More regulation puts future safety at risk

Rodney Hide

HIDESIGHT

There is no doubt the government will make precisely the wrong policy choice in the wake of Pike River.

Governments always do. The cry will be “It must never happen again!” Legislation will be drafted and passed. Worthy speeches will be made. People will believe, finally, that something has been done. There will be much backslapping.

And then disaster will repeat. There is an inevitable cycle to failed policy. And ever-more regulation is a failed policy.

But ever-increasing regulation is hard-wired into the DNA of New Zealand politics. It’s not the default position in response to any problem, it’s the only position. The only debate is about how much and what type.

The Royal Commission is clear: Pike River Coal directors, management and, indeed, miners, put profit ahead of safety. And the regulator, the Department of Labour, didn’t do its job.

The evidence, analysis and conclusions are unassailable. The bare facts speak for themselves. The fault is the resulting policy prescription: it doesn’t fix the problem identified.

Ticking the boxes

The department failed to enforce existing regulations. More regulations won’t improve bureaucratic performance. It will make it worse.

More regulation makes it harder for a department to tick all the boxes. And businesses and civil servants become more and more preoccupied with form filling and box ticking than ensuring safe workplace culture.

Proper process and ticking the boxes become the substitute for actually ensuring safety, and correct procedure followed the sure-fire excuse should anything go wrong.

We then have the “profits before safety” problem. More and more regulation doesn’t alter that basic equation. Safety is a cost, a constraint, an add-on to the business of business, the making of profit. More regulation doesn’t change that dynamic.

Imagine this. Imagine managers and directors were personally liable for accidents. Not strictly liable. But liable for negligence. The dynamic would change overnight.

The business would have to seek insurance. It would need to do so before the business even started.

An insurance company would do a far better job than the failed Department of Labour, or any other department for that matter, in ensuring the business was safe.

Best safety practice would be built into the business to ensure profits. Its very success and survival would depend on it.

It would no longer be “profits before safety”. It would be “safety to ensure profit”. Risky mines, risky ventures, risky practices would never get off the ground. They wouldn’t get the insurance necessary to start.

The argument against tort for negligence is that it’s the ambulance at the bottom of the hill – and depends on lengthy and expensive legal process following an accident. That’s true. And it’s a big negative.

Rearranging deck chairs

But the big plus is not the result should there be an accident but the incentive on everyone to ensure there isn’t an accident to begin with.

The problem at Pike River was that no one – workers, managers, directors, departmental heads and staff – was incentivised to ensure a safe workplace and safe work practice.

Regulation was a cost. And enforcing them a pain. For everyone.

That’s what needs to change. And all the regulation in the world won’t produce that change.

The Royal Commission recommends a standalone Crown agency to take responsibility for health and safety. That’s rearranging the deck chairs. It doesn’t change the problematic dynamic that caused the disaster.

The commission concluded, “Oversight of health and safety planning should start early in the life cycle of a mining project”. That’s absolutely right.

But seriously, is making a government-approved Health and Safety plan a requirement to applying for a mining permit the proper way of doing that? I doubt it.

We are going to get a new bureaucracy, further legislation, more red tape but no extra safety. Bank on it. It’s in our DNA.

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9 Comments & Questions

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Mr Hide your argument is compelling and fits so much of life in NZ. I was an early believer in ACC yet over the years when I realised that ACC had no interest (or at least I was able to hear of) in taking on the role of public prosecutor from the judiciary in bringing those responsible for death and injury to financial account to a level so utterly hard that it both covered the victim cost and helped top up the pool. Imagine if councils were removed from all building inspections, you could build anything you liked BUT by law it must be fully insured against all events both during construct and finish. Like you I suspect the insurance inspectors would prove far more diligent than those in quasi govt dept employee. Private enterprise would demand standards including employee quality and if you job was on the line then its a given the standard would be better. Pike River is a tragedy on so many levels and I fear you will be proven right ...again.

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Yes. The fines for lax practice are pitiful. It's a big jump, though, from nanny state to personal responsibility.

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The increased Financial regulations and oversight worked well for RAM investors......

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Yes. Further proof!

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ACC!!
AS far as I can recall ACC has never investigated the cause of an significant accident, nor prosecuted the offending party(ies). ACC is just another profit consuming form of tax, for which there is no real economic return.
The Act has been expanded to cover almost anything that can vaguely be called an accident; it has become a 'defacto welfare trough'. It even funded a sex change operation, gender is hardly an accident; although ther are no end of unplanned 'accidents' born every week, the result of irresponsibility and ignorance/ cauldn't care less attitude.
Such is also the general atitude to work safety, there is always ACC.
The only people who can actually determine what happened down the mine, and who/what caused the explosion, sadly for their families, have all perished.
There is more than one item of anecdotal information suggesting that workers ignored/ circumvented safety. It only requires one such incident; and on the day this may have been it

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Case from UK many years ago. Workman disconnected the safety fence on a large guillotine so he could work more easily. Result - loss of fingers. Management claimed that it was not their fault, as the worker had deliberately removed the safety device. The court ruled that it was indeed management's fault, as they had an absolute duty to protect their workers. Similar case in NZ a few years ago. The Huntly power station takes water from the Waikato for cooling, and feeds it back into the Waikato. Danger areas are signposted and barbed wire barriers exist to stop anyone approaching them along the banks. One or more small boys circumvented these and at least one drowned - courts found the company at fault. Doctrine of "attractive nuisance".

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From a director’s risk perspective: if your assets are in trust running an unsafe mine makes economic sense. If the mine fails, you stand to lose whatever nominal assets are yours, but if it succeeds you make an excellent return.

Although I am reluctant to criminalise commercial behaviour if you run a work place recklessly and people die that is the same morally as driving a car recklessly causing death.

In an unfettered free market, however, mine workers should be free to choose to work in an unsafe mine, free to join a union to pursue safety issues, and free to leave an unsafe mine.

What no one is saying is that the Royal Commission reports workers both knew of and contributed to the safety issues.

I did note, in support of Rodney’s view, that the commission says this:

“The closest to a review was an insurance risk survey conducted by Hawcroft Consulting International…The company’s health and safety management systems were rated as average or above, save in one respect – risk management.”

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That's it Rodney, get the 8 year olds back down the coal mines fanks guvner

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I agree with Rodney that Regulations without monitoring, compliance and enforcement is not worth a damn. However, what leads to this situation is often a lack of leadership, clear compliance policies (risk based) and funding. Policies are operational to the organisation but the leadership and funding clearly falls within the gambit of government ( governance). There is clear lack of governance skills in our finance companies, Pike river and dear I say Ministers in charge of our industrial safety and financial markets. So less regualation might work but only if there is better governance. Why are we devoid of leaders?

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