b) in the following terms:

On 14 June 2018 I decided pursuant to s 50(1 )(b) of the Public Service Act 1999 (PS Act) to inquire into the following alleged breaches of the Code of Conduct by the Australian Public Service Commissioner (the Commissioner):

Whether the Commissioner used the resources of the Australian Public Service Commission (APSC) to create a document which set out contents of various public service enterprise agreements and an analysis of that content for the sole purpose of providing it to the Institute of Public Affairs (of which he was a member), thereby:

[particulars of possible breaches of s 13(1 ), (7), (8) and (11) were set out]

22 June 2018

Professor McMillan wrote to Mr Lloyd to advise he had been engaged by the Acting MPC:

…to assist him in an inquiry that he had commenced under s 50(1)(b) of the Public Service Act 1999. The terms of the inquiry were notified to you by the Acting Commissioner in a letter dated 14 June 2018 (and are attached to this letter). In substance, it is an inquiry into a complaint that was referred to the Acting Commissioner, alleging that you had breached the Australian Public Service Code of Conduct.

Attached to the letter was a document headed "Terms of inquiry commenced by the Merit Protection Commissioner (Acting)" which reproduced the statement from the 14 June letter which is set out above.

12 July 2018

Mr Lloyd attended an interview with Professor McMillan. At the commencement of the interview Professor McMillan asked Mr Lloyd to confirm that he had received and was familiar with the 22 June 2018 letter and Mr Lloyd confirmed that he had done so.

Professor McMillan then described the approach he would take during the interview in terms of which included the following statement:

Then I'll go specifically to the email that has been a focus of this inquiry, namely an email sent on the 13th of April 2015 to an Institute of Public Affairs officer. I'll ask you a number of questions about the document that was attached. And then sort of really at the end I'll ask you a number of questions about criticisms that have been made of your conduct and how you respond to those criticism, ...4

Professor McMillan put the following questions to Mr Lloyd during the interview:

If I could just ask you some questions about providing this to the IPA. One possible comment is that given your association with the IPA, you could have directed the inquiry to another

4 Transcript, p. 2-3, 12 July 2018

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Date Event

source, for example arranged for the media section or directed the enquiry to the Minister's office. Do you want to comment on that?

How do you respond to the criticism that it was unwise for you to deal directly with the IPA on a contentious issue given that you were a former IPA officer?

Now, two months prior to providing this your links to the IPA had been the subject of questioning at an estimates meeting on the 23rd of February and also in a doorstop interview the following day with Senator Wong in which there was a reference to your links to the IPA. So, again, I suppose a similar question. How do you respond to the criticism that your links to the IPA having been raised as a contentious issue, it was unwise of you as Commissioner to deal directly with them in providing information?

Sort of standing back from that John, one might say that given that setting it was unwise to maintain contact of this kind with the - or to respond to an IPA request in this way because it would add fuel to the criticism that your partisan political appointment was anti-union. How do you respond to that?

One of the criticisms - and I'll get your response to it - is that your conduct sets a standard for all public servants, and so if you provide information directly to an organisation active in the debate, then it is open to any public servant to respond directly to similar requests rather than for example have the response go through a different institutional channel. How do you respond to that?

And, one form of the criticism was that you were servicing a lobby group hostile to public service roles and conditions. How do you respond to that?

And, finally on that one, another form of criticism is that the response displayed partisanship in public office, bearing in mind that you are the statutory officeholder, the Public Service Commissioner with the responsibilities of independence and partiality that is displayed - and responding in this way displayed partisanship? 5

Toward the end of the interview the following exchange occurred:

Mr McMillan: Yes I have the complaint here. I haven't gone into the complaint because I've worked on the premise that the Acting Commissioner reframed what he was going to investigate. So, that's the complaint there, but for my purposes it was the way Mark Davidson has defined the reference of the inquiry.

Mr Lloyd: I think Mark Davidson's sort of coming down to the fact if you -the preparation of the documents was the key issue. I certainly hadn't done it on purpose, and he wasn't convinced on that. I had the complaint with some notes on it. I'd just like to look at that before - so many things here.6

25 July 2018

Professor McMillan provided a copy of his draft report to Mr Lloyd for comment. The cover letter included a statement that the draft report "contains my view that one of the five complaint allegations that I was investigating should be sustained. This was an allegation that you failed to uphold APS values and the good reputation of your agency and the Australian Public Service in providing a document to the Institute of Public Affairs on 13 April 2015".

5 Transcript, p. 22-27, 12 July 2018 6 Transcript, p. 38, 12 July 2018.

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Date Event

30 July 2018

Mr Lloyd provided his response to Professor McMillan's draft report. Paragraphs 1-12 of the response made submissions that Professor McMillan's finding lay outside the scope of the inquiry he was asked to conduct, and that the Mr Lloyd had participated in the inquiry with the understanding that the inquiry was not considering his provision of the Document to the IPA.

Professor McMillan finalised his report, and concluded that Mr Lloyd failed to uphold the APS Values and the good reputation of his agency and the APS in providing the APSC Document to the IPA. This report and the Report No.2 were provided to me.

Mr Lloyd received a copy of the transcription of the 12 July 2018 interview.

1 August 2018 I wrote to Mr Lloyd providing him with notice of my preliminary finding that he had breached s 13(11) of the Code of Conduct by failing to uphold the APS Values and the

good reputation of his agency in providing the IPA the APSC Document in an email to the Executive Director of IPA on 13 April 2015 following a private telephone discussion between the two of them. I advised Mr Lloyd that my preliminary view was that the way in which he provided the information in issue to the IPA amounted to a failure by him to uphold the “Ethical” value and the good reputation of the APS and the APSC because it would likely be viewed by critics as a strategic and controversial initiative by him to build a coalition of support for his views, and as a political action that was at odds with APS Values. I invited Mr Lloyd to make any further submission to me by 9.00am on Friday 3 August 2018 in respect of my preliminary finding, before I made a final decision.

2 August 2018 Mr Lloyd provided me with a submission in response to my preliminary finding.

In summary Mr Lloyd claimed he had been denied procedural fairness because:

 He was led to believe by the terms of the Acting MPC's letter of 14 June 2018 that any inquiry

would only be into whether he had breached the Code of Conduct by creating the document,

and would not be into whether he had breached the Code of Conduct by providing the APSC

Document to the IPA.

 That belief was reinforced by the content of Professor McMillan's correspondence to him of 22

June 2018.

 He answered questions at the interview on 12 July 2018 about criticisms of his decision to

provide the APSC Document to the IPA on the understanding that these questions were directed

at testing his evidence about the creation of the APSC Document and was not on notice at that

time that the inquiry would consider whether he had breached the Code of Conduct by

providing the document to the IPA.

 He first learned that the inquiry was considering whether he had breached the Code of Conduct

by providing the document to the IPA on 25 July 2018, when he received Professor McMillan's

letter of that day enclosing his draft report.

 He was not provided with the transcript of his interview on 12 July 2018 until 30 July 2018.

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 In these circumstances the deadlines imposed on him to respond to the proposed finding that

he had breached the Code of Conduct by providing the APSC Document to the IPA have been

manifestly unfair.

On a close reading of the letter of 14 June 2018 from the Acting MPC, it does not assure Mr Lloyd that the inquiry would be confined to the allegation about the creation of the APSC Document. Similarly a reasonable inference arises from the questions Professor McMillan asked Mr Lloyd in the interview of 12 July 2018 that he was considering Mr Lloyd’s conduct in providing the APSC Document to the IPA. Nevertheless, I do consider it was reasonable for Mr Lloyd to have understood from the 14 June letter and the 22 June letter that the inquiry was confined to issues concerning the creation of the APSC Document. Professor McMillan’s comment at the 12 July 2018 interview that he was working on the premise of how the Acting MPC had defined the reference of the inquiry may have also given reassurance of any view Mr Lloyd already held that the inquiry was limited to the creation of the APSC Document.

Upon receipt of draft report No. 1 on 25 July 2018, Mr Lloyd was however on notice that his conduct in providing the APSC Document was an issue in the inquiry. Therefore I must turn my mind as to whether the opportunity that has been provided to Mr Lloyd to address this issue meets the requirements of procedural fairness.

Mr Lloyd was given two opportunities to respond to this particular issue, firstly by Professor McMillan’s invitation of 25 July 2018 to do so, and secondly by my invitation of 1 August 2018 to do so. What I must consider is whether these timeframes provided a reasonable opportunity to Mr Lloyd to present his case (including that he be given notice of the matters which I may take into account and an opportunity to respond which is reasonable in all the circumstances). While the timeframes for Mr Lloyd to respond have been shorter than I would have preferred, I do consider that they were sufficient for Mr Lloyd to present his case on the particular matter and that he has been provided with procedural fairness in respect of this issue.

Bias

Mr Lloyd submitted that my inquiry has been affected by doubts about Professor McMillan’s ability to bring an impartial and independent mind to his investigation. Mr Lloyd refers to three newspaper articles (which are attached to Mr Lloyd’s submission dated 2 August 2018 - see Attachment G). These articles discuss comments made by Professor McMillan, two of which merely discuss a comment made by Professor McMillan in the third article. The comment was made by Professor McMillan in an interview he gave to the Guardian newspaper on 30 September 2015 and was in the following terms:

I think it’s terrible that the head of treasury and the head of the public service commission feel comfortable in speaking out and saying FOI has gone too far, without having to explain what is meant by its gone too far," he said.

You get all these mists thrown around, about you can't have (a) frank briefing at senior levels. FOI protects any document that needs protection. The exemptions are quite adequate to protect any document, and the IC review decisions made it plain.

Professor McMillan’s statement criticised that the APS Commissioner (who was Mr Lloyd) and another senior official had made certain statements about the FOI regime without specifying reasons or

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arguments for those statements. That matter was unrelated to the scope of Professor McMillan’s inquiry and I do not believe a reasonably informed bystander would have doubt about Professor McMillan’s ability to bring an impartial mind to his inquiry as a result of this comment. I formed this view (as did the Acting MPC) when Professor McMillan reported this comment in the first instance (with the Acting MPC on his engagement and with myself when I commenced in the role).

More importantly however, it is the Merit Protection Commissioner (and not a consultant engaged to assist the MPC) who has the power to decide under s 50(1)(b) of the Public Service Act whether the APS Commissioner has breached the Code of Conduct. My letter of 1 August 2018 demonstrated that I had brought an independent mind to my assessment of Professor McMillan’s reasoning and reached my own preliminary view about whether Mr Lloyd may have breached the Code of Conduct.

Functus officio

Mr Lloyd contended that because the Acting MPC decided not to inquire under s 50(1)(b) of the Public Service Act into whether Mr Lloyd had breached the Code of Conduct by providing the APSC Document to the IPA I am now functus officio in respect of that allegation and are now precluded from taking any further action under s 50(1)(b) in respect of that allegation. I do not accept that such a decision was made by the Acting MPC but even if it is correct that the Acting MPC had made such a decision there is no basis for the suggestion that anything in s 50(1)(b) precludes me from revisiting that decision and making a different decision.

Failure to have regard to a relevant consideration

Mr Lloyd submitted that I have failed to take into account the fact that the Acting MPC had already decided not to inquire into the allegation that he had breached the Code of Conduct by providing the APSC Document to the IPA. A relevant consideration is one that a decision maker is bound by the statute to take into account in making their decision. There is no basis in s 50(1)(b) from which it could be inferred that I am are required to take into account the consideration given to this question by my predecessor in exercising the power under that provision. In any event, I have had regard to the views of the Acting MPC in his Statement of Reasons dated 14 June 2018. I accept (as the Acting MPC did) that the provision of the APSC Document by Mr Lloyd to the IPA was consistent with, and authorised by (at least), the function conferred on him by paragraph 41(2)(b) of the Public Service Act. I also accept (as the Acting MPC did) that this finding does not necessarily answer the allegation that the provision of the APSC Document by Mr Lloyd was a conflict of interest. The Acting MPC considered he would be slow to conclude that Mr Lloyd had failed to appropriately manage a conflict of interest (merely) by providing the APSC Document to the IPA in circumstances where none of its contents were confidential and most of the information it contained was publicly available through other sources. I am still however required to consider whether Mr Lloyd failed to behave in a way which upheld the APS values and the integrity and good reputation of the APS and the APSC by doing so. The question of whether a conflict of interest arose in these circumstances is one of the issues which arises for consideration in that context but it is not necessarily the only matter which is relevant to my consideration of whether Mr Lloyd has failed to behave in a way which upheld the APS Values and the integrity and good reputation of the APS and the APSC.

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Irrelevant consideration taken into account

Mr Lloyd submitted that I have taken an irrelevant consideration into account by taking into account the views of Professor McMillan that he had breached the Code of Conduct by providing the APSC Document to the IPA. This submission appeared to be based on the proposition that, given the scope of the inquiry set by the Acting MPC, any views of Professor McMillan about the provision of the APSC Document to the IPA were outside the terms of his engagement. Even if it is accepted that this was so (which I do not), this does not establish that Professor McMillan’s views were an irrelevant consideration which I was precluded by s 50(1)(b) (or otherwise) from taking into account. I do not consider this submission to have merit.

Submissions that I should not conclude that Mr Lloyd had breached s 13(11) of the APS Code of Conduct

Mr Lloyd made only brief submissions about the merit of my preliminary decision that he had breached the Code of Conduct by providing the APSC Document to the IPA. These include (along with my considerations):

 Mr Lloyd submitted it would be unworkable and fanciful to erect "a new test of previous or

current links" which could preclude an APS employee from providing information. I understand

this submission to be to the effect that a finding that the APS Commissioner had failed to uphold

the APS Values and the integrity and good reputation of the APS and his agency by providing the

APSC Document to the IPA would necessarily impose a standard on all APS employees that they

could never provide information (including non-confidential information) to any person or body

with whom they had "previous or current links". I believe this mischaracterises what I had put in

my letter to Mr Lloyd of 1 August 2018 which pointed to specific circumstances in relation to the

particular matter:

o Mr Lloyd was a current member of the IPA and was previously employed with the IPA

o those links had previously been raised in a Senate Estimates Committee hearing that

occurred two months after the Mr Lloyd’s appointment as APS Commissioner

o the content of the information in the APSC Document was potential contentious to

some.

 In my view, these circumstances made it highly likely, viewed objectively, that Mr Lloyd’s actions

in providing the APSC Document to the IPA himself, would fan controversy if they became

publicly known. That direct private provision of the APSC Document to the IPA involved a clear

attendant risk of potential consequences for Mr Lloyd’s position in upholding the APS Values

and for protecting the good reputation of the APSC and the APS (if it became publicly known

which it did in 2017). Those potential consequences could have been otherwise mitigated.

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 Mr Lloyd submitted that Professor McMillan's suggestion that he could have had the APSC

Document sought and provided through the framework of the FOl Act misunderstands the way

information is treated and provided to those outside government, and that the FOl process

involves a significant regulatory burden that his provision of a direct response to the IPA

avoided. It is true that Professor McMillan's suggestion that the FOl framework might have been

used was in some sense a bureaucratic one. On the other hand the suggestion was expressly

premised on the particular circumstances, which included Mr Lloyd's position as an Agency

Head, his prior and current association with the body that was requesting the APSC Document,

and the highly political environment to which the request related, and in which his actions

would be seen. I do not consider it necessary for me to form the view that any request of

government should be treated in this way, I do however accept the proposition that it would

have been prudent in the particular circumstances for Mr Lloyd to have so acted, or that his

failure, in those circumstances, to take this step or another satisfactory alternative course was a

breach of the Code of Conduct. Other alternatives which were available to Mr Lloyd included

directing the request for the APSC Document to another senior executive to manage or

publishing the APSC Document on the APSC website so that its’ existence and content were

known and accessible to all individuals and organisations with an interest in the subject matter.

 Finally Mr Lloyd submitted that judgments about the specific language used in the APSC

document and its impact conveyed a lack of understanding of the "tough" workplace relations

bargaining environment. Mr Lloyd appears to contend that the workplace bargaining

environment was so highly charged that any statement or comment he made would be criticised

and opposed. While this statement may be (at least to some degree) correct it is not obvious

that it helps to explain his failure to then take the actions suggested by Professor McMillan or

myself. These factors submitted by Mr Lloyd underline the rationale for firstly recognising and

then ensuring that the IPA's request for the document was handled in a more transparent and

fair manner.

MY FINDINGS IN RELATION TO THE COMPLAINTS AGAINST MR LLOYD

Complaint No. 1

The first complaint concerns the preparation and provision of an APSC Document entitled “Examples of “Soft” Arrangements in Commonwealth Enterprise Agreements”. The complainant alleged that the APSC Document was researched and prepared by APSC staff at the direction of Mr Lloyd. The complainant stated that the production of the APSC Document followed a phone call between Mr Lloyd and an IPA staff member. The complainant also stated that the APSC Document was not made publicly available and was prepared for the sole use and benefit of the IPA. The complainant stated that in response to being provided with the internal APSC Document by Mr Lloyd, the IPA thanked Mr Lloyd stating the document was “very handy”. The complainant stated that the document was subsequently used by the

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IPA for a later article and a submission to a Government Inquiry into the impact of the Government’s Workplace Bargaining Policy and approach to Commonwealth public sector bargaining. The complainant stated that in both instances the IPA quoted sections of the APSC Document but did not acknowledge the APSC Document as the source.

The complainant alleged that Mr Lloyd’s actions amounted to:

 a breach of subsections 13(1), (7), (8), (10) and (11) of the APS Code of Conduct7

 a contravention of ss 26, 27, 28 and 29 of the Public Governance, Performance and

Accountability Act 2013

 an offence under section 142.2 of the Criminal Code 1995.

This inquiry was concerned with five allegations arising from the first complaint:

1. Whether Mr Lloyd used the resources of the APSC to create a document for the sole purpose of providing that document to an external organisation of which he was a member, namely the IPA

2. Whether, in creating such a document or providing it to the IPA, Mr Lloyd failed to act honestly and with integrity, in breach of the APS Code of Conduct (s 13(1))

3. Whether, in creating such a document or providing it to the IPA, Mr Lloyd failed to take all reasonable steps to avoid a conflict of interest, in breach of the APS Code of Conduct (s 13(7))

4. Whether, in creating such a document or providing it to the IPA, Mr Lloyd failed to use Commonwealth resources in a proper manner and for a proper purpose, in breach of the APS Code of Conduct (s 13 (8))

5. Whether, in creating such a document or providing it to the IPA, Mr Lloyd failed to uphold APS values and the integrity and good reputation of the APSC and the APS, in breach of the APS Code of Conduct (s 13(11)).

In relation to the preparation of the APSC Document, the evidence indicated that the creation of the APSC Document was instigated by Mr Lloyd for his purposes as the APS Commissioner and more than two months prior to his telephone discussion with an IPA staff member on or around 13 April 2015 (after which the APSC Document was emailed by Mr Lloyd to Mr Roskam). The above allegations as they apply to the creation of the APSC Document are not sustained.

In relation to the provision of the APSC Document by Mr Lloyd to the IPA by email on 13 April 2015, allegations one to four are not sustained. There is no evidence that Mr Lloyd’s action was dishonest, was indicative of a lack of integrity or a misuse of Commonwealth resources. It could be argued that Mr Lloyd’s action of providing the APSC Document to the IPA could fall within section 13(7) (a failure to take reasonable steps to avoid a real or apparent conflict of interest), I am not satisfied that there was, in fact, a conflict of interest given the duties Mr Lloyd has as an Agency Head with a wide discretion to conduct the affairs of his agency and to advance public debate on agency matters. This allegation is not sustained. While I have found that there were actions Mr Lloyd could have taken that would have minimised any perception of a conflict of interest, I consider that those actions bear more greatly on his

7 The APS Code of Conduct is contained in section 13 of the Public Service Act.

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obligation to uphold the APS Values (in particular the Ethical Value) and the good reputation of the APSC and the APS.

In considering allegation five as it applies the provision of the APSC Document to the IPA by Mr Lloyd, I have had regard to standards set out in relevant APSC policy and procedure documents. In the “Values and Code of Conduct In Practice” the Ethical Value includes that an “APS employees should act in a way that models and promotes the highest standard of ethical behaviour”.8 In the “Handling Misconduct: a human resource managers guide” the guide states that s 13(11) places “a positive obligation on APS employees to behave in a way that maintains confidence in their ability to serve the Government of the day professionally and does not undermine public confidence in their agency or the APS”.9 The guide goes on to state that “because this element of the Code places a positive obligation on employees, it is not necessary to establish actual damage to the reputation of the agency or the APS in order to find this section of the Code has been breached”.10

The fifth allegation that Mr Lloyd, by providing the APSC Document to the IPA, failed to uphold the APS Values and the good reputation of his agency and the APS is sustained. I find that Mr Lloyd’s actions breached section 13(11) of the APS Code of Conduct as described above and in Professor McMillan’s Report (No. 1). In particular, my view is that the way in which Mr Lloyd provided the information in issue to the IPA amounted to a failure by him to uphold the APS Values (in particular the Ethical Value) and the good reputation of the APSC and the APS because it would likely be viewed by critics as a strategic and controversial initiative by Mr Lloyd to build a coalition of support for his views, and as a political action. There were alternative courses available to Mr Lloyd to mitigate those negative views, but Mr Lloyd did not choose to do this despite clear indications that the direct provision of an APSC document on this particular topic would fan controversy for both himself, the APSC and the public service had it became publicly known as it subsequently did. I do not consider this action to be driven by dishonesty or a lack of integrity but rather a failure to recognise the clear attendant risks of potential consequences for his position in upholding the APS Values and for protecting the good reputation of the APSC and the APS.

Complaint No. 2

The second complaint concerned an email Mr Lloyd sent to Mr Roskam of the IPA on 24 October 2017. The previous day (23 October 2017) Mr Lloyd had given evidence at a public hearing before the Finance and Public Administration Legislation Committee (Senate Estimates). Some of that questioning related to email exchanges, including the one referenced in the first complaint.

The email Mr Lloyd sent to Mr Roskam on 24 October 2017 had the subject title “PR for IPA” and Mr Lloyd wrote “More publicity for the IPA, including page 1 of Canberra Times, thanks to ALP questioning in Estimates yesterday”. The Canberra Times article Mr Lloyd referred to was “Public sector head defends IPA link”.11

8 APSC, Values and Code of Conduct in Practice, p. 7, paragraph 1.2.8. 9 APSC, Handling Misconduct: a human resource manager guide, p. 120, paragraph 2.50. 10

APSC, Handling Misconduct: a human resource manager guide, p. 120, paragraph 2.51. 11 Canberra Times, Public sector head defends IPA Link, 24 October 2017.

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The complainant alleged that in sending this email to the IPA on 24 October 2017 from his APSC email, Mr Lloyd had breached sections 13(1), 13(4), 13(7), 13(8), 13(10) and 13(11) of the APS Code of Conduct. I do not find any of these allegations to be sustained. The comment made by Mr Lloyd does not reach the threshold of amounting to extreme criticism, personal attack or inflammatory commentary.

NO RECOMMENDATION ON SANCTION Section 50(1)(b) of the Public Service Act requires me to report to the Presiding Officers on the results of my inquiries, including, where relevant, recommendations for sanctions. I have formed the view that the only action which can be taken in respect of a finding that the APS Commissioner has breached the APS Code of Conduct that might meet the description of a sanction in section 50(1)(b) is that contained in section 47 of the Public Service Act(removal from office on the ground of misbehaviour). Despite my finding that Mr Lloyd has breached the APS Code of Conduct, I do not regard this breach as being of sufficient gravity to warrant the making of any recommendation that a sanction be imposed (irrespective of Mr Lloyd’s imminent departure from his position).

Linda Waugh

Merit Protection Commissioner

7 August 2018

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