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Review of the Department of Labour's interactions with Pike River Coal Limited

 

The nature of the Department's regulatory role

Introduction

37. The nature of the Department's regulatory role is set out in the HSE Act, although the Department also has responsibilities under other legislation (see in particular the Hazardous Substances and New Organisms Act 1996 (HSNO)). The HSE Act covers all workers and all workplaces, including the mining industry (although the Crown Minerals Unit of the Ministry of Economic Development has responsibility for issuing coal mining permits). Two sets of mining-specific regulations have been promulgated under the Act: the HSE (Mining Administration) Regulations 1996 and the HSE (Mining - Underground) Regulations 1999. There are also explosives, HSNO and generic regulations with regard to hazardous machinery, controlling hazardous processes and general workplace regulations.

38. To appreciate the nature of the Department's responsibilities under the HSE Act it is helpful to have some understanding of the reasons why this legislation was enacted (section 2.2). The Act itself and the philosophy underpinning it are then described, in order to provide a better appreciation of why the Department takes a particular approach to its regulatory responsibilities (2.3). The Department's regulatory role extends beyond the Act to regulations, codes of practice and guidance material developed under it. The approach it has taken in developing such material, or supporting its development by industry associations, is also examined (2.4).

Historical context for current legislative framework

39. Prior to the enactment of the HSE Act, New Zealand had a 'mishmash of legislation'^[5], in which the duties of employers and others tended to be set out prescriptively and in considerable detail. Under this regime, specification standards directed duty holders as to precisely what preventive measures they must take in particular circumstances. Such standards identified inputs, telling duty holders how to meet a goal, rather than health and safety outcomes to be achieved.

40. This detailed approach to standard setting had many disadvantages although it is valuable where there is a high degree of risk and there are specific prohibitions or control measures

which are applicable to all circumstances where the risk exists. Statutes that rely on detailed prescriptive standards tend to result in a mass of law that is difficult to comprehend and keep up to date. At the same time, behaviour that does not fit precisely within the terms of such standards tends to fall through the cracks in the regulations even though it may involve significant risks. Such standards do not allow duty holders to seek alternative solutions, may stifle innovation and may be less cost-effective, often imposing obligations that are outdated or irrelevant. And because they only require the duty holder to implement the specified measures, they do not provide incentives or encouragement to continuously improve organisational OHS performance or to strive for outcomes above compliance with minimum requirements. Detailed prescriptive standards are also less suited to controlling risks that change over time, for example those arising from the organisation of work, rather than static features of the work environment.^[6]

41. In summary, as numerous official reports and analyses have pointed out, prescriptive standards tend to result in regulatory overload as so many individual obligations are imposed that they become impossible to comprehend, let alone to implement^[7]. Prescription may also lead to apathy on the part of workers and management, a reliance upon 'going by the book' and an encouragement of a minimum compliance mentality which militates against the development of a culture in which safety is everybody's responsibility^[8]. Finally, it can impose high costs on companies and reduce international competitiveness without commensurate improvements in safety^[9]. These widely recognised limitations of prescriptive regulation led many countries, including New Zealand, to search for more efficient and effective alternative approaches to regulation.

42. In undertaking reform, New Zealand, like the UK and Australia before it, was strongly influenced by the British Robens Report of 1972. This report resulted in widespread legislative change, from the traditional, 'command and control' model, imposing detailed obligations on firms enforced by a state inspectorate, to a more 'self-regulatory' regime, using less direct means to achieve broad social goals. As Robens put it:

There are severe practical limits on the extent to which progressively better standards of safety and health at work can be brought about through negative regulation by external agencies. We need a more effectively self-regulating system. ... The objectives of future policy must therefore include not only increasing the effectiveness of the state's contribution to safety and health at work but also, and more importantly, creating the conditions for more effective self-regulation.^[10]

43. Robens here is touching on the fundamental question of whether or to what extent employers and other duty holders should be allowed to decide for themselves what action to take with regard to workplace safety, or whether the state should intervene to ensure compliance with prescribed minimum standards. Under the first approach, the role of the state would be to persuade, encourage and educate employers to improve their safety performance, employing the law rarely and as a last resort. Under the second, the state would intervene more forcefully to direct duty holders to comply, invoking sanctions when they fail to do so. Self regulation and state intervention are two ends of a continuum and a preference for one of these policies does not preclude some use of the other. The Robens approach, while certainly not advocating pure self-regulation (with no state role) nevertheless leans clearly towards the self regulatory end of the continuum.

44. In adopting the Robens philosophy through the HSE Act, New Zealand replaced detailed standards with broad general duties imposed on employers and others, supplemented by regulations and codes of practice. It provided enforcement agencies with powers of entry and inspection, the option of issuing improvement and prohibition notices, enforcement through criminal prosecution and a requirement to notify incidents involving serious harm. Finally (following amendments to the original Act) it introduced a measure of worker participation in heath and safety matters, principally through the mechanism of employee heath and safety representatives.

The HSE Act 1992 and the Department's role.

45. In broad terms, the HSE Act replaced heavily prescriptive standards (telling duty holders precisely what measures to take in a particular situation) with a performance-based approach, primarily by imposing general duties (sometimes referred to as goal setting regulation) such as to take 'all practicable steps' to ensure health and safety, leaving it to the discretion of the duty holder how they achieve that standard. This approach was coupled with greater use of performance standards that specify the outcome of the health and safety improvement or the desired level of performance but leave the concrete measures to achieve this end open for the duty holder to adapt to varying local circumstances. There was also a focus on systemsbased standards. These identify a particular process, or series of steps, to be followed in the pursuit of safety, and may include the use of formal health and safety management systems.

46. New Zealand embraced the Robens philosophy of self-regulation somewhat belatedly, but with particular enthusiasm and in the context of a political environment that was strongly supportive of deregulation. Indeed, in various forms, deregulation (and reducing the regulatory burden on industry more broadly) was strongly endorsed by the Labour Government that came into power in 1984 and by the National Government that succeeded it in 1990^[11]. The HSE Act was a product of this deregulatory environment and in its initial version was stripped of some of the key measures recommended by Robens, not least tripartism, worker participation and an independent executive^[12]. It was regarded, so we were told, as a 'necessary evil' at a time when the predominant public policy goal was to enhance business competitiveness:

So you take Robens but you shape it into that efficiency dominated environment, but it was done with the greatest reluctance. All countries had OHS legislation but it was not something to embrace, it was something you had to do (former Senior Department of Labour officer).

47. Against this backdrop, the HSE Act might be understood as emphasising self- regulatory initiatives of duty holders (especially employers). Section 5 for example, emphasises that one of the objects of the Act is 'promoting excellence in health and safety management, in particular through promoting the systematic management of health and safety' (emphasis added). As such it requires employers and others to take the responsibility for developing and implementing such systems, to maintain safe working environments, and implement sound practice. The reliance on duty holders to take primary responsibility for safety at work is also made clear by s.5(f) which states that: 'successful management of health and safety issues is best achieved through good faith co-operation in the place of work and, in particular, through the input of the persons doing the work.' Again, s.7 (and see also ss.8-10) in imposing explicit duties on employers with regard to hazard management, states that it is their responsibility to systematically identify existing hazards to employees at work, to systematically identify new hazards and to take steps to eliminate, isolate or minimise them. This emphasis on self- management is also apparent from s.30, which states the functions of an inspector include helping employers, employees and other persons to improve safety at places of work, and the safety of people at work, by providing information and education' although they must also take all practicable steps to ensure that the Act is being complied with.

48. Accordingly, the Department's interpretation of the HSE Act is that it:

Places positive duties on employers and others to manage hazards in their own workplaces, reflecting the approach that self-management of health and safety by businesses is preferable to relying on visits by inspectors to ensure compliance, no matter how frequent those visits might be (s.6-19)^[13] the duty to ensure the safety of the workplace is placed on employers and others as set out under the HSE Act and regulations, and not on the Department^[14].

49. In the Department's view, the bottom line is that:

The Department's role in health and safety in mining, as with other sectors, is to ensure that employers are aware of their obligations, to support and assist them to understand and give effect to these obligations and to enforce as appropriate.^[15]

50. Put differently, whereas under the previous legislation, inspectors had been expected to go into workplaces and direct duty holders as to what safety measures they should introduce (the expectation being that the inspector rather than the employer would take the initiative) under the HSE Act employers bear primary responsibility for health and safety while providing information and support, particularly when it comes to establishing and developing health and safety systems and processes and takes enforcement action where the employer fails to meet the practicability standard.

51. In recent years the Department has also sought to become more effective in achieving best regulatory outcomes through transitioning from being a traditional to being a modern regulator^[16]. As we were told by senior departmental officers:

This means shifting from a reactive event-based focus to positioning ourselves to better understand patterns of incidents, accidents and fatalities and to addressing these. It's to stay ahead of the game, to be focused and targeted, and based on the intelligence we gather.

52. Such a regulator, we were told by senior officers, would engage with a company as an issue arises. They would ask:

What does this issue represent in terms of the need for health and safety management systems in this company going forward? For example, they encounter methane. The inspector provides advice rather than directing them what to do. The inspector might ask: have you got a system to manage gas outbreaks? Is it adequate? How are you going to deal with the risks we know will flow from these outbreaks? They might even suggest where the company might find the outside expertise to enable them to deal with the problem.

53. This is a reasonable and sophisticated interpretation of the Department's responsibilities under the Act. We return to questions of the Department's regulatory role and approach to its responsibilities in Chapter 7.

Regulations, codes and guidelines

54. When the basic legislative framework was put in place in 1992, far less attention was paid to the roles of regulations, codes of practice and guidelines, all of which are important in a Robens system in putting flesh on the basic duties stated in the Act and in providing duty holders with the necessary guidance to discharge their responsibilities effectively under it.

55. Of particular importance are codes of practice, which provide non-mandatory guidance as to how to meet the principles and performance-based requirements set out in the general duties and in regulations. These codes were intended by Robens to fill in much of the detail which was lacking in the general duties, but to do so in a more flexible and participatory fashion than had occurred in the past. Under most of the post-Robens legislation, these codes have a quasi-legal status,^[17] in that while failure to comply with a code does not in itself involve a breach of the Act, it nevertheless has evidentiary value (as is the case in New Zealand by virtue of the HSE Act s.20).^[18] This solution has the considerable attraction of providing more detailed guidance as to one acceptable way to comply with the general duties, while preserving duty holders' options to devise their own means of satisfying those duties.^[19]

56. Such guidance is particularly important for small and medium-sized organisations, and codes of practice are often seen as the best vehicle to provide more accessible information to such groups.^[20] For example, in the mining context, such codes and guidance material might be an effective means of providing best practice technical information about how to control high risk underground mining activities.

57. The Department's initial intention, consistent with the deregulatory preferences of the government, was to remain 'hands off' and to rely on industry to develop standards and guidance material. However, for a considerable period at least, industry failed to undertake this role and ultimately the Department stepped in, and developed two sets of mining-specific regulations: the HSE (Mining Administration) Regulations 1996 and the HSE (Mining - Underground) Regulations 1999.

58. While the former are primarily concerned with certification standards for mine managers, the latter are much broader. Under them, employers have particular duties with regard to all mines and tunnels, including obligations to notify the inspector of details of the timing and nature of operations, preparation of a plan with regard to each operation (including the physical details of the operation), and ensuring a competent person examines all areas where employees will be present. There are also obligations with regard to eliminating, isolating or minimising significant hazards, testing for the presence of flammable gas and ensuring that employees leave the mine or tunnel where there is reason to believe that flammable gas in the air is 2% by volume or more.^[21]

59. There are further duties relating to coal mines and gassy mines under Part 2 (including taking all practicable steps to prevent ignition of flammable gases, testing for the presence of flammable gas and having ventilation that ensures that the presence of flammable gas in the air is not more than 1.25% of the air by volume).^[22] There are duties with regard to electrical systems under Part 3 and with regard to offences for non-compliance in Part 4. Consistent with the deregulatory philosophy of the times, the responsible Minister had indicated a willingness to repeal the regulations once industry developed its own standards, but the government lost power before any such standards were developed and so the regulations remained in force.

60. The regulations themselves are a mixture of prescriptive and performance-based requirements, although notably less prescriptive than, for example, their New South Wales comparators. Nevertheless, we were told by long-standing senior departmental officers that insofar as substantial prescription remained, the regulations were, (given the principle and performance-based nature of the HSE Act) 'mixing oil with water ... it was gradually realised you can't do it and it's not going to work so there was a shift to codes of practice and guidelines'. This is an appropriate description of the challenges and how they might be resolved through some combination of codes of practice and guidelines.

61. Turning first to codes of practice, the failure of industry to develop its own codes expeditiously ultimately prompted the Department of Labour to put in place a substantial number of its own Approved Codes of Practice. No Approved Codes of Practice have been introduced in the mining sector. This can be attributed principally to resource constraints rather than any lack of willingness on the Department's part. As we were told by departmental officers, 'in the past we might have been standards setters, and having the functional expertise within the agency, but increasingly we now see ourselves as standards facilitators because we don't have the capacity and expertise to be more.'

62. As a result of these constraints, the Department again turned to industry to take the initiative on code development.^[23] With the establishment of MinEx (the National Health and Safety Council for the New Zealand mining industry) in 2006, this became a more realistic proposition. Between 2008 and 2009 MinEx did produce two odes of practice and 12 sets of guidelines relating to underground and surface mining.

63. However, the reliance upon MinEx codes and guidelines raises a number of questions. In particular, there is a risk of a conflict of interest between industry's concern to minimise costs (which might result in the creation of low standards or no standards at all) and the public (and worker) interest in improved occupational health and safety outcomes. Such codes might, for example, result in lowest common denominator approaches and a de facto lowering of the general duty standard of care.

64. While there is no evidence to suggest that industry codes (and guidelines) were of a consistently low standard, a number of informed respondents did identify inadequacies in them. We were consistently told that they provide only very general guidance and lack the sort of attention to specific issues that provides practical direction to duty holders^[24]. According to two former senior departmental officers: 'we thought MinEx would do it but they made trade-offs... there wasn't much punch. We expected too much of industry standard setting.' Similarly, The Senior Advisor High Hazards (Extractives) Johan Booyse, with regard to the draft explosives code, commented that 'it does not cover all aspects, some aspects are just missing. There was not enough detail and it was just not specific enough.', and one of the inspectors also told us: 'the MinEx standard (for example for conveyors) is lower than the departmental expectation - and lower than the Australian standard or elsewhere.'

65. Against this, it should be noted that the MinEx standards appear to contain a lot of the same information as the Australian guidance materials. We would have wished to pursue this issue further but MinEx declined to be interviewed so we were unable to obtain their views on this and related matters.

66. Since there is at the very least, a quite widespread perception that MinEx-developed standards are inadequate in some respects, one might have anticipated that the Department would actively engage with MinEx in code development. Doing so, and taking on a particular oversight role, might have at least mitigated the risk of gaps or inadequacies in the standards being developed.

67. But for some time it appeared that the position of the Department (perhaps de facto rather than as a matter of formal policy) was that it was the industry (through MinEx) that had the capacity to engage in technical standard setting and guidance document development rather than the Department, and that the Department would not make any contribution to such standards or endorse them. As one of the mines inspectors told us: 'as to the MinEx Underground Mines Code of Practice - we had no input. We had a look at it, felt we should go through it properly but we never did.'

68. However, the departmental position shifted when a new Senior Advisor High Hazards (Extractives) was appointed in 2008. It was intended that the Senior Advisor would liaise actively with MinEx in the development of further codes. However Mr Booyse told us that initially he made little progress in engaging MinEx and that the organisation did not welcome a dialogue with government. Nevertheless, in his view, the position of MinEx changed with a change of leadership within MinEx and for a period prior to the Senior Advisor's resignation in February 2011 the prospects for constructive engagement between the public and private sector seemed much more promising. One of the inspectors also had positive interactions with MinEx with regard to the further development of the Explosives Code during approximately the same period: MinEx actively sought his views and he provided extensive comments (see further Chapter 6). However, Mr Booyse's resignation and the disruptions to departmental priorities caused by the Pike River tragedy put this initiative on temporary hold.

69. Another option for the Department would have been to place emphasis on the development of its own Approved Codes of Practice for the mining industry - effectively taking over the standard-setting role (albeit that this would not have precluded extensive consultation with all stakeholders). There may have been some support for such a role from outside of the Department. Former Pike River Coal Safety and Training Manager, Neville Rockhouse identified what he called: 'a major shortfall in that currently in New Zealand there is no approved code of practice for underground mining operations. This I feel ... should become

one of the recommendations from this type of internal review as it will set issues that should be addressed on a regular basis for mining companies as well as the Department of Labour inspectors.' One area where an ACOP might have provided substantial guidance to all parties would have been a requirement to develop and implement Major Hazard Management Plans (which it should be noted are now included in the MinEx code of practice on Underground Mining and Tunnelling, 2009). Guidelines on the type of explosives which may be used in underground coal mines is another example.^[25]

70. However, in recent years the Department has expressed no enthusiasm for the development of ACOPs whether in mining or other areas (although some generalist ACOPs have nevertheless been developed). Its principal documentation on the role of standards and guidance states that:

'ACOPs are time-consuming and onerous to develop, maintain and revoke. To receive ministerial approval ACOPs must undergo a significant period of consultation. Once in place, ACOPs are difficult and costly to amend or revoke. Consequently the same process to approve must be used for change or revocation. For these reasons many ACOPs developed earlier in the life of the HSE Act have not been amended or revoked. ACOPs also offer very little by way of advantage over other forms of guidance"^[26]

71. Instead, the Department is increasingly pursuing another option, the development of guidance material. For the mining industry, the Department has become more directly engaged in standards development as a result of the Departmental Regulatory Review of Underground Mining (2006-2009). One important outcome of that review was a recognition of the need to re-engage in the development of guidance material for the sector and two important pieces of standards development were initiated: (i) improving health and safety management systems by developing guidelines for safety management in small mines; and (ii) ensuring mine owners receive better health and safety technical guidance by developing technical guidance for small mines (this was to involve reviewing the MinEx documents)^[27].

72. The intention was that both of these pieces of work would be progressed by the Technical Services Group with Mr Booyse playing a key role in conjunction with his colleagues in the standard-setting team which is also located in the Technical Services Group. In the event, the Pike River tragedy and Mr Booyse's resignation in February 2011, constrained the progress of this work. Nevertheless it is important to acknowledge that the Department had a work programme for both these pieces of work, and that the policy review proposed and approved further departmental involvement in standard setting and MinEx code development.

73. However, neither of the projects, nor the related work programmes or standard setting initiatives related specifically to the development of mining-specific Approved Codes of Practice. This brings us to the question whether ACOPs are important or whether similar outcomes can be provided through other mechanisms, such as the guidance material on which the Department has been focusing.

74. A conventional view would be that ACOPs play an important role in a Robens-based regulatory framework that cannot be compensated for by the introduction of guidelines. On this view, ACOPs have legal implications that result in their being taken seriously by duty holders, whereas guidance materials, while playing a useful ancillary role, do not. This is certainly the perception of some of the relevant decision makers. As one of the mining inspectors pointed out: 'it's very difficult for the inspectorate to enforce a code of practice that's not an approved code. If someone is injured you are looking to take information you could cite - can you use the code as evidence of negligence? You are talking about something not required by regulations.'

75. This seems to be a mis-perception. Courts in a number of jurisdictions regularly do take nonapproved codes and other guidance material (e.g. Australian/New Zealand Standards) into account in determining whether an employer has discharged their general duty to take all practicable steps to ensure safety, and in practice courts in a number of jurisdictions routinely do so. We were advised that industry codes of practice are relied on by inspectors in prosecutions in New Zealand, and would normally be accepted by the court and would be persuasive evidence of industry knowledge about risk and the means of dealing with it.

76. While ACOPs have some advantages, the most important thing is that there is good quality guidance material available. It is not realistic to think that guidance material will provide certainty in every circumstance - although it may do so in many. While the Department is now making efforts to provide such material (largely resulting from recommendations of the 2006- 2009 Departmental Review), it should have taken this matter in hand before 2008, and it should have taken an active role in the development of the Minex Codes and Guidelines during 2008/9. This is especially so if the Department believes (as a number of its individual officers clearly do) that there are gaps in the MinEx Codes and Guidelines We note that from 2009, the Department did become more active in the scheduled review of the Minex Codes and Guidelines. The end result is that a performance and systems-based approach that was intended to be underpinned by much more detailed guidance in the form of codes of practice, industry guidelines and to a lesser extent regulations, remained underdeveloped for too long. In consequence not only some duty holders (particularly small and medium sized enterprises) but also inspectors themselves lacked, and to a significant extent still lack, sufficient guidance in discharging their respective responsibilities. However, as we describe in Chapter 6, the specialist mining inspectors took the initiative to fill gaps by researching international standards and engaging with experts to deal with significant mining safety issues, notably on the use of particular types of explosives, and on other issues as well.

Related and supporting roles

77. For the sake of completeness, it should be noted that in addition to the Department's regulatory role as set out in the HSE Act, it also plays a number of related and supporting roles that are described on its website.^[28] For example, in addition to enforcing the HSE Act, the Department plays a facilitative role, consistent with its broader operating philosophy stated above. This includes providing information and guidance (e.g. through publications and forms), responding to queries, conducting seminars and supporting industry health and safety groups (groups established by industry participants with the principal aim of promoting workplace health and safety).^[29] The Department also works with industry health and safety groups as outlined in the OSH and ACC Position on Industry Health and Safety Groups.^[30]

78. The Department's stated aim is also to act as a modern regulator This involves: having a client focus- reflecting and evolving with community's needs and concerns; using regulatory power in a constructive, accountable and transparent way; having people who are experienced, trained and professional - who look for patterns and opportunities; being proactive and positive - identifying and focusing our resources on areas of greatest risk and impact; having staff who act as change agents - helping people to move beyond compliance to best practice; and ensuring fair and swift consequences where necessary.^[31] While acting as a 'modern regulator', is not required by the HSE Act, the approach contemplated is entirely consistent with its statutory responsibilities under the Act.

79. Finally, it is also noteworthy that the report-back (2008) on public consultation during the Departmental Regulatory Review of Underground Mining (2006-2009)^[32], concluded that this regulatory framework was broadly sound and endorsed the performance-based approach embodied in Robens style legislation. Following the review, the Department has developed a work programme for engaging the mining sector on developing tailored guidance on improved safety systems, technical standards, and a strategic approach to improving employee participation.^[33] This programme includes greater involvement in the development of codes of practice as described above. Further details are provided in the Phase 1, Tier 2 paper provided to the Royal Commission by the Department of Labour.^[34]

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