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Practical proposals for improving the Department of Labour’s approach to high hazard industries


Summary of recommended actions

This summary lists the seven improvements suggested in this paper and another 33 specific actions proposed to achieve these improvements. The 33 actions and subsidiary additional action points are not necessarily comprehensive, but provide some sense of the nature of the work required to deliver the work. Many of these actions will be able to be achieved simultaneously.

Recommendation one: Enhance the Department's focus, capacity and capability to deal with high hazards

Recommendation two: Draw on certification, verification, plans and notifications

Recommendation three: Strengthen relationships

Recommendation four: Bolster the analysis of safety cases

Recommendation five: Help high hazard industries to comply

Recommendation six: Support environmental outcomes and regulation

Recommendation Seven: Hold off further work on funding until these practical suggestions are implemented or progressed


Defining high hazards for the purpose of this report

There is a general consensus that the concept of a 'high hazard' industry describes a small set of strategically important operators and activities where failure is rare but which can have catastrophic consequences.

Drawing on various approaches and examining overseas definitions, this paper uses the following working definition for the term high hazards:

Industries vital to the New Zealand economy

There are some inherently risky industries/work practices which benefit the wellbeing of the nation. Underground mining (particularly underground coal mining), for example, is an inherently dangerous activity but it plays an important role in the New Zealand economy. Similarly, aviation is an industry where there are catastrophic possibilities but also is crucial to the success of the New Zealand economy.

Industries and places of work where failure can have catastrophic impacts

The essence of the high hazard concept is where failure could result in catastrophic impacts. Impacts can be broader than just serious harm or fatalities to people. For example, potential impacts could include:

Work where there are inherent risks that need to be managed actively

Unexpected things can occur in any activity and these can inflict significant damage or harm. However, freak occurrences do not necessarily mean an industry or activity is inherently risky. Offshore drilling for petroleum is inherently difficult. The environment is risky, the substances being dealt with are toxic, flammable and unstable, and there are immense pressures involved. Unmanaged, any one of these aspects is likely to contribute to a significant accident. By contrast, a petrol station deals with basically the same product but, left unmanaged, while risky, is reasonably stable. The difference is the need for active, ongoing management.

Industries where managing safety is technically complex

There are many industries where the activity itself is generally safe and safety systems are aimed at preventing disruption or accidents. However, the high hazard concept suggests that safety is something that needs to be sustained through active management (see above) and that the safety systems required are complex. In some industries safety can be maintained by just prudently following set approaches. However, in high hazard industries, the systems are complex and technically challenging.

Where the risk of failure is low

Another aspect of the high hazard concept is the infrequency of events. The Department tends to direct its health and safety enforcement to the industries where accidents are frequent and harmful. However, high hazard industries are those where accidents are infrequent but catastrophic if they occur. It is unlikely activities or industries creating frequent and catastrophic-scale harm could exist. So it appropriate for the Department to prioritise its limited enforcement resources on those industries where accidents are both frequent and harmful (i.e. harmful but not catastrophic) and to also focus on industries or activities where accidents are infrequent but potentially catastrophic.

Where the Department has a prominent regulatory role

The Department has the broad mandate of enforcing health and safety, employment and hazardous substances law in places of work. This technically means it has a role in virtually all industries and work-related activities in New Zealand. In some industries the Department is seen as a lead agency whereas other industries - including 'high hazard' industries - have other regulators who play a general role in maintaining safety, in a general sense. For example, commercial aviation has significant risks associated with it, but the Civil Aviation Authority is the main safety regulator for ensuring aircraft safety.

Industry analysis

Using these criteria is possible to examine various industries set out in the New Zealand Standard Industry Output categories which is used by Statistics New Zealand for its statistical analyses of industrial activities. The Industry Output categories are the officially accepted way of bundling varying types of businesses into particular categories.

If one was so inclined, this kind of analysis could equally be applied to any sub-industry, or indeed a particular place of work or type of activity.

This analysis indicates two industries that fit under this high hazard definition:

The analysis also shows the following might also fit under the high hazard definition depending on the circumstances:

The Department also maintains an active interest in pipelines and geothermal-related activity - both these industries might be included in the high hazards concept. Pipelines carrying gas and other petroleum products may be particularly hazardous. So, there could be a good argument to include these technical areas under the high hazard rubric. Geothermal is already partly managed through the Department's specialised petroleum resource. It is therefore sensible to continue with this arrangement and to ensure petroleum resources continue to include a focus on geothermal. Bringing the existing pipeline specialised resource into the High Hazards Unit may also be something that ought to be considered.

For the purposes of this paper, though, the focus is primarily on coal mining and oil and gas extraction. However, existing practice suggests bringing the whole extractives focus into the High Hazards Unit (i.e. include quarrying and other types of mining alongside the focus on coal mining) and that onshore and offshore petroleum production and geothermal is included in the High Hazards Unit's focus on petroleum. Any further widening of the high hazard definition can occur after these initial practical steps have been taken to clarify and improve the Department's approach to high hazard industries - in particular coal mining and petroleum production.

Other industries that might fit the broad definition of 'high hazard' but in which the Department does not play a prominent regulatory role (i.e. there is a more prominent regulator involved) include:

Again, there may be some sense in widening the Department's scope on high hazard industries to include these other sectors. However, any decision on this should be considered after the work recommended by this paper has been significantly progressed.

Another way of identifying high hazards is to consider the hazardous nature of certain places of work or facilities rather than types of work. This approach is taken by some other jurisdictions where 'major hazard facilities' can be the focus of high hazard regulatory attention. There are some facilities in New Zealand that have catastrophic potential - those with significant holdings of toxic and easily dispersed chemicals, for example. A real example of this type of facility would be a pulp and paper mill that holds large quantities of chlorine dioxide. A failure in the containment could result in a major and potentially fatal release of chlorine gas into a populated area. There is a legitimate open question about whether the High Hazards Unit should broaden its thinking to include major hazard facilities. This report does not attempt to resolve that question and leaves it open for subsequent thinking. It should be noted that the effective control and safety of hazardous substances is managed under the Hazardous Substances and New Organisms Act. This Department is responsible for enforcing this Act in places of work.

Capability and capacity

The Department of Labour's Labour Group wants to ensure its work with high hazard industries is appropriate and effective given the current regulatory and legislative framework.

The Department's fundamental concern emerging through the reviews on high hazard work such as underground mining and petroleum is about the Department's capability and capacity - although most of the focus is actually on the issue of capacity and whether this has an adverse effect on its capability and the level of attention it gives these industries.

This paper identifies a number of practical suggestions on actions that can be taken reasonably quickly to improve the Department's approach to high hazard industries within the current regulatory model. Changing the regulatory framework is largely seen as sitting outside of the scope of this work.

A practical analysis

This paper is not intended as a policy review. It is intended to analyse what can be done to improve the Department's approach to high hazard activities within the current regulatory framework.

Other work, such as the MED comparative review of HSE legislation, identified areas where New Zealand's regulatory approach could be reviewed. This includes, for example: changing the regulations to allow for the acceptance of safety cases and implementing an industry-specific levy to fund inspection activities.

However, the approach taken by this paper is to maximise the Department's effectiveness within the current regulatory framework and resources before undertaking a more fundamental review of the law itself.