Pike River report of the Independent Investigation … · Report of the Independent Investigation . to the Chief Executive of the Ministry of Business, Innovation and Employment

MBIE-MAKO-3983458 Page 1

Pike River Tragedy

Report of the Independent Investigation

to the Chief Executive of the Ministry of Business, Innovation and Employment

David Shanks 14 March 2013 Jane Meares


Conrad Adams

Malcolm Campbell

Glenn Cruse

Allan Dixon

Zen Drew (Verhoeven)

Christopher (Chris) Duggan

Joseph Dunbar

John Hale

Daniel (Dan) Herk

David (Dave) Hoggart

Richard (Rolls) Holling

Andrew (Huck) Hurren

Koos Jonker

William (Willie) Joynson

Riki (Rik) Keane

Terry Kitchin

Samuel (Sam) Mackie

Francis Marden

Michael Monk

Stuart (Stu) Mudge

Kane Nieper

Peter O’Neill

Milton (Milt) Osborne

Brendon Palmer

Benjamin (Ben) Rockhouse

Peter (Pete) Rodger

Blair Sims

Joshua (Josh) Ufer

Keith Valli

The Pike 29


The Independent Investigators David Shanks has held a number of senior public sector roles spanning senior management and governance, chief legal advisory positions, and Human Resources advice and management. In his current role as Deputy Chief Executive of Corporate and Governance at the Ministry of Social Development, David has responsibility for a range of departmental corporate services. Since joining MSD in 2009 he has held a number of other senior roles in that department including General Manager Human Resources and Chief Legal Advisor. Prior to joining MSD, David spent a number of years as Chief Legal Advisor for the State Services Commission during which time he led or assisted on a number of high profile public inquiries, including the investigation into the leak of a classified telecommunications cabinet paper to Telecom by a DPMC messenger in 2006, and the 2008 inquiry into the Department of Labour’s handling of the immigration matters for family members of the then Head of the New Zealand Immigration Service. David has also been the Corporate Legal Advisor for Inland Revenue. He started his legal career in the private sector with a background in civil litigation. Jane Meares is a commercial barrister with Clifton Chambers in Wellington. At the bar she has undertaken a broad range of public sector and commercial advisory work. Before joining Clifton Chambers, Jane was the chief legal adviser at the New Zealand Treasury. She has a broad understanding of core public sector processes and structures and the framework within which it operates. Whilst at the Treasury she undertook a number of internal and external inquiries. Jane was also a corporate and commercial partner at Bell Gully, spent some time assisting the Takeovers Panel to set up systems and procedures prior to the introduction of the new Takeovers Code in 2001 and was the Manager, Legal Group at the Department of Internal Affairs. Jane is admitted in New Zealand and England & Wales and has a number of governance roles.


Contents

1. Background ..................................................................................................................................... 4

2. Executive Summary ......................................................................................................................... 5

3. Process and Methodology .............................................................................................................. 9

4. Ministry of Economic Development ............................................................................................. 13

5. Department of Labour .................................................................................................................. 23

6. Recommendations ........................................................................................................................ 53

Appendices

1. Terms of Reference for Independent Investigation ...................................................................... 55

2. Glossary ......................................................................................................................................... 58

3. List of Interviewees ....................................................................................................................... 59

5. Timeline of some of DOL’s interactions with Pike ........................................................................ 63

6. DOL organisation chart as at 19 November 2010 ......................................................................... 64

7. Summary of Key Changes Post Pike River Tragedy and Implementation of Royal Commission

Recommendations ........................................................................................................................ 65


1. Background 1. On 19 November 2010 twenty nine men were tragically killed by an explosion at Pike

River. 2. On 14 December 2010 a Royal Commission was established to enquire into and report

upon the matters set out in the Royal Commission’s terms of reference. On 30 October 2012 the Royal Commission reported to the Governor-General and published its report (the “Royal Commission Report”) on 5 November. The following day, David Smol, the Chief Executive of the Ministry of Business, Innovation and Employment (the “Chief Executive”) apologised to the families of the victims and announced that an independent investigation would be carried out to look at the implications of the report for him as an employer.

3. On 19 November 2012 the independent investigation (“Investigation”) was initiated to provide advice to him about:

Any actions or inactions of individual employees connected with the issue of the mining permit and/or the discharge of health and safety functions that may have contributed to the tragedy.

Any systemic failings within the former Department of Labour (“DOL”) and/or the former Ministry of Economic Development (“MED”) that may be identified as having contributed to such actions or inactions of individual employees.

Whether any such actions or inactions may warrant a formal employment investigation.

4. The terms of reference for this Investigation are attached as Appendix 1 (the “Terms of

Reference”). We have undertaken this Investigation in accordance with the approach, scope and process set out in the Terms of Reference and the Process and Methodology set out in Part 3 of this report. Note that terms used in this report have the same meaning as in the Royal Commission Report, unless otherwise stated (see the “Glossary” at Appendix 2).

5. In undertaking this Investigation we had an exceptional starting point in the form of the

Royal Commission Report. This Royal Commission was extremely detailed, thorough and wide-ranging. We have been fortunate to have the benefit of such a report for use in our own Investigation.


2. Executive Summary

6. The Pike River tragedy and the Royal Commission Report into it holds crucial lessons

about what it means to be an effective regulator of the mining industry – and of many other industries as well.

7. The Royal Commission made a number of very significant findings relating to the permitting and monitoring functions undertaken by the then Ministry of Economic Development and also the health and safety regulator functions performed by the then Department of Labour. The assessment makes grim reading. The Royal Commission identified a wide range of missed opportunities in the course of both agencies’ engagements with Pike. There were failures both in identifying issues and risks, and in responding to them effectively.

8. These findings go to the heart of public confidence in the government agencies that have

these responsibilities. It is important for the Chief Executive of the new Ministry of Business, Innovation and Employment (which incorporates both the former MED and the former DOL) to understand to what extent these failures may have contributed to the tragedy and whether any individuals concerned can and should be subject to an employment investigation. At least as important is the need to understand what systemic or organisational failings may have contributed to it. Those are the reasons for this Investigation.

9. We have concluded that there were actions or (more often) inactions on the part of

officials in both agencies that may have contributed to the tragedy. That will likely come as little surprise to those who have read the Royal Commission’s Report carefully.

10. In relation to MED’s assessment and monitoring of Pike’s mining permit, we consider that

those functions were discharged in a light-handed and perfunctory way. There existed the possibility within the regime for officials to have taken a more careful, deliberate and searching approach with Pike. Concerns about the company’s level of geological knowledge of the area and the growing pressure on it from repeated delays in its work programme could have been surfaced. Ultimately such an approach might have led to further conditions being imposed on Pike, or even the revocation of its permit.

11. We have found that the primary reasons such an approach was not taken with Pike were

systemic. The expectations on those responsible within MED for discharging these duties at the time were to process and administer such applications as quickly and efficiently as possible. The regulatory regime in place was complex and ambiguous, limited information was required of applicants and permit holders and there was limited expertise within the Crown Minerals area to interrogate strongly the information received. Health and safety considerations were explicitly excluded from the overall assessment to be undertaken.

12. The approach taken was that significant commercial operations did not require careful

testing to ensure that they were undertaking their operations according to good mining practice, as they had the resourcing and incentives to ensure this was done. Pike was seen as such an operation.


13. There are few individuals who had any responsibility for assessing or monitoring Pike’s mining permit still in the employ of MBIE. Even if there had been, the approach taken and the systemic issues we have identified mean that we would not recommend any employment action be commenced against those individuals.

14. In considering the interactions between DOL, as regulator, and Pike, it is clear that these

were much more extensive than MED’s. In the course of those interactions we find there were a number of actions or (more frequently) inactions that may have contributed to the tragedy. Most often, the inaction is the failure of the regulator to use its powers to take a strong enforcement approach with Pike, for example by issuing a prohibition notice in circumstances where that was warranted.

15. Again there were evident systemic issues that contributed to these actions or inactions.

The mine inspectors who were responsible for inspecting and monitoring Pike River lacked the systematic approach, tools and resources to obtain a clear view of the level of compliance at the mine. Accordingly, they continued to engage with Pike as a compliant, even ‘best practice’, employer and sought to negotiate agreements with the company to address outstanding safety issues. This allowed safety issues to persist and to worsen.

16. Whilst with the benefit of hindsight a number of decisions and actions or inactions by the

mine inspectors concerned can be questioned or criticised, we do not recommend that an employment investigation be commenced against the mining inspector who remains employed by MBIE. We have not found evidence of carelessness, incompetence or breach of policy so as to merit an employment investigation. Rather, we consider that the systemic issues were the dominant factor leading to the failure to engage with Pike firmly and effectively.

17. We note that the Royal Commission also commented in relation to the issues with DOL’s

oversight of Pike that “this was not a case of individual fault, but of departmental failure to resource, manage and adequately support a diminished mining inspectorate”1.

18. In our investigation we have had the opportunity to interview managers who had direct

responsibility for the mining inspectors, who were members of the Mining Steering Group, and who had very senior leadership roles in DOL’s health and safety function. We were grateful for the opportunity to also interview James Buwalda, who was Chief Executive of DOL from July 2003 to May 2007. According to our Terms of Reference we needed to consider whether any manager’s actions or inactions may have contributed to the tragedy and merited employment action (where that might be possible). We also needed to understand what those leaders might be able to add to our understanding of any systemic issues.

19. There is no doubt that there were opportunities for managers to have taken different

decisions that may have relieved the problems with the mining inspectors and might possibly have resulted in a different outcome. However we have not found evidence of carelessness, incompetence or breach of policy on the part of former DOL managers such that we would recommend you commence an employment investigation. There were systemic issues within DOL at various levels that, again, were the dominant factors.

1RC Volume 1, page 23.


20. The fact that we do not recommend any employment action against any individual managers should not be seen as excusing the performance of the organisation as a whole.

21. DOL’s performance as health and safety regulator of Pike was ineffectual and

dysfunctional. The mining inspectors, as we have found and is evident from the Royal Commission Report, were not resourced and supported so as to be able to properly carry out their functions. Serious concerns about this were raised but not engaged with effectively by senior managers who were endeavouring to balance resources for other potentially major risks. A policy review following mining deaths in 2006 took 3 years to complete but had little input from the mine inspectors themselves. The functional responsibility for oversight of workers using electricity and gas was transferred from MED to DOL at the beginning of 2009, but DOL’s response was reactive and did not take into account the need for electrical inspections in underground mines.

22. These and other examples are in our view symptomatic of wider problems within DOL in

relation to mine inspection in particular and DOL’s approach to health and safety regulation in general. In focussing on the employer responsibility for meeting health and safety requirements, it downplayed its own critical role as regulator. In using workplace fatality statistics to set its strategic health and safety agenda, it omitted to consider the potential for catastrophic events. Larger employers are more likely to be implicated in such events, but the focus of DOL was on smaller employers, on the basis that larger enterprises had the resources to ensure they were meeting their health and safety requirements.

23. We think there are clear lessons in this for current and future regulators. For MBIE

holding current responsibilities for granting and monitoring mining permits, significant changes are underway to improve the clarity of the regulations and the need to engage with health and safety considerations in assessing whether good mining practice is being undertaken. New practices are in place to ensure a more ‘joined up approach’ between this area and the High Hazard Unit with responsibility for health and safety in mines. It is essential for these linkages to remain even when the new health and safety Crown Entity has been formed and has taken on the latter role. There should be no assumption that larger enterprises will themselves take the necessary steps to ensure there is good and safe mining practice.

24. Similarly, for the health and safety regulator, size is no guarantee that an employer will be

doing the right things to ensure the health and safety of its employees. In terms of maintaining an effective mining inspection service, there have been many issues identified regarding training, approach, tools and resourcing for which solutions have been or are being put in place now. In addition to these we think there are some fundamental lessons here about the culture and strategic approach of an effective health and safety regulator.

25. Simply put, any organisation that has health and safety regulatory responsibilities needs

to own them. While the central role and obligations of an employer in health and safety should be made clear, the role and responsibility of the regulator should also be clear. While it is important to consider what death and injury statistics might say about the areas of focus and resource for the regulator, this tragedy shows that it is unacceptable for any organisation to lack a strategy for and understanding of the risks inherent in mining, and other areas with potential for disaster.


26. Perhaps most importantly, an effective health and safety regulator needs to have a culture that is above all focussed on doing everything it can with the resources it has to reduce the risk of danger and harm to New Zealanders, rather than being focussed on reputational and organisational risk. It also needs to ensure that its management systems and staff and managers at all levels escalate serious concerns about risk quickly and transparently, so that proper decisions can be made about them.


3. Process and Methodology

Introduction 27. As noted above, on 19 November 2012 the Investigation was initiated to provide advice,

in accordance with the Terms of Reference, to the Chief Executive about:

any actions or inactions of individual employees connected with the issue of the mining permit and/or the discharge of health and safety functions that may have contributed to the tragedy;

any systemic failings within the former DOL and/or the former MED that may be identified as having contributed to such actions or inactions of individual employees; and

whether any such actions or inactions may warrant a formal employment investigation.

28. Further comment in relation to the parameters of those Terms of Reference is made below in the section “Our Terms of Reference and the Threshold for an Employment Investigation”.

Project Initiation and Support 29. The Investigation was initiated on 19 November 2012, with the appointment of a small

secretariat to support the Investigation team. The role of the secretariat was to provide information and support to the Investigation, as required. The MBIE Transition Programme Director provided oversight of the project for the Chief Executive and ensured the Investigation progressed efficiently without any barriers or issues. He also dealt with any internal and/or external queries to maintain the independence of the investigators.

30. David Shanks and Jane Meares were appointed as independent investigators. Our

biographies are set out above. 31. We would like to thank our secretariat for their dedication and support, as well as the

numerous people who assisted us by agreeing to be interviewed, performing a role as a support person, or tracking down or providing documentation.

Approach, Scope and Process 32. We have undertaken this Investigation in accordance with the approach, scope and

process set out in the Terms of Reference and as further outlined below.

33. The Investigation included an information discovery phase, an analysis phase, an interview phase and a reporting phase which covered:

Establishing the operating and decision-making context of both MED and DOL relevant to the time period in the Terms of Reference.


Identifying the staff forming part of the operating and decision-making systems, including establishing whether any of those staff were still employed by MBIE and assessing whether any individual through action or inaction may have contributed to the tragedy.

Identifying any element of the operating and decision-making systems that may have contributed to those actions or inactions.

Considering whether any formal employment investigation ought to be commenced in relation to any such actions or inactions by any staff still employed by MBIE.

34. The secretariat assisted with information-gathering, logistics, administration and the

identification of key organisational contacts. 35. In accordance with the Terms of Reference, the findings of the Royal Commission were

used as a basis for our investigations and material gathered for the Royal Commission was used by us, including submissions to and transcripts from the Royal Commission, along with a review of other material made available to the Royal Commission by DOL or MED. We analysed the Royal Commission Report and identified all of those criticisms or comments which could be attributed to individual or organisational actions or omissions of DOL or MED. We are satisfied that we have turned our minds to, and reviewed, those criticisms and comments.

36. A further documentary search by the secretariat was also conducted to identify other

potentially relevant documentation for review including Cabinet Minutes, Ministerials, Memoranda of Understanding, policy and funding papers, internal procedures and policy guidelines, organisational records, policies and human resource information, database searches and reports, meeting minutes, and management reports.

37. We consider that most relevant information has been able to be recovered and

considered as necessary, although we have been researching documents in relation to MED’s operation going back more than 15 years, and there have also been constraints in relation to the document management systems within the former DOL. This made the tracking down of documentation difficult on occasion, particularly that which is old or which was created by staff who have now left.

38. As our Investigation progressed we identified individuals we wanted to speak to in order

to discuss specific points of detail, to test specific facts identified during our documentary investigations or to give us more context and understanding of the operating and decision-making environment at the time. As well as those we specifically wanted to interview, we also offered a number of others (who had been involved in DOL during the relevant period) the opportunity to provide information or be interviewed by us.

39. For those individuals that we interviewed, we were often asking people to speak to us at short notice and about events which in some cases were well over 10 years old. In total we interviewed 13 people, from both within and outside MBIE. A list of persons interviewed (or invited to be interviewed) by us is attached as Appendix 3.

40. Where interviews were transcribed, those transcripts were provided to the interviewee.

Extracts of the draft of our Investigation report were made available for review to affected persons in accordance with the Terms of Reference. We reviewed any feedback from them before finalising our report and delivering it to the Chief Executive.


Our Terms of Reference and the Threshold for an Employment Investigation 41. We have taken a broad approach in considering any actions or inactions of individual

employees of the former MED and DOL which might have contributed to the tragedy. 42. For example, in Part 4 below relating to the permitting function of MED, the actions of the

individual employees who approved the issue of the mining permit could be considered to have contributed to the tragedy. If the permit had not been granted, there could have been no mine. That becomes relevant in our Investigation if there are questions or concerns about the issuing of the permit.

43. Similarly, much is known about the conditions of the mine at the time of the tragedy, and

the fact that a number of regulatory requirements were not at that point being met by Pike. Some of these may have been material to, caused or contributed to the explosion. We have taken the approach that if an effective regulator ought to have, or could reasonably be expected to have, identified and enforced correction of such material breaches, then this would amount to an “action or inaction” contributing to the tragedy and is within scope of our Terms of Reference.

44. Most of DOL’s interactions with Pike took place via the department’s mine inspectors.

They were the officers engaging directly with Pike; they had the responsibility and mandate for making enforcement decisions, and they were a repository for mine expertise and experience within DOL. However, they were also subject to management direction, expectations and guidance, and they operated within the broader context of DOL. Accordingly, it was clear to us that management involvement and decision-making needed to be tested and might fall within our Terms of Reference as “actions or inactions” that could warrant an employment investigation.

45. In terms of whether any identified actions or inactions might warrant a formal

employment investigation, we had regard to general employment law principles as well as employment policies operating at the time in both MED and DOL. Ordinary employment law principles normally require that any employment investigation be commenced promptly after the issue has been discovered by the employer. In this case, the actions or inactions being considered span more than 15 years.

46. MED’s and DOL’s employment relationship policies and codes of conduct are broadly

similar and, amongst other things, provide that :

all matters relating to unsatisfactory conduct must be dealt with fairly, properly and consistently and allegations of misconduct must be fully investigated;

unsatisfactory conduct is either serious misconduct (which includes such things as refusal to perform work, obey lawful orders, the improper use of official information, wilful damage to property, violent behaviour, sexual harassment or theft) or misconduct (which includes such things as unauthorised absence from the workplace, use of obscene language, persistent absenteeism and unsatisfactory work performance);

appropriate disciplinary action will be taken after the investigation has occurred; and

disciplinary action could include warnings or dismissal.


47. Decisions or actions that suggest a lapse in performance will usually be dealt with by the employer engaging with the employee and providing the employee with an opportunity to improve.

48. An employment investigation is therefore usually undertaken to determine the facts of

what has occurred with reference to those allegations of misconduct or serious misconduct. On the basis of the facts that are determined by that investigation, the employer can then consider whether the conduct of the employee justifies dismissal or a formal warning or is simply a performance management issue. Those considerations require an assessment of all of the relevant circumstances including those in which the employee is operating at the time.

49. If the employee is carrying out the responsibilities in their job description in accordance

with the reasonable instructions of their employer, and their performance is being assessed as adequate (or better) then there are unlikely to be grounds which can later be raised to warrant dismissal or a formal warning. The exception to this is when there is alleged carelessness or incompetence (whether by actions or inaction) on the employee’s part or other misconduct or poor performance that has since come to light that the employer was not reasonably aware of at the time.

50. We have had regard to these principles as we applied our Terms of Reference to this Investigation.

51. The extremely serious implications of decisions or actions in this case mean that the bar

should be high – if we could see a good and reasonable basis for commencing an employment investigation, we would recommend that. However, it is important that this clear requirement for accountability needs to be balanced with an equally real need for fairness. There could be no benefit in recommending an employment investigation where we did not see a sound basis for doing so, and there would likely be no outcome.


4. Ministry of Economic Development

52. Over the period relevant to our Investigation the then MED had responsibility for the

granting and monitoring of prospecting, exploration and mining permits over Crown-owned minerals. These responsibilities were undertaken by a unit internal to MED known as Crown Minerals (“CM”).

53. While there were previous relevant exploration permits granted, our area of focus

commences on 1 April 1996, when MED received an application for a mining permit from Pike. The permit was considered and ultimately granted in September 1997. From that point on, MED had responsibility to monitor compliance with the permit conditions and any permit changes. A summary and timeline of relevant events and the major interactions between MED and Pike is attached as Appendix 4.

54. The Royal Commission found that MED’s evaluation and subsequent monitoring of Pike’s

mining permit was weak.2 In particular, the Royal Commission found that:

The application for a permit by Pike in March 1996 appeared to have been approved on the basis of documentation that contained limited analysis of the feasibility of the operation, had limited information and the approval documents did not demonstrate a thorough evaluation of the application.3

Health and safety matters were not considered when reviewing Pike’s proposals to develop the mine. 4

After the Pike permit was granted, there was no evidence of any monitoring or auditing of compliance with the work programme or the permit conditions and the overall approach to monitoring was passive. 5

55. Accordingly, there were significant issues for us to investigate in relation to the

performance of MED in assessing and monitoring Pike’s mining permit. We consider the permitting and monitoring functions in turn below.

The Grant of Pike’s Mining Permit The Regulatory Framework 56. The legislative and regulatory framework applying to MED’s interactions with Pike was

detailed at length in joint departmental submissions made to the Royal Commission6 and is also traversed in the Royal Commission Report.7 The relevant historical context for that framework, in particular the Crown Minerals Act 1991 (“CMA”), was also discussed in detail in MED’s submissions.8

2 RC 27:3

3 RC 27:15 - 27:18

4 RC 27:14

5 RC 27:19 - 27:21

6 Joint Legislative Framework Paper prepared by the Departments of Labour and Conservation and the

Ministries of Economic Development and for the Environment, dated 6 May 2011. 7 RC 27:4 - 27:13

8 Tier Two Paper prepared by MED, dated 6 May 2011, pages 11-49.


57. For our purposes it is sufficient to note that prior to the introduction of the CMA, legal matters relating to coal mining, ranging from the allocation of mining licences to safety and environmental requirements, were all consolidated under the Coal Mines Act 19799. The CMA came into effect in 1991 alongside the Resource Management Act 1991 as part of major reform of legislation governing New Zealand’s natural resources.10

58. At around the same time that new resource management and conservation legislation

were being adopted, a major review of this country’s health and safety legislation occurred, which ultimately led to the introduction of the Health and Safety in Employment Act 1992.

59. In short, the legislative reforms in 1991 and 1992 marked a major transition away from an

integrated and prescriptive Coal Mines Act to a legislative framework that separated regulatory responsibility for licensing of Crown-owned mineral resources (including Crown-owned coal) from health and safety and environmental regulation.

60. The transition took time. The CMA provided for minerals programmes to be issued for

different types of mineral resources, to establish policies and procedures aimed at achieving:

the efficient allocation of rights in Crown-owned minerals; and

the obtaining by the Crown of a fair financial return from its minerals (section 12 CMA).

61. One of the first minerals programmes to be issued following the enactment of the CMA in

1991 was the Minerals Programme for Coal (1996) (the “Coal Programme”) issued to take effect in October 1996.

62. There are relatively few coal mines in New Zealand, and applications for permits to mine

coal are infrequent. Underground coal mine applications are even rarer. Between 1998 and 2010 there were seven underground coal mine and three mixed underground and open-cast coal mine applications granted.

63. Pike’s was one of the first major underground coal mine permit applications to be

considered under the new regime.

64. The Coal Programme stated its fundamental objective as being to:

“allow continuing investment in prospecting, exploration and mining of Crown-owned coal which is in accordance with good exploration or mining practice, always provided that: there is efficient allocation of permits; the Crown obtains a fair financial return from the extraction of its coal resources by a permit holder under that permit; and there is due regard to the principles of the Treaty of Waitangi.”11

9 And before that under the Coal Mines Act 1925.

10 The provisions of the Crown Minerals Bill were initially part of the Resource Management Bill which was

introduced into Parliament in December 1989, but were eventually separated into a discrete Bill. 11

Paragraph 2.18 Coal Programme. This is similar to other minerals programmes (for example, see paragraph 2.1 Minerals Programme for Minerals (Excluding Petroleum) 2008; paragraph 2.16 of the Minerals Programme for Petroleum 2008).


65. While this was the overarching aim, in actually assessing an application for a coal mining permit, the Coal Programme provided for the Minister (or delegated official)12 to grant a

permit where:13

“(a) the application is first in priority;

(b) the land in respect of which the application is made is available for

permitting;

(c) the minerals in respect of which the application is made are available for

permitting;

(d) the permit applicant has identified and delineated a coal deposit that can be

effectively mined within technical and economic constraints;14

(e) there is an acceptable or approved work programme which is in accordance

with good mining practice and provides for the recovery of the coal resource

such that the Crown will obtain a fair financial return;15

(f) the area of land applied for is appropriate to enable mining activities to be

carried out;16

(g) an appropriate duration is determined;17

(h) there is an agreed point(s) of valuation for royalty purposes;18

(i) the Minister is satisfied that due regard has been given to the principles of

the Treaty of Waitangi and any relevant international obligations; and

(j) the Minister is satisfied that the permit applicant will comply with and give

proper effect to any permit granted.19”

66. Any one of these considerations could involve substantial information provision and analysis to reach an informed conclusion. For example, in considering whether a coal deposit has been “delineated” under the Coal Programme, the Minister is to take into account 11 detailed considerations including such matters as the geology of the permit application area.20

12

While under the CMA the Minister of Energy and Resources is responsible for administering the CMA, in practice many of the Minister’s functions and powers under the act were exercised by the Group Manager of CM under delegation and the associated work and analysis was undertaken by officials in CM. See Joint Legislative Framework Paper prepared by the Departments of Labour and Conservation and the Ministries of Economic Development and for the Environment, dated 6 May 2011, page 26. 13

Coal Programme paragraph 8.12 14

Coal Programme paragraphs 8.14 - 8.15 15






See also the list of considerations in respect of Work Programme Assessment for the allocation of prospecting permits, at paragraph 6.11 of the Coal Programme, and for the allocation of exploration permits at paragraph 7.13 of the Coal Programme.


67. Similarly, the Coal Programme details six wide-ranging and complex “matters that the Minister will have regard to” in determining whether the proposed work programme is in accordance with good mining practice, including:

“whether the exploration or mining methods proposed are suitable and technically effective, given the geology of the area, work programme objectives and prior knowledge of the area; and

whether the exploration, development and production operations are designed and conducted so as to maximise extraction of a saleable commodity and avoid sterilisation and waste.”21

68. It is not clear what level of detail or information was needed in order to satisfy the Coal Programme’s requirements. This lack of clarity was compounded by some very general statements, for example, in relation to “good mining practice” the Coal Programme states:

“Good exploration or mining practice cannot be defined unequivocally. Rather, it is a concept implying that a permit holder will undertake prospecting, exploration or mining in a technically competent manner and with a degree of diligence and prudence reasonably and ordinarily exercised by experienced operators engaged in similar activities under similar circumstances and conditions.”22

69. One thing that is very clear from consideration of the Coal Programme however is that

health and safety is explicitly excluded from assessments and monitoring under the Coal Programme:

“The Crown Minerals Act 1991 and this Minerals Programme for Coal do not address environmental and health and safety matters relating to prospecting exploration and mining. These matters are provided for in the Resource Management Act 1991 and the Health and Safety in Employment Act 1992 which set the legislative requirements respectively on environmental and health and safety issues. The provisions of those two Acts complement those of the Crown Minerals Act 1991.”23

70. We note the Royal Commission’s comments on the artificiality of strictly divorcing health

and safety considerations from overall consideration of good mining practice.24 Nonetheless, in keeping with the clear legislative separation intended by the reforms we have outlined above, the Coal Programme is explicit in noting that it:

“…does not address those good exploration or mining practice components which are not relevant to the functions of the Crown Minerals Act 1991. In particular, this includes those aspects of good exploration or mining practice concerning health and safety matters and environmental effects. ”25

21



Coal Programme preamble, para 10 24

RC 27:27 25

Coal Programme paragraph 14.1


71. Our interviews confirmed that the officials involved in considering mining permits at the time were very clear about this and that they gave no consideration to health and safety in the process, as this was explicitly excluded by the Coal Programme.

72. From our Investigation it was evident to us that the regulatory framework that the

officials were required to apply to mining permit applications was a complex and overlapping one. The specific matters that may be considered are difficult to define, particularly given the inclusion of high level descriptions or definitions that are general and permissive of a “broad brush” approach. However, one aspect that is clear is the exclusion of health and safety considerations.

The Focus and Resourcing of Crown Minerals

73. The overriding focus for those in charge of permitting within CM was on ensuring that rights in Crown-owned minerals were allocated efficiently and in a way that ensured a “fair financial return” to the Crown from its minerals. This is in line with the legislation in place at the time.26

74. This was evident to us from both the human resource information we reviewed and from

our interviews. The relevant performance measures focussed on the volume and timeliness of permits and licences processed. Little account was taken of more qualitative measures.

75. In one interview we were told about constraints on resourcing in this area. The fee of

approximately $1,500 for a mining permit equated to approximately 30 hours work. This was intended to cover the associated processing and analysis work. There was no scope for further cost recovery from the applicant (for example if it were considered that specialist advice or assessment might be required).27

76. There were challenges in meeting these volume and timeliness targets. Evidence

provided to us showed that at about the time that Pike’s application was processed, there was a considerable backlog of historic applications made under the previous mining legislation, as well as significant numbers of fresh applications coming in under the new regime. We were told there were often complications and delays in assessing even apparently simple criteria such as whether the application was first in priority.

77. This environment meant that CM was predominantly focussed on processing applications

efficiently and quickly. As one senior staff member told us, the CM was essentially “a permitting factory”.

26

CMA s.12 27

This may be contrasted with the statutory ability for the Department of Conservation to recover such costs under s. 17 of the Conservation 1987.


The Pike Permit Application 78. Pike applied for a mining permit in April 1996. The application was made on the correct

form applicable at the time.28 79. The form is a one page document. The primary information sought is applicant details,

land description and information about the work programme. The associated ‘guide to completing permit application form’ states that where the space on the form is insufficient, separate sheets are to be used. Pike’s application with attachments comprised in total 28 pages.

80. The information provided by Pike in support of its permit application appears brief,

particularly given the complexity of the Coal Programme as discussed above. Similarly, there is not a great deal of documentation that we have been able to locate that was created by CM in assessing the application. In total, there are three documents comprising 47 pages of material.

81. The former manager of the permitting unit within CM described for us the general

approach for considering such permits as including:

Work undertaken to determine that the applicant was ‘first in priority’ in order to be granted the permit. It was explained to us that this was often not a straightforward process, as there were often transitional issues to deal with arising under the former legislation, or complications whereby original licence or permit holders had granted priority to another party.

The permitting unit would also send the information to Land Information New Zealand in order to ensure the land in question was available and within Crown reserves and that the boundary could be mapped clearly.

Checks were undertaken to determine whether any Waitangi Tribunal claims had been filed affecting the application.

The permitting unit geologists would also undertake an assessment of the claim by reference to the ‘library’ of existing technical data, samples and geological surveys.

Local iwi would be consulted on the application. 82. We were also directed to a ‘Procedures Manual’ that guided the CM staff through various

processes, including dealing with permit applications. This manual did set out a detailed process to be followed, but provided little in the way of guidance as to what analysis should be applied in arriving at a decision. The emphasis again was on efficient processing and timeliness.

83. The evidence we received indicated that there would be significant work and activity

undertaken in relation to a permit application along the above lines that would not ordinarily be recorded and retained on the CM files.

28

Form 1 from the Crown Minerals (Forms Other than for Petroleum) Regulations 1992 was the form to be used for mining permit applications.


84. Although Pike’s was one of the first coal mining applications to be considered under the new regime, we were able to consider some other comparable coal mining permit applications from the same period. While there were differences between them as might be expected given that the applicants, the area and the detail of the proposals were different, we found that overall the level of information provided and other documentation kept on file were all broadly consistent.

85. The Royal Commission received evidence suggesting that “the data provided to Crown

Minerals…would not be adequate to meet the evaluation of an application criteria established under the Minerals Programme for Coal (1996)”29 . There was also other evidence provided to the Royal Commission and to us that the information provided, though brief, was sufficient to meet the bare requirements of the Coal Programme.

86. In our view it would be very difficult to definitively determine this question, given the

ambiguity in the Coal Programme as to what was required to evaluate a mining permit application. More important in our view is the fact that there was clearly very little detailed guidance provided to officials involved in making an assessment of Pike’s application about how to conduct a thorough evaluation. Nor were any of the officials directly involved in this assessment equipped with coal mining expertise.

87. This is consistent with the ‘permitting factory’30 approach, with the associated emphasis

on processing and timeliness that we have described above. MED’s Monitoring Obligations 88. Once the permit was granted to Pike, MED had ongoing monitoring obligations.31 In

considering this aspect the Royal Commission found that:

“MED’s subsequent monitoring of the mine development was limited to ensuring that work statements were filed and storing mining plans.”32

89. The Royal Commission further stated there was:

“..no evidence of any monitoring or auditing of compliance with the work programme, or the permit conditions. No questions were asked about the operation, despite delays in development and production, and escalating costs. There was no analysis of annual summary reports or other reports on exploration or mining activities.”33

90. Under the conditions of Pike’s mining permit there were requirements to submit to MED:

a proposed annual work statement “for written acceptance”34 within 30 days following the anniversary of the grant of the permit, meaning the first work statement was due in October 1998; and

detailed geotechnical reports.

29

RC 27:16 30

See paragraph 77, above. 31

CMA s. 5(c) 32

RC Volume 1, page 22. 33

RC 27:19 34

Conditions of Mining Permit 41453, clause 3(a)


91. The annual work statements needed to detail what mining operations would be undertaken in the year ahead, or if no mining operations were proposed, to give reasons for this. Where mining was intended to take place Pike needed to provide a mine plan and further detail such as the quantity and quality of coal to be recovered and the mining methods to be used.

92. The annual work statements filed by Pike from 1999 to 2004 were typically filed as one

page letters, outlining matters such as work related to gaining resource consents, obtaining land access, making marketing trips and raising debt/ equity. A number of comments were made throughout this period in the annual work statements about the “continuing delays in obtaining a land access arrangement from the DoC”. The 2004 work statement advises that an access agreement had been reached with the Department of Conservation (“DOC”) on 8 October 2004, stating that mining activities were not expected in the year to September 2005 as the access road and other infrastructure needed to be completed. Later annual work statements continued to show nil production forecasts and referred to progress on access and road construction. It was not until the annual work statement provided on 27 November 2007 that coal production of 10,000 tonnes of coal was forecast for the year to September 2008. A map of the mine workings was also provided with that work statement.

93. On 19 December 2008 Pike submitted an annual work statement and associated

summary, which forecast production of coal of 390,000 tonnes for the period October 2008 – September 2009. Subsequently in 2009 a further, revised annual work statement was filed predicting an increased forecast of production of 771,641 tonnes to September 2009.

94. In relation to the obligation to file technical data, in terms of Pike’s permit, the

requirement was that annual geotechnical reports be provided according to the same timeframe as the annual work statements. Unlike the annual work statements, these technical reports were not proactively sought or followed up on by CM. Pike does not appear to have filed any such technical reports until CM contacted Pike in November 2006 and brought this default to the company’s attention. Pike provided technical data covering some of the years 1983 to 2007 on 1 June 2007.

95. In our interviews we were told that the main focus for the filing of both these reports was

for CM to monitor that the permit was still being used, that the resource was not being sterilised, the level of royalties (if any) and development of the technical database. If there were no significant issues in these areas, the reports provided were simply noted and filed.

96. We consider this overall approach is also evident in relation to CM’s attitude towards the

possibility of obtaining much more detailed and richer information about Pike’s mining proposals. As the Royal Commission noted, the original permit application contained limited information about such matters as capital requirements, costs and profitability and the proposed mining methods were uncertain.35 However, by 2000, Pike had developed a feasibility study that contained much more information on the overall proposed mining plan. While DOC obtained that study for their purposes, there is no record of CM having obtained a copy, despite their being aware of its existence.

35

RC 27:15


97. This, in our view, reflects MED’s narrow focus on the efficient turnover of work volumes, and a limited view of what factors needed to be considered to ensure that there would ultimately be a “fair financial return” to the Crown.

Conclusions 98. As discussed under the section entitled Our Terms of Reference and the Threshold for an

Employment Investigation, it is possible to draw a connection between the actions or inactions of staff of CM in carrying out the permitting and monitoring functions relating to Pike, and the tragedy that occurred. If the permit had never been granted, or had been revoked, the tragedy might never have occurred.

99. In considering whether the permitting and monitoring functions were deficient in any way, it is evident to us that there was scope under the relevant regulatory regime to take a different, more assiduous approach to these responsibilities. If a broader perspective had been taken to carrying out the obligations contained in the CMA and the Coal Programme a refusal of the permit could conceivably have occurred in the first instance. Similarly, there was scope for stricter conditions to be applied to the permit. If that had been done, we could speculate that this too could have ultimately resulted in the revocation of the permit if these conditions were not complied with.

100. The approach to monitoring was clearly perfunctory. Having determined that, it is not

clear to us how closer monitoring of Pike’s activities within the framework and expectations of the time might have significantly changed the course of events – although this too may have been possible.

101. Our view is that there were significant systemic issues that in combination likely

prevented those tasked with assessing Pike’s permit application and monitoring it once it was granted from applying a balanced, deliberate and comprehensive approach to their responsibilities.

102. In summary these were:

a complex, confusing regulatory framework that had a number of contradictory elements;

a narrow organisational focus on MED’s responsibilities under the CMA in terms of obtaining for the Crown a fair financial return from its minerals; and

a lack of resourcing and internal guidance for staff.

103. In considering, pursuant to our Terms of Reference, whether any action or inaction of any individual in this regard may warrant the commencement of an employment investigation, there is a very significant time factor. The permitting process itself took place more than 15 years ago. We have found that all of the individuals directly involved in the grant of the permit itself are no longer employed by MBIE.

104. However, this has not prevented us from being able to assess the actions, decisions and

inactions of former MED employees relevant to the Royal Commission’s criticisms. This has revealed a story that is not about individual employee failure that might lead to an employment investigation (even if that were possible). Instead, we have found that individuals involved in the permitting and monitoring process were not put in a position to carry out their duties in a careful and deliberate way due to the wider system imperatives.


105. Addressing these issues in the on-going permitting and monitoring processes to be managed by MBIE will be imperative. Similar issues to those identified by the Royal Commission should not and cannot be permitted to contribute to any tragedy in the future.

106. We are heartened by evidence we received in the course of our Investigation about

changes in the approach to permitting and monitoring that are fundamentally different from that which applied when Pike’s permit was dealt with. In particular, a pragmatic ‘interim’ approach is being taken by CM staff pending the passing of new legislation whereby permit applications that potentially raise health and safety considerations are discussed between CM staff and the relevant mine inspector.


5. Department of Labour

Introduction 107. Over the period relevant to the Investigation, DOL had responsibility for the regulation of

health and safety in the workplace and enforcement of the HSE Act and related regulations. Amongst those were the Mining Regulations.

108. The Royal Commission traverses the history of the mining inspectorate in New Zealand36 and how DOL became the regulator. As referred to in our Terms of Reference, our Investigation covers the period since 1 January 2005.

109. We note the Royal Commission’s comments that “(t)he Department of Labour did not

have the focus, capacity or strategies to ensure that Pike was meeting its legal responsibilities under health and safety laws. The department assumed that Pike was complying with the law, even though there was ample evidence to the contrary. The department should have prohibited Pike from operating the mine until its health and safety systems were adequate.”37

110. The fact that there was a departmental failure to this extent is obviously a critical

concern. In our Investigation we have sought to appraise the potential responsibility not only of the mine inspectors who were literally ‘at the coal face’ in the dealings with Pike, but also of managers and senior officials who held critical decision-making roles relevant to the support and resourcing of those mine inspectors.

111. In this section we consider firstly the specifics of the mine inspectors’ interactions with

Pike; then the management support for the mine (and extractives) inspectors and the management response to the mine inspectors’ requests for additional resources, support and training, and finally we consider the organisational context and priorities that we believe contributed to the failure to provide effective regulator oversight at Pike.

DOL’s interactions with Pike 112. A timeline of some of DOL’s key interactions with Pike is attached as Appendix 5.

113. The number of mine inspectors with responsibility for regulating mines over the relevant

period ranged from three to one. As is reflected in the Royal Commission Report, most interactions with Pike occurred with Michael Firmin, who had primary oversight of Pike River from February 2007, and Kevin Poynter, who was the mine inspector overseeing Pike River from July 2008 up to and beyond the date of the explosion.

114. While Mr Firmin handed over responsibility for Pike River to Mr Poynter in July 2008, as might be expected from the fact that from that time they were the only two mine inspectors in DOL, they continued to have regular contact and discussions. In particular Mr Poynter would discuss issues or concerns about Pike River with Mr Firmin from time to time.

36

RC 22 37

RC Volume 1, page 12


115. In the course of this Investigation we were able to interview Mr Firmin, who remains an employee of MBIE. Unfortunately Mr Poynter, who is no longer employed by MBIE, declined to be interviewed.

116. While we regret that we were not able to interview Mr Poynter, we note that there is a

very significant volume of information available providing evidence of his actions and approach, contained in briefs provided to the Royal Commission, as well as in transcripts of his evidence to the Royal Commission and also his evidence to internal reviews. This information was valuable to us in undertaking our Investigation.

117. In the Royal Commission Report there is discussion of a number of specific points of

interaction between the mine inspectors and Pike where the Royal Commission notes that more effective action could have and should have been taken by the mine inspectors. The most relevant of these in our opinion are: the failure to confront the issue of Pike’s plan to locate the main fan underground; failure to decisively respond to the issue of the inadequate second egress; the lack of a prosecution or warning being issued to Pike following the ‘roadheader investigation’; and the failure to follow up effectively on the issue of ‘frictional ignitions’. We deal with each of these in turn below.

The location of the main fan underground 118. As is evident from the Royal Commission Report, at the time of the explosion the

ventilation system was inadequate for the area of the mine being worked. A significant contributor to those ventilation issues was the decision by Pike to locate the main fan for the mine underground. This decision was a poor choice for a coal mine like Pike River. As was stated in evidence to the Royal Commission, if there are high methane levels in the mine, the power supply to the fan must be shut down to avoid an ignition.38 This creates a “catch-22” situation as the fan cannot then be used to clear the methane. An underground fan is closer to explosive material such as methane and coal dust and a malfunction could provide an ignition source. Furthermore, in the event of an explosion it is essential to re-establish ventilation as soon as possible to maximise the chances of survival for those underground – but an underground fan may be inaccessible and is also is more likely to be damaged by an explosion.

119. The Royal Commission’s comments on the adequacy of DOL’s response to this issue were pointed: whilst noting that location of a main ventilation fan underground was not expressly prohibited in New Zealand, it was “at odds with established practice”39. The Royal Commission’s view was that Mr Firmin needed to confront the issue in 2007, particularly in November, when he was told that the fan was to be located west of the fault. The Royal Commission considered that the failure to question the proposal made it more difficult for Mr Poynter to do so later, allowed a highly questionable ventilation system to be installed at Pike River, and also set the tone for subsequent interactions between the company and the inspectors.40

38

David Reece Witness Statement filed with Royal Commission, dated 2 February 2012, paras 21, 66 and 99. 39

RC 15:27 40

RC 15:27, RC 15:29


120. In our interview with Mr Firmin on this issue he was able to expand upon his evidence to the Royal Commission on this point. It is notable that the proposal to place the main fan underground was put to Mr Firmin by Peter Whittall, the general manager, mines, in February 2007, the day of Mr Firmin’s first inspection of Pike as the responsible mine inspector. Mr Firmin retains his notes from the day of that inspection, and can recall Mr Whittall saying to him in relation to the location of the main fan “there’s nothing you can do to stop me”.

121. In our interview with Mr Firmin it was evident that he had ultimately concluded that this

was true. He did have concerns about the placement, noting the problems that would occur particularly if the mine gassed out due to a fan stoppage, as to how the fan could be restarted.41 Mr Whittall told him that a fan on the surface would be provided to address this issue. Mr Firmin did have some experience with tunnels and mineral mines where the main ventilation fan had been placed underground.42 He was also concerned enough to research the applicable regulations both in New Zealand and also those applying in a number of Australian states. He could not find anything prohibiting this approach to ventilation.43

122. Accordingly, Mr Firmin took an alternative approach of testing with Pike how they

proposed to install and operate the main fan safely. He told us that Pike assured him that the ventilation plan would also incorporate an auxiliary external fan, which would have the capacity to ventilate the mine in circumstances where the main fan had shut down. He told us that this “took the heat out of” his primary concerns. Pike also provided Mr Firmin with information about the construction around the fan of “explosion pathways” that would serve to protect the fan in the event of an explosion, as well as assurances that the contractors to be providing the fans were reputable and experienced in this area.44

123. In November 2007 Mr Firmin again visited the mine and was told the position of the shaft

and the sump was to now be on the western side of the Hawera fault. He asked for further operational details, but these were not available.45

124. The Royal Commission notes that the fan was not installed until August and September

2010 and became operational in October 2010. It was finally commissioned for operation on 10 November 2010 – nine days before the first explosion.46

125. We would observe that there are a number of significant features of Mr Firmin’s

approach to this issue: he did not raise it with his manager to check his approach; nor did he consider the possibility of commissioning an expert report to assess the safety of the proposal to place the main fan within the mine. Once he had received assurances from Pike about the steps they were going to take, he did not take proactive steps to ensure that those assurances were checked and tested. Mr Firmin described to us that the handover process (both generally and in the case of his handover to Mr Poynter of Pike in

41

Michael Firmin Witness Statement filed with Royal Commission, dated 19 October 2011, paragraph 29. 42

Michael Firmin Witness Statement filed with Royal Commission, dated 19 October 2011, paragraph 28. 43

Royal Commission Transcript for Phase Three Hearings – for the week of 14 November 2011, Michael Firmin, pages 2895 – 2899. 44

Royal Commission Transcript for Phase Three Hearings – for the week of 14 November 2011, Michael Firmin, page 2953, line 12-13. 45

RC 15:27 46

RC 8:67


May 2008) was “very informal” and he did not specifically raise the fan issue with Mr Poynter47.

126. The end result was that Pike did place the main fan underground. A number of the

features that Mr Firmin was assured of would be put in place to assure the safety of that approach were not put in place, or not applied effectively. There was no independent expert opinion obtained to help inform decision-making or risk assessments by DOL. Nor was there any process or plan to provide assurance that the promised safeguards were put in place or were working.

127. This should not have happened. However, our Investigation has led us to the view that

Mr Firmin’s actions in response were consistent with his own and the other mine inspector’s general approach to Pike. It was also in general accordance with the approach expected of him by his manager and was informed by the relevant operating guidelines to mine inspectors at the time.

128. We return to the issue of the mine inspectors’ overall approach to Pike and more broadly

to their role in our discussion at paragraph 147 below. The ‘Second Means of Egress’ Issue 129. Pursuant to Regulation 23, employers are required to “take all practicable steps to ensure

that every mine… has suitable and sufficient outlets, providing means of entry and exit for every employee in the mine.”48 This requirement is a logical one in terms of ensuring an escape option for those who may not be able to exit a mine through the primary entrance because of a rockfall, explosion or other issue.

130. For Pike River, the purported second means of egress was essentially a ventilation shaft

with a ladder system installed. This was 105 metres high, and exited into a remote, unsheltered area. As was observed by the Royal Commission, this was not an adequate or acceptable second means of egress.49

131. The Royal Commission considered that when construction of the ventilation shaft and the

installation of the ladder system was completed in mid-2009, Mr Poynter should have required Pike to provide its plan for a proper second egress then. When in 2010 the focus started turning to hydro extraction, the issue of a prohibition notice was the only appropriate response.50 When this was put to Mr Poynter in cross-examination by the Royal Commission, it is noted that:

“he referred to the difficulty in interpreting Regulation 23, the need for a decision from someone more senior in DOL if a prohibition notice was issued, and his perception that Pike’s management viewed this matter as ‘a priority’, meaning that a negotiated agreement remained a preferable approach. The commission cannot accept this.”51

47

The limited functionality of DOL’s health and safety information system, INSITE, to assist in this process is referred to at paragraph 173 below. 48

Mining Regulations, regulation 23; under regulation 23(2)(c) a relevant factor to have regard to is the need to have at least two outlets that are separate from each other but that interconnect. 49

RC 15:54 50

RC 15:54, 15:55 51

RC 15:56


132. Again, we agree with the Royal Commission that a stronger stance could have and should have been taken by the department on this issue. Our Investigation confirms that Mr Poynter was concerned about this, particularly after his visit to Pike on 2 November 2010 when he realised that coal extraction had started and that the mine would have moved to full extraction before the planned completion of the new egress. 52 Mr Poynter also included reference to this issue in his activity reporting to his line manager, and put in significant effort to try to make a negotiated agreement with Pike work.53

133. Mr Poynter’s knowledge of an attempt to issue an improvement notice on another mine

which had been operating without a second egress for nearly 10 years also may have influenced his decision to persevere with negotiation. In that case, an improvement notice was finally issued but was appealed54 and substituted by a revised improvement notice that extended the timeframe for compliance,55 despite that mine not having a second egress at all.

Ventilation and Frictional Ignitions 134. On 11 November 2008 several methane ignitions occurred at Pike, and Mr Poynter was

notified of these by Pike (as it was required to do) on 13 November.56 Mr Poynter then deemed the mine to be a “Gassy mine” under the Mining Regulations.

135. Soon after that, sometime between 14 and 19 November 2008, a Mr Bell (a former chief

inspector of coal mines, but who had no continuing role as a mine inspector and no employment relationship with Mr Poynter) rang Mr Poynter to advise that he had been made aware of “10 ignitions in the past fortnight” by a senior McConnell Dowell employee working at Pike. Mr Bell told Mr Poynter that the problem was inadequate ventilation57 through the use of forcing ventilation and said that work must stop.58

136. Mr Poynter considered the issue of forcing ventilation, and also consulted the senior

advisor high hazards (extractives) for DOL. There followed a number of interactions between Mr Poynter and Pike where Mr Poynter tried to determine what Pike knew about the number of ignitions and what the company was doing in response to them.59 This was ultimately inconclusive and Mr Poynter closed the electronic ‘INSITE’ entry on 13 February 2009. It is possible that this was because by then mine development had progressed beyond the Hawera Fault, where coal had been first encountered, reducing the immediacy of the issue.60

137. In the Royal Commission’s view Mr Poynter misunderstood the relevant Mining

Regulation, and he decided that he could not act because the Mining Regulations did not require the use of exhausting, as opposed to forcing, ventilation. In fact the primary consideration was whether the company had taken all practicable steps to supply fresh air

52

Kevin Poynter Witness Statement filed with Royal Commission, dated 19 October 2011, para 282. 53

RC 15:51 and Kevin Poynter Witness Statement filed with Royal Commission, dated 19 October 2011, paras 245 and 281. 54

RC 23:9 55

RC 23:10 56

RC 15:31, 15:32 57

RC 15:33 58

RC 15:41 59

RC 15:34-15:37 60

RC 15:38


to the face. If this had not been done, then the regulator’s role was to determine what response was appropriate.61

138. This was a turning point where, in the view of the Royal Commission and in our view also,

there was an opportunity for Mr Poynter to reappraise Pike’s compliance status. Up until this point, the general approach by Mr Poynter (and of Mr Firmin before him) was to treat Pike as a compliant, even “best practice” company. This event provided a basis for reviewing that approach, as there were “clear indications that they (Pike) were not properly investigating and reporting notifiable incidents”.62

139. However, Mr Poynter did not take that opportunity. The Roadheader Investigation 140. On 14 February 2010 a miner at Pike River suffered serious injury to his foot due to the

faulty operation of a roadheader machine.63 Mr Poynter was required to undertake an investigation of this accident under the HSE Act.

141. Mr Poynter’s investigation report into this accident identified a number of contributing

factors including:

the injured person’s actions at the time were contrary to the mine rules;

an apprentice fitter (who had not trained on the machine as an operator) operated the machine without authorisation;

a mine deputy observed a similar action earlier in the shift and did nothing to prevent a reoccurrence; and

the faulty machine was not withdrawn from service.64

142. There was a significant matter discovered by Mr Poynter during his investigation that was not explicitly addressed in his report. In his investigation notes Mr Poynter recorded that “further inspection found that the Deadman lever on the opposite bolter had been tied down with an electrical cable tie”. This was a deliberate overriding of a safety device – in itself a serious matter. It does not appear that Mr Poynter undertook any specific investigation into that matter, although Mr Poynter gave evidence to the Royal Commission that he had a number of discussions with Pike concerning workforce briefings about the risk of overriding safety devices.

143. This was a serious safety incident, with evidence of a disabled safety device. As was

noted by the Royal Commission, these factors should have increased concern about the safety culture at Pike, and provided a clear indication of a need for a much firmer compliance approach.

144. While Mr Poynter did find in his investigation report that each of the mine deputy, the

injured employee and the company had committed a number of breaches of the HSE Act, he concluded that due to the dismissal of the mine deputy, the serious injuries to the employee and the company’s corrective actions, no further action needed to be taken.

61

RC 15:41 62

RC 15:42 63

As described by the Royal Commission (RC 15:67), a roadheader bores mine roadways and is equipped to install roof bolts as it moves forwards. 64

RC 15:68


145. There are a number of significant features of Mr Poynter’s approach to this investigation. He discussed it with his team leader, Irene Campbell. In her interview with us, she told us that she recalled that discussion, and that she agreed with the proposed approach.

146. In his report Mr Poynter states that “…further action would provide no benefit ”. He told

Gunningham and Neal that whenever he needed to consider the merits of a prosecution, he would ask whether that would be in the public benefit, and if a mine “is keen to cooperate we are encouraged to use negotiated agreement…to seek compliance. We would only revert to enforcement tools if the hazard warranted it and we had experienced non-compliance in the past”.

The Overall Approach taken by the Mine Inspectors 147. The above accounts are in no way a complete account of the interactions between the

mine inspectors and Pike. There were a large number of interactions over a wide range of issues.65 In some instances, there is evidence of a relatively firm and directive approach being taken by the mine inspectors, for example in their discussion with Pike over the types of explosive that could be used in the mine.66

148. However, the examples above are evidence of opportunities where the mine inspectors

could have taken firmer action with Pike, and potentially even pursued a prosecution in the case of the roadheader investigation. Instead, the mine inspectors took the approach that Pike was a compliant, responsive “best practice” company.67

149. The Royal Commission, in its consideration of regulator oversight at Pike River, concluded

that “the inspectors acted in accordance with DOL policy and largely met the operational requirement to conduct mine inspections at three-monthly intervals”, nonetheless they “obtained only a limited snapshot of the mine’s physical systems during inspections, and possessed insufficient information to make an informed judgement concerning the level of compliance at Pike River.”68

150. It is evident from the Royal Commission Report that Pike was not the compliant, “best

practice” operator that the mine inspectors viewed it as being. Leading up to the explosion there were a number of incidents occurring in the mine that required notification to DOL, including a large roof fall in the hydro panel on 30 October 2010 and uncontrolled methane accumulations on and around that date. Reports made by underground deputies and workers did not make their way to Pike senior management, and the mine inspectors were unaware of the level and frequency of these methane build ups. The mine inspectors did not see some of the information evidencing these sorts of issues until they appeared before the Royal Commission.69

151. A critical question for us is how the mine inspectors could have acted in accordance with

DOL policy, and yet still be operating in the relatively uninformed way described by the Royal Commission. The lack of a full understanding of the level of compliance at Pike is key to the Royal Commission’s conclusion that “...an effective regulator would have issued a prohibition notice when Pike commenced hydro mining in September 2010 without a

65

See Gunningham and Neal appendix 4 for a fuller list. 66

See Gunningham and Neal para 306, 372 - 374 and 399. 67

RC 15:80 68

RC 15:80 69

RC Volume 1, page 1


useable second outlet (egress) from the mine.” 70 Such a decision could have paused work while the egress was put in place – this would have also provided a second ventilation intake, and in turn may have improved overall ventilation and methane management in the mine.

152. In short, the mine inspectors were complying with relevant policy, yet did not apply their

statutory powers to Pike in a way that might be expected of an effective regulator. How could this occur?

153. We consider a substantial part of the answer to that lies in the environment the mine

inspectors were operating within; what they understood their role to be; and the resources, organisational guidance, training , tools and support they were provided with to carry out that role. We consider each of these points in the following sections.

The Role of the Mine Inspectors and relevant Regulation, policy and guidance 154. As the Royal Commission states, DOL’s function in relation to Pike was to ensure that Pike

was a legally compliant coal mine.71

155. One of the mine inspector’s primary tasks under the HSE Act was to “take all reasonable steps to ensure that this Act is being complied with”. 72 This obligation is subect to any directions and conditions that the Secretary for Labour imposes.73 If there is a difference in opinion between a health and safety officer and the department about what may be best practice in this area, the officer is expected to represent the department’s views.74

156. There were also important roles for mine inspectors in helping employees and employers

to improve safety by providing information and education.75 DOL’s own briefing to Ministers following the Pike tragedy emphasised these aspects:

“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.”76

157. The emphasis placed by the department here is very consistent with what we heard from

a range of former DOL managers and leaders in relation to the “modern regulator” approach to health and safety regulation adopted by the department. The focus was on the employer as bearing the primary responsibility for health and safety, with support, education and enforcement being the primary roles of the department.

70

RC 15:82 71

RC Volume 1, page 23 72

HSE Act s 29(2) 73

HSE Act s 30 74

Profitt v Chief Executive, Department of Labour ERA Auckland AA 258/07 24 August 2007 75

HSE Act s.30 76

Ministerial Briefing of 20 December 2010: Underground Mining – Background of Department of Labour’s Legislative and Investigative Approach, page 3.


158. The emphasis on support and education was made clear to the mine inspectors. The main DOL policy document available to them to help inform their decision-making was the enforcement policy document “Keeping Work Safe”. This document also emphasised the importance of being clearer about how the department would undertake its enforcement role so that a collaborative approach to health and safety management was undertaken in this country.77 It also clearly informed the mine inspectors’ general approach, for example where it states “…we will generally use the minimum enforcement necessary to obtain compliance with the HSE Act. Our initial response to non-compliance might not involve the use of one of our statutory enforcement tools.… Aside from the seriousness of the non-compliance, we will generally be supportive of duty-holders who demonstrate a genuine willingness to comply with the HSE Act. In some circumstances, for example, it may be appropriate for a duty-holder and inspector to negotiate an agreement on specific remedial actions and timeframes required to bring about compliance with the HSE Act. ...”. 78

159. The mine inspectors were well aware of “Keeping Work Safe” as evidenced by the

comments in relation to the roadheader investigation noted above.

160. Other than this though, internal policy to help guide and inform the mine inspectors in carrying out their particular duties was thin. A counterpart to “Keeping Work Safe” intended for departmental officers was a work in progress at the time of the explosion.79 While there were a range of internal policy documents, policy and operating procedures and tools available for DOL staff to use, most of these would have been of only passing relevance for the mine inspectors. The main resources that the mine inspectors would have referred to was the ‘mining sector work plan’, which outlined the work plan for the mining inspectors for the year ahead, as well as DOL’s general ‘Investigations Best Practice Manual’.

161. The HSE Act is overarching legislation, and it allows for detailed regulations and approved

codes of practice. Regulations impose legal duties, and approved codes of practice provide guidance on how to meet those duties. Both regulations and the approved codes are considered to be crucial adjuncts to the Robens’ model of regulation.80 They are particularly important in circumstances such as in coal mining in New Zealand. When the HSE Act was introduced, it repealed the Coal Mines Act 1979 and associated regulations, leaving this country with no legislation specific to coal mines.81 The risks of this were noted with ‘considerable consternation’ by a review committee led by the Ministry of Commerce in 1996.82 These changes were part of a wider move to a light handed regulatory regime.83

77

Keeping Work Safe, 2009, page i. 78

Keeping Work Safe, 2009, page 6. This was in turn consistent with approaches outlined in the Improvement and Improvement Notices Operating Procedure issued on 17 October 2005, which states that the health and safety intervention policy of the department considers three broad approaches: negotiated agreements, directed compliance and enforcement actions. 79

Gunningham and Neal para 83 80 RC 18:17-19; Robens Committee (1972), Committee on Safety and Health at Work, Safety and Health at

Work: Report of the Committee, HMSO, London. 81

RC 26:2 82

RC 26:14 83

See Gunningham and Neil para 46 et seq


162. For the period relevant to our Investigation, two coal-mine specific sets of regulations existed and no approved codes of practice. Some industry developed guidance did exist, but this was in no way comprehensive.

163. The Royal Commission characterised this as “an inadequate framework for underground

mining”, noting that the sector specific regulation that was in place was not comprehensive and needed revision.84 The Royal Commission also noted difficulties with the reliance in the Mining Regulations on the phrase “all practicable steps” causing difficulty in interpretation and application, the inadequacy of focus or scope in some of the Mining Regulations, and the lack of support for a safety management system.85

164. The difficulty that the mine inspectors had in relying on the Mining Regulations is

evidenced by their frequent search for applicable overseas regulations or guidance when dealing with issues arising at Pike.86

165. Overall it is evident that the mine inspectors lacked an effective supporting framework of

regulation and guidance to help them carry out their role.87 Some relevant departmental policy guidance did exist, notably Keeping Work Safe. The mine inspectors did seek to apply this policy, but it did not help them to identify critical points where a strong regulatory response was needed.

What Training, Qualifications and Tools did the Mine Inspectors Have? 166. DOL’s internal qualification requirements for a specialist mine inspector specified that any

suitable candidate needed to hold a First Class Coal Mine Manager Certificate of Competence. Both mine inspectors held such a certificate. Mr Poynter had extensive experience as a mine manager, while Mr Firmin had less mine manager experience but held a number of other relevant qualifications.88

167. The Royal Commission considered both to be adequately qualified and sufficiently

experienced and that Mr Firmin’s limited experience as a mine manager:

“would not have been a difficulty if the inspectorate worked in a supportive environment, was properly resourced and had been able to access specialist advice from other experts.”89

168. While the mine inspectors had suitable entry qualifications and experience, it has been

recognised that their ongoing ability to meet the requirements of their role would to a great degree depend upon the quality of their ongoing training and support.90 On this front there were issues.

84

RC 26:10 85

RC 26:16- 26:21 86

For example, in dealing with the debate about what explosives would be permissible at Pike the mine inspectors relied heavily on UK guidance – see also Kevin Poynter Witness Statement filed with Royal Commission, dated 19 October 2011, paras 165-171. 87

Gunningham and Neal para 76 88

RC 15:13-14 89

RC 15:15 90

Gunningham and Neal para 164


169. The Royal Commission identified training deficiencies for mining inspectors in hazard identification, auditing, workplace culture, management practices, emergency response, inspections and investigations.91 Both the Royal Commission and Gunningham and Neal noted that the mine inspectors felt disadvantaged, as specialists within a generalist inspectorate that did not understand their need to be equipped with mining specific skills.92 Both quoted Mr Firmin on this topic:

“Management’s approach is – all you need *is+ to check people’s systems and any inspector can [do this]..but I say I want ventilation, engineering training, geotechnical training, and they say it’s not your responsibility why do you need training to that degree…sometimes I say I am coming *to a mine+ to do ventilation, show us all you have done, but I need the qualifications to ask, is it adequate?...You have to have continuous professional development….I need to be competent, up with developments…I want to be current, go on courses, sit exams. It helps my credibility on site.”93

170. This issue was a long standing one. Concerns about the need for specialist training as well

as maintenance of the mine inspectors’ core skills in areas such as investigation and report writing were raised during a 2006 review.94 There were two fundamental difficulties with providing the mine inspectors with access to mining specialist courses. Firstly, such courses were generally only available in Australia, meaning higher cost. Secondly, because of the reporting structure the mine inspectors were placed within, the mine inspectors had to request funding for such training from their respective regional service managers and had to compete for scarce training budget resources alongside a wide range of requests from ‘general’ health and safety inspectors.

171. While noting that the issue of effective resourcing for appropriate training of mining

inspectors is a common one,95 Gunningham and Neal concluded that “there are significant gaps in Departmental training” and that finding the resources to provide such training on a structured basis “should be a high priority”.96

172. Possibly the most significant gap in terms of training relative to the findings of the Royal

Commission relates to audits. An audit of Pike would likely have been invaluable in obtaining a true picture of the level of compliance at the mine. However, while the relevant mine inspector position description states that mine inspectors may "carry out mining inspection audits as determined by the Service Manager",97 the mine inspectors were not trained in auditing. There was also no health and safety compliance audit tool for mining, and there appear to have been funding issues associated with undertaking audits.98 The Mining Sector Work Plan 2010/11 included the activities “Develop audits for underground mines” and “Conduct audits”. No progress was made on those activities as at the time of the 19 November explosion.99

91

RC 22:40 92

RC 22:40 93





Health and Safety Inspector/Inspector of Coal Mines/Metalliferous Position Description dated September 2007. 98

RC 15:79, 22:40, 23:26, 23:27 99

It is evident that a more methodical audit-based approach could have resulted in a clearer picture being obtained of Pike’s level of compliance. Audits were undertaken of New Zealand’s underground coal mines


173. Besides the lack of audit tools, there is evidence that there was a general lack of other potentially useful tools available to the mine inspectors. The Royal Commission notes that they did not have available to them any data analysis tools.100 The mine inspectors also appear to have struggled with the general business tools used for recording and tracking their work. The main system used, “INSITE” was considered inadequate.101

174. This system was apparently developed in 2005 on a very modest budget and was designed to record all the interactions between an employer and various units within DOL including the health and safety inspectorate and the labour inspectorate. The system generated information used for the performance assessment of each inspector as it reports the number and type of matters dealt with by each inspector and whether they met the required timeframes. Recent internal feedback on the system has also criticised its inability to generate data on all interactions of the department with a particular employer and the variability of the data quality. This was not a useful tool to allow Mr Poynter to assess or analyse the interactions Mr Firmin had had with Pike.

What expert technical support was available?

175. Even with effective training and resourcing in place, it appears that any realistically sized mining inspection service in this country will struggle to maintain sufficient expertise to adequately address the diversity and complexity of major hazards in underground coal mines. As the Royal Commission notes, these hazards can span diverse specialist areas such as geological, geotechnical, strata, spontaneous combustion, poor ventilation, methane and electrical.102 This can be mitigated with access to the right specialists.

176. The department did have in place a senior advisor high hazards (extractives), Mr Booyse.

While the mine inspectors did consult with him for specialist advice,103 he did not have specific coal mining experience or training.104 Even if he had done, it would not have been feasible to expect him to have expertise across all of the specialist areas that may require attention in an underground coal mine.

177. This would suggest that a comprehensive and effective mining inspection service would

have an explicit process and reserved funding for external, specialist opinions and advice where required.

178. This does not appear to have been in place for the mine inspectors.

179. An example of when such an option might have been useful in engaging with Pike is the

instance above where Mr Firmin needed to respond to Pike’s proposal to place the main fan underground. This was a novel proposal for Mr Firmin as far as a coal mine ventilation

following the Pike River disaster and 15 improvement notices were issued between October 2011 and March 2012. This compares with one improvement notice having been issued for an underground coal mine in the two years prior to the explosion. Department of Labour Report to the Royal Commission on Recent Incidents dated 30 March 2012, para 3. 100

RC 15:79 and RC 22:57- 22:59 101

RC 22:59 102

RC 22:32 103

RC 23:18 104

Gunningham and Neal appendix 6


system was concerned. It also involved potentially highly technical evaluations of the risks of the approach and how they might be mitigated.105

180. Pike had evidently decided their preferred approach, had already undertaken an

evaluation of the legal and technical implications, and appeared to be almost challenging the regulator to prevent the company from pursuing that option.

181. We asked Mr Firmin about whether he considered engaging an expert to help assess the

proposal to place the main fan underground. It was clear that this simply was not an idea that entered his head at that time. He told us that obtaining expert advice was often done in the course of an investigation in response to a workplace fatality, but that in his experience this had never been done proactively to support the mine inspectors approach to a particular issue or proposal.

182. While we did not interview Mr Poynter, there is evidence that he held a similar view. He

did not formally engage any external experts to support him with his work with Pike or any other mine, as far as we can determine. In our interview with his team leader, while she thought there would be funding available to commission such advice, she could not recall any such request being made by Mr Poynter. In his evidence to the Royal Commission, Mr Poynter was asked about whether there were fiscal constraints around seeking such advice – he stated “at times it was very difficult to get permission to travel, so I guess we took an assumption that being able to get technical advice was going to be something that was quite difficult.” 106

183. It seems to us that this was the type of situation that may arise from time to time for a

mining inspectorate where even well-trained mine inspectors might want to have the option of commissioning an expert to provide advice or opinion in order to fully assess the proposal being made by the company, and to provide the regulator with confidence that “all practicable steps” were being taken to ensure that the (in this case) ventilation solution was safe.

What were the mine inspectors resourced to do? 184. Under the heading ‘*t+he decline of the mining inspectorate’ in chapter 22 of its Report,

the Royal Commission discusses the history and functioning of the mining inspectorate under the Coal Mines Act 1979 when there was a separate inspectorate for coal mines; through a transition period from 1992 to 1998 following the introduction of the HSE Act, and from 1998 when mine inspectors became part of DOL.

185. The decline over the relevant periods is starkly made out by the Royal Commission and is

evident across nearly all parameters of the function: there was a decline in staff numbers and correspondingly workloads had gone up. Overall inspection frequency reduced. The Royal Commission considered the inspectorate to be “understaffed, especially in later years.”107

105

This is evident from David Reece’s evidence, for example the discussion of an airlock at the entrance to ensure an effective and accessible auxilliary fan. David Reece Witness statement 2 February 2012 paragraph 67. 106

Royal Commission Transcript for Phase Three Hearings – for the week of 14 November 2011, Kevin Poynter, page 2969 line 18-20 107

RC 22:64 (note also this summarises many negative conclusions on the mining inspectorate’s capacity and capability)


186. The mine inspectors themselves had real concerns about their workload. The actual number of mine inspectors within DOL varied from one to three over the period that Pike was operational. From April 2008 when Mr Poynter was employed until his resignation in June 2011, DOL had two mine inspectors.108 Both Mr Poynter and Mr Firmin thought it vital to recruit a third inspector to achieve reasonable coverage of mines, quarries and tunnels in the country.

187. As was noted by the Royal Commission, the workload for the mine inspectors was

‘formidable’.109 The two mine inspectors for most of this period were expected to provide coverage for all extractives workplaces (coal and mineral) across the country. This comprised approximately 1,000 mines, tunnels and quarries.110 As Mr Poynter was based in Greymouth and Mr Firmin was in Dunedin, they alternated responsibility for the North Island on a six monthly cycle.111

188. Mr Poynter made his views on the lack of coverage and resultant risks arising from the

lack of a third inspector very clear. In every monthly Operational Review Process (“ORP”) report to his manager from August 2009 up until the explosion occurred at Pike he entered under the ‘Issues and Risks’ section the comment:

“With only two warranted inspectors covering the country resources are extremely stretched. In addition there is a lack of knowledge or inspections of high risk extraction sites throughout the lower half of the North Island.

Plans to inspect Underground Tunnels in Auckland Area but nothing has been done to evaluate the need in the lower half of the NI.

The impact or risk on the Department should anything occur is high.”

189. Mr Firmin shared these concerns. He noted that there were a number of occasions where

he had operated as DOL’s only mine inspector.112 Mr Firmin told us that he recalled Mr Poynter discussing with him the fact that he (Poynter) had adopted the practice of putting the resourcing issue as an item in all of his monthly reports. Mr Firmin considered this but did not think it would be effective.

190. Mr Poynter’s reports were going to his direct line manager, Ms Campbell. Within DOL’s

structure at the time, Ms Campbell was a regional team leader based in Christchurch. Her responsibilities also included management of a number of other specialist health and safety staff (including occupational health nurses and a hazardous substances specialist), as well as employment relations mediators. She had no background or expertise in mining.

108

Mr Poynter started conducting inspections from the date of his appointment, however he did not receive his certificate of appointment until June 2009, which permitted him to use the powers available under the HSE Act. 109

RC 22:63 110

RC 22:28, but see also comment on quarry inspectors from 2005 at 22:38 and possible cross reference to WSMT decision re quarries. 111

RC 22:37 112

These periods are outlined in RC 22:36


191. Ms Campbell told us that Mr Poynter had general health and safety inspector responsibilities over and above his mine inspection duties. Given that DOL did not have another health and safety inspector in Greymouth, Mr Poynter was required to act as a “first response” inspector to accidents. While the amount of time spent on these types of duties was difficult to quantify, they were another demand on his already significant workload.

192. Ms Campbell had real concerns about the mine inspectors. She thought the inspection

workload was too high and she was concerned for Mr Poynter’s health and wellbeing. She also had concerns about the risks to DOL that this raised, and told us about a discussion she had with Mr Poynter:

“I can remember us sitting in my office and we were talking about if something ever went wrong how would it look for the department, it was a huge risk.”

193. Ms Campbell told us that she tried to be flexible with Mr Poynter in setting his work

programme, asking him for his view as to what was manageable, given the amount of travel his role involved. She felt that the way to address the inspection workload was to appoint a third mining inspector. This was the subject of the memo from the Mining Steering Group (“MSG”) to the Workplace Services Management Team (“WSMT”) discussed at paragraphs 217-226 below.

What were the mine inspectors supported to do – the management of the mine inspectors 194. The management and support of the mine inspectors is dealt with by the Royal

Commission at Chapter 23. The Royal Commission concluded in that chapter that:

“Management and oversight of the mining inspectors were deficient, leaving the inspectors inadequately supported. Problems affecting the inspectorate and the resulting risks were known at many levels of DOL, but were not competently addressed. Generally there was an inadequate focus on the health and safety risks posed by the underground coal mining industry.”113

195. We can confirm from our Investigation many of the elements identified by the Royal

Commission supported this conclusion. Attached as Appendix 6 is an organisational structure chart of the relevant areas within DOL. In brief, Mr Firmin and Mr Poynter each reported to separate regional team leaders, who had general management responsibilities and who did not have specific mines expertise. While another important person was the senior advisor high hazards (extractives) referred to above at paragraph 136, he was based in the North Island and contact between the mine inspectors and him was infrequent, certainly not as routine as that between the mine inspectors and their team leaders.114

196. The mine inspectors reported monthly to their team leaders (by means of an “ORP”

report). We have described above the particular risk that Mr Poynter started including in his monthly reports concerning the need for an additional mine inspector. In addition to this, he reported many of the issues and concerns he noted at Pike River, including issues

113

RC 23:57 114

RC 23:18


with methane ignitions, inadequate stone dusting, an apparent breakdown in the strata management plan, and the need to complete another egress.115

197. Pike River was not the only area of concern. A particular issue that again was reported on

routinely by Mr Poynter between March 2010 and June 2010 related to a gold mine that had been allowed to operate without any second egress in breach of the Mining Regulations for many years. Mine inspectors prior to Mr Poynter had not taken any issue with this breach. The Royal Commission noted that even after this clear breach had been identified by Mr Poynter, enforcement action took approximately six months.116

198. In the Royal Commission’s view, these and other health and safety concerns notified by

the mine inspectors in their reporting should have raised questions about the effectiveness of DOL’s scrutiny of the industry and resulted in a review of DOL’s approach to compliance in the area.

199. The first line of management that might have had opportunity to take action in relation to

the issues and concerns being raised by the mine inspectors was the team leaders, as the mine inspectors’ direct line managers. Was there a significant performance failure on the part of the team leaders in failing to take such action?

200. We consider that there was a failure to take action. However from our interview with Mr

Poynter’s (then) team leader we consider that she was endeavouring to address the issues as best she could. The fundamental problem was that, although a warranted health and safety inspector herself, she was a general manager, with no background experience to assist her in dealing with this type of issue. She considered the role and responsibilities of the mine inspectors to be the same as for all inspectors, however she did not have the sort of training or experience needed to provide expert guidance and support to the mine inspectors.

201. She was accordingly not in a strong position to determine that a change in approach was

needed, independent of advice from the mine inspector. When confronted by particular issues arising in a mine (such as the second egress issue), she told us that she was effectively reliant on taking Mr Poynter’s advice on what the best approach might be. If further support on a mining issue was required, she would inevitably suggest that Mr Poynter contact the senior advisor high hazards (extractives).

202. She did not gain a sense that things were seriously off track with health and safety

management at Pike. Her reading of the reports, and associated discussions with Mr Poynter, suggested to her that while issues and risks were arising with Pike, appropriate mitigation strategies were also being agreed to deal with those risks and that matters were in hand.

203. In summary, the team leaders lacked seniority in the organisation, and the power to make

or review significant resource decisions. They did not have any technical background to assist in their management of the mine inspectors.

115

RC 23:7 116

RC 23:8-23:10


204. Similarly, the senior advisor high hazards (extractives) had technical expertise in mining, but no coal mining training or expertise. He did not have any management role or oversight of the mine inspectors. The Royal Commission noted that “(t)he advisor was a member of the MSG and privy to the major issues facing the inspectors. Like their team leaders he was probably powerless to remedy them.”117

The Mining Steering Group and its role 205. The team leaders in turn reported to service managers, who in turn reported to a regional

manager southern. Issues raised by the mine inspectors with their team leaders were duly passed on to the service managers and then that regional manager. Both the team leader and the (former) regional manager we spoke to were members of the MSG as were the mine inspectors, the senior advisor high hazards (extractives) and other relevant team leaders, service managers and regional managers. This group was first convened in late 2006, and met between two and four times per year. The MSG meetings spanned two days, with the first day typically involving separate meetings between the mine inspectors and the senior advisor in one group, and the managers in another. On the second day all members met jointly.

206. The Royal Commission notes that the group was to:

“Be a forum for national planning and setting of operational priorities across the sector ….be a means of monitoring and resolving emergent mining issues ….be responsible for improving the consistency of approach by mine inspectors in relation to regulatory checks and visits …enable the coordinated involvement of relevant line managers …assist with Dept’s development of industry standards, guidelines and operating procedures”.118

207. There were at least two attempts to draft terms of reference for this group, and we have

located a draft containing a slightly different set of objectives from those listed above. The core objectives or tasks of the MSG were never formalised.

208. Those former members of the MSG we spoke to did believe it provided a useful forum to

discuss matters related to mining. Gunningham and Neal noted that the MSG ”provided a valuable and necessary forum and coordinating structure”, 119and that the members of that group “thought that the quarterly meetings provided a valuable forum where the mining specialists could meet directly with the managers and work through the issues confronting them”. 120

117

RC 23:19 118

RC 23:20 119


Gunningham and Neal para 122


209. The MSG did set annual work plans for the mine inspectors, and reviewed these at their meetings. We also heard evidence that the MSG played a significant part in advancing (and securing budget for) the recruitment of the senior advisor high hazards (extractives) in November 2008. We were told an early initiative to have non-specialist health and safety inspectors conduct quarry inspections originated from the group. There appears to have been a significant amount of time spent on management administration, for example where and how to apportion the cost of travel for the mine inspectors when they were carrying out North Island mine inspections. Specific issues arising at particular mines were seldom discussed.121

210. Many of the significant issues confronting the mine inspectors were raised and discussed

at the MSG, as evidenced by the group’s minutes. The issue of professional development for the mine inspectors, the need to form operational links with other agencies, the possibility of conducting joint audits or inspections, and concerns about the adequacy of the mining information on the DOL website were some of the matters covered. The issue of reporting lines and the inherent difficulty created by having the mine inspectors each reporting to different team leaders, with the senior advisor high hazards (extractives) reporting to yet another manager was also raised and discussed.122

211. Accordingly, as was noted by the Royal Commission, “[t]he group discussed issues that, if

addressed, could have substantially improved health and safety in mining.”

212. However, while these significant matters were discussed, and recorded in the minutes, little forward progress was made on many of them. Part of the issue appears to be that MSG had no resource delegations – any changes that group wished to make impacting on the overall cost of mining inspection services required escalation. In concluding that the MSG was “ineffective” in dealing with these issues the Royal Commission noted that it “appears to have lacked budget and the authority to make key decisions.”123

213. This is true. However the option was available to the MSG to escalate these issues to a

more senior group, WSMT, which did have the delegations and authority to make key decisions. It is remarkable that we could find only one instance where this had been done formally, and that was in circumstances where the MSG felt that there was a very real prospect of a “catastrophe” if the issue of resourcing for the mine inspectors was not addressed. This is discussed further in paragraphs 217 to 226 below.

214. During 2006 to 2009 a mining policy review was conducted by DOL.124 This was

commenced at the request of the then Minister of Labour, following the fatalities at Black Reef and Roa. As noted by the Royal Commission, it was proposed to review “whether the regulatory framework was ‘effective in the high-hazard underground mining environment, and whether there was a case to return to greater regulatory prescription and re-establish a separate mining inspectorate.’” 125

121

Mr Firmin told us one exception was the second egress issue at the gold Mine referred to at paragraph 133 above. 122

RC 23:24 – 23:27 123

RC 23:29 124

Discussed at RC 23:48 - 23:54 125

Department of Labour, Briefing: Underground Mining – Background on Department of Labour’s Legislative and Investigative Approach, 20 December 2010; quoted at RC 23:48.


215. There does not appear to have been a substantive input by MSG on this review. Mr Firmin told the Royal Commission that the MSG was concerned that they had not been allowed enough time to provide feedback on the review.126

216. Overall, the MSG lacked an adequate mandate, impetus and strategic focus. The

response from WSMT to MSG’s one formal plea for additional resource may inform why the MSG did not direct more requests to that group. Out of the 11 people who would typically meet for two days about four times a year, at most four had any understanding of mining. There was a strong sense amongst some members that the MSG membership lacked the collective understanding of the issues to be able to steer the mining inspection service; as one former service manager and MSG member told us “some excellent people tried to do the right things…I don’t believe that they were supported properly, but then again saying I don’t know if we were the right people to even sit on that group.”

WSMT’s consideration of the MSG memorandum seeking a third mining inspector

217. The MSG’s request for more resources from WSMT is discussed by the Royal Commission

in chapter 23, paragraphs 36 to 39. The group decided to raise the issue of the shortage of mining inspectors with WSMT following its meeting on 10 December 2009. A memorandum was drafted for consideration by WSMT at its meeting on 17 February 2010.

218. The Royal Commission noted that the memorandum described the shortage as posing: ““significant political, reputational and service standard/delivery risks to the DoL.” The potential for catastrophe was described as ‘very real’. The group pointed out that “*b+ased on the current staffing levels, there is no realistic means for the DoL to service all high-hazard mining, tunnel or quarry operations, low-risk operations are not currently serviced.””127

219. As well as asking that WSMT agree that a third mining inspector be recruited to address

these risks, the memorandum further proposed that existing health and safety inspectors be trained to undertake quarrying inspections. MSG members felt that this proposal would serve to reduce some of the existing workload on the mine inspectors and allow them to focus on underground mines, although it was recognised that the mine inspectors would also be required to provide the training. This would likely increase their workload in the short term.

220. One member of MSG was also a member of WSMT, being the then regional manager

southern. It was she who cautioned MSG that ‘this is a difficult decision for WSMT, with no funds available, and may mean a trade-off with other staff’.128 She was nominally the MSG sponsor for the MSG memorandum at WSMT, but did not actually attend the 17 February meeting. When we asked her whether she had considered deferring the item so that she would be able to present it, she told us that she felt that other WSMT members were well across the issue, as she had raised it with them a number of times before. In an email she sent to WSMT members on 16 February 2010, the day before the WSMT meeting, she advised that she would not be able to attend the meeting but she provided

126

RC 23:53 127

RC 23:37 128

RC 23:37


an ‘executive summary’ and commented in relation to the recommendation that a third mining inspector be appointed:

“Should there be deaths or catastrophic failure, as can occur in mining, questions of our current staffing and regime would be asked. We need to be comfortable with the investment decisions made.”

221. The strong sense from most MSG members was that the mining inspection service “was in

crisis” and this is reflected in the tone of the memorandum. It presents as a “cry for help” from the group. However it was lacking clear metrics and objective comparative data, nor did it provide a compelling analysis of the issues.

222. WSMT did agree to the request that other health and safety inspectors be trained so as to

be able to take up some quarry inspection responsibilities, but declined the request for a third mining inspector, with the minutes recording that that request:

“Needs to be considered in conjunction with resourcing requirements for other high risk areas such as geothermal and petroleum. Also need to clarify statutory requirements and how this affects demand for services and workloads.”

223. We spoke to Maarten Quivooy as the group manager, Workplace Services and chair of

WSMT at the time about the WSMT decision. In considering the MSG memorandum, he told us that WSMT had real concern about resourcing for other potential high risk areas as noted in the WSMT minutes. They did not feel able to make a decision on this request without considering those wider risks. He also told us:

“..we were faced as a management team with the question of what is the best distribution of resource, either existing resource or additional resource depending on what you’re dealing with. And the fact that we lacked any kind of tool or approach around how we weighed up if you like the cost benefit or the risks and benefits of investing. And I would again draw the context back to – that wasn’t just a question for mining but it was a question for geothermal, for offshore hazardous substances to some extent and occupational health.”

224. In that context, although WSMT did not agree to a third mining inspector, the risk was

placed on a DOL risk register in March 2010 which stated: “Limited mining resource. May have service failure, certainly very constrained service. Reputational risk in an event.”

225. This risk also appeared in the Business Group Level Risk Register which went to second

tier level within DOL, but in that register was presented as a cost pressure issue with no reference specifically to mining:

”Workplace Services. This group is currently forecasting cost pressures of $1.2 million for the next financial year and ongoing. This is expected to significantly impact on the number of front-line staff. Currently, it is expected that two key specialist positions (high hazards and geothermal) will remain vacant.”129

129

Cost pressures in the Workplace Services Group were evident both from a number of the interviews we conducted as well our documentary investigations. In 2007 an appropriation to use the unallocated HSE levy was granted to significantly increase the number of health and safety inspectors and technical support


226. It is evident to us that the MSG did not present a strong business case to WSMT on this

proposal. However, the depth of concern and the level of risk raised appears to us to have warranted further inquiry by WSMT members as to how serious the issues really were. The criticality of these issues should also have been clearly represented in the Labour Business Group Level Risk Register.130 To WSMT this presented as just one of a number of critical and pressing concerns that WSMT members had in mind, but they had no clear framework or tools to allow effective prioritisation of resources.

Electrical Safety in Mines

227. A particular issue arises in relation to the failure to undertake effective electrical

inspections at Pike once the main electrical systems had been installed. The background as to why this did not occur in our view further demonstrates the disconnect between the mine inspectors and more senior levels in the organisation, and in particular a lack of focus on and understanding of the possible impacts a wider organisational change might have on mining inspection services.

228. The Royal Commission noted a “significant concern about the electrical system and

whether it played a role in the explosion”.131 It also recorded the view of a witness before the Royal Commission that “the underground Pike electrical system warranted ‘a significant amount of attention’ from a regulator, because of its location in a hazardous area and its unconventional nature.”132

229. Up until January 2009, electrical inspection of mines was the responsibility of MED. We

understand this was generally initiated by the DOL mine inspectors, who would liaise with the Electrical Safety Service (“ESS”) within MED, to coordinate electrical inspections with a scheduled mine inspector visit.

230. An electrical inspection was carried out at Pike River on 13 February 2007 by Richard

Davenport from the ESS, accompanied by Mr Firmin. Another inspection was carried out by Mr Davenport on 26 November 2008, when he attended with Mr Poynter. The inspections found the electrical system to be compliant on each occasion, but even as at November 2008 no significant underground electrical equipment had been installed.133

231. From 1 January 2009 the responsibility for electrical inspections transferred to DOL. No

further electrical inspections were carried out by an electrical systems specialist at Pike River prior to the explosion. The Royal Commission found that DOL lacked expertise to conduct such inspections, and that “*a]s a result, key underground electrical systems installed in 2010 were not scrutinised by an electrical expert from or on behalf of DOL.” 134

but by the 2010 report back the actual increase was significantly less due to cost pressures (SDC Min(07) 9/2; EGI Min(10) 6/5 refers). 130

We have also seen issues with risk reporting at other levels. For example, activity and risk reporting appear to be merged in “ORP” reports which went from mine inspectors to team leaders and up through the management line. For example, one monthly report we saw to the general manager, Workplace Services, was 47 pages long. 131

RC 11:60 132

RC 11:51 133

RC 11:53 134

RC 11:54; 11:59


232. Our Investigation shows that DOL’s approach to the transfer of responsibility that occurred on 1 January 2009 was ineffectual, particularly insofar as mine inspections were concerned.

233. The transfer of responsibility that occurred on 1 January 2009 went far beyond energy

safety at underground mines. In 2001, the Cabinet Finance, Infrastructure and Environment Committee had agreed that the HSE Act would “be the primary piece of legislation governing safety while work is being carried out by electrical or gas workers, and for the safety of other workers using electricity and/or gas at work”.135 DOL was given funding to cover these responsibilities, but this funding had been returned by DOL to MED each year, under an agreement between the agencies that ESS would actually carry out the work.

234. In 2008 it was confirmed to Cabinet that this arrangement would change and that DOL

would itself undertake these responsibilities. Cabinet was told that this would result in extra workload, and that most health and safety inspectors would require specific training in the fundamentals of electrical and gas safety and in identifying non-compliance and possible hazards in these areas. To support the front-line inspectors, specialist expertise in these areas would also be required:

“This specialist expertise could be spread across several people, called on for advice as required for the various functions. They could be departmental staff, or the expertise could be purchased from MED or elsewhere.”136

235. Additional funding and one-off transitional funding was approved by Cabinet to support

these changes.137 236. The transition occurred on 1 January 2009, and on that date ESS began referring all

notifications of workplace electrical and gas accidents to DOL. In response, DOL produced a guide for responding to electricity and gas accidents in the form of “Q&A’s”, dated 23 February 2009. This was circulated by the then acting national support manager workplace services to workplace service managers and team leaders on 2 March 2009, for further distribution ‘as needed’. In the covering email, reference was made to DOL undertaking a programme of visits in March and April of 2009 to engage with health and safety service managers, team leaders and inspectors to “provide information, address questions and identify issues emerging from this transfer of responsibilities.”138

237. The Q&A documentation is entitled “Electricity and Gas Accidents”. It is entirely focussed

on DOL’s responsibilities in the event of an electrical or gas accident. Staff were provided with a contact list of electrical and gas experts to assist in such events.

135

CAB Min (01) 33/5 136

Cabinet Economic Development Committee Paper “Energy safety Funding for the Department of Labour” EDC(08) 107 page 2 paragraph 13. 137

The increase in baseline funding was increased from $0.305M to $0.468M, with one-off funding for staff training etc of $0.066M, together with a one off capital amount of $0.114m to provide ‘mobility support’ for the inspectorate to carry out its new responsibilities: Cabinet Economic Development Committee Paper “Energy safety Funding for the Department of Labour” EDC(08) 107 page 2 paragrahs 14 -17. 138

Internal email 2 March 2009 – Acting National Support Manager Workplace to Workplace Service Managers and others.


238. The communication to workplace managers and staff on 2 March 2009 advised that there would be a further ‘phase 2’ of activities to “support the new requirements and to put in place a longer term sustainable platform for the Department’s work in this area.” These included a development plan to address resourcing requirements, training needs, and amendments to business processes.

239. We followed up with Mr Firmin his understanding of what the transition meant for mine

inspections. He could recall the Q&A documentation being provided to inspectors in relation to incidents and that there was a presentation. He also had contacted a team leader in the North Island who was an electrical inspector about a surface electrical issue. However, proactive electrical inspection of mines by a qualified electrical person was not addressed as far as he could recall. Nor could he recall any discussion of that issue at the MSG.

240. We were not able to speak with Mr Poynter on this issue, but as we have noted above, he

did not appear to access any external expert advice to assist him with inspections, and he indicated in evidence to the Royal Commission that he anticipated that fiscal constraints would make that difficult. He appears to have considered that he needed to cover all aspects of inspections himself.139

241. Still, it is surprising that there is no mention of this issue in any ORP reports from the mine

inspectors to their team leaders, nor any mention of it in any MSG minutes. There appears to have been an unquestioning response to the organisation’s communications advising as to how these new responsibilities would be addressed. It may have been anticipated that the ‘phase 2’ process would address the issue.

242. There were decisions to allocate funding for resourcing energy safety work. WSMT

considered a paper in July 2009 that presented a proposal for this. It was decided that some funds be held centrally for contracting gas and electrical expertise, and that some funds (0.5 FTE equivalent) be distributed to the regions for a similar purpose. It was also decided to employ a senior advisor high hazards electricity to provide the necessary technical resource. This position was not able to be filled until January 2011.

243. No further assistance or guidance on how electrical inspections should be conducted was

provided to the mine inspectors in the period leading up to the explosion at Pike. Despite the paper to Cabinet in 2008140 clearly setting out the need for DOL to put in place ‘specialist energy safety skills’ to support the health and safety inspectors’ range of functions, including compliance assessments, no one within DOL appears to have considered explicitly how the Mining Regulations would be monitored or enforced effectively. Overall the process appears to have been reactive and ad-hoc.

139

Irene Campbell’s ORP report of November 2009 makes reference to Mr Poynter having been accompanied by an inspector from NSW on North Island visits and that Mr Poyner “learnt a lot about safety of electrical installations…” 140

Cabinet Economic Development Committee Paper “ Energy Safety Funding for the Department of Labour” EDC(08) 107


Senior Management focus and strategy

244. In the discussion of the effectiveness of DOL as health and safety regulator the Royal Commission concludes that “DOL has been ineffective as the regulator of health and safety in the underground coal mining industry, and its strategic approach to health and safety in general provides cause for concern.”141

245. In order to explore what level of visibility senior management had of the approach to

mining inspection, and what their focus and strategy was relevant to it, we interviewed a number of senior managers, to deputy chief executive and chief executive level.

246. It was clear from these interviews that senior management had a very limited

involvement with the mine inspectors, and the issues they faced, and that senior managers had no effective means of evaluating risks and making resource decisions in relation to low frequency/high consequence areas. None of the senior managers we spoke to had any health and safety expertise.142

Considering the potential for disaster

247. Whilst the risks inherent in mining did not have a high profile, the broader issue of low frequency/high consequence risk or catastrophe had been raised with DOL senior managers as early as 2005. At that time, Mike Cosman who was then manager operations support, health and safety, wrote a paper entitled “The Case for a Specialist High Hazard Team in the Workplace Group - A think piece”. This paper described the need for DOL to engage with the issue of potential disasters. Underground mining was listed as one of a number of major hazard workplaces in the paper, which commented:

“If such an incident *eg the Piper Alpha disaster in the North Sea+ were to happen in New Zealand tomorrow, would the Department and the Government have a good story to tell about the robustness of its regulatory mechanisms to monitor and intervene where appropriate in order to achieve a socially acceptable risk level? Or would we be criticised for having inadequate expertise, resources and regulatory mechanisms for those industries that represent the highest potential hazard, whilst spending much of our time dealing with common but much more contained risks?”

248. In our interview with Andrew Annakin who was deputy secretary of Workplace Group at

the time this paper was written, he told us that he did not recall reading the paper, but he did recall a discussion with Mr Cosman about this type of issue. He recalled that the discussion touched on the type of risk presented by the petroleum industry and LPG storage facilities. He did not recall any specific advice or follow up on that conversation.

249. At around this time the issue was also discussed between Mr Quivooy as general manager

Workplace Services and Mr Cosman. In considering the issues being raised by Mr Cosman, Mr Quivooy told us that given the limited resources available, he found it difficult to assess this issue against the other demands for health and safety services. The paper and discussions about it did not result in any formal advice or recommendations to take the issue forward. Part of the reason for this appears to us to be that it did not fit

141

RC 24:53 142

The exception to this was our interview with Mr Cosman. His positions over this period are outlined in Appendix 3.


within the direction of travel for health and safety strategy that senior management within DOL was looking to progress which focussed on an integrated Workplace Services Group delivering both health and safety and employment relations services.

The limited focus for health and safety

250. In 2005 DOL launched its ‘10-year strategy’ aimed at lifting New Zealand’s health and

safety performance, enhancing the productivity of New Zealand’s businesses, and reducing the number of deaths or serious injuries at work. This set out four principles:

Prevention: focusing on preventing workplace illness and injury;

Participation: participation by all groups involved in the workplace, including workers, health and safety representatives, unions, employers, industry and government agencies;

Responsibility: employers are primarily responsible for health and safety, although employees have some personal responsibility; and

Practicability: health and safety is based on what is reasonable, including the potential for harm, current knowledge and the cost of health and safety measures.

251. The Royal Commission did not endorse the responsibility and practicability principles,

noting in particular in relation to ‘responsibility’ that “the statement …overlooks the critical role of the regulator, whose inspectors inform, educate and ensure compliance.”143

252. We spoke to a number of former senior managers in DOL about what they saw as their

priorities in the health and safety area. It was clear from these interviews that their primary focus in the health and safety area was on reducing the work toll informed by workplace fatality data. Judged on this criterion, the mining industry was not identified as a particular priority, as the industry is relatively small and fatalities are infrequent. As Mr Quivooy told us;

“The data tells you on a sort of year by year basis that most people die are not in mining, you know, forestry, fishing, agriculture, construction. And so simplistic as it might be as a kind of methodology, that’s what we were looking at which is how can we improve outcomes in those areas and outcomes means reducing the toll.”

253. Based on this approach, we were told that DOL had identified five industries to focus on,

being those industries that recorded the most fatalities. These were: construction, manufacturing, agriculture, forestry and fishing.

254. Allied to this was a long-standing focus on small business rather than large employers. Mr

Annakin told us that the view within DOL was that large businesses have the capability to manage their own health and safety issues. During his tenure as deputy chief executive, he said there was a refocusing of Workplace Services and health and safety delivery on small businesses and information dissemination.

143

RC 24:37


255. This approach was consistent with senior management right to chief executive level. When we interviewed James Buwalda (Chief Executive of DOL from July 2003 to May 2007), he was able to provide us with some insights into the perspective he had had on the health and safety function over that period. From his position, the primary issues were the large numbers of workplace fatalities and work-related deaths in New Zealand, and the Government’s focus on workplace productivity. He also commented that larger businesses that achieved tertiary accreditation with ACC were largely trusted to manage workplace practices. When questioned on whether he had had any advice or briefings on low frequency/high consequence risks, he could not recall this having occurred. He commented to us that, by way of comparison, he had 200 staff (including management) in health and safety, out of a total of around 1,400 staff. Most of his focus and time spent on operational matters was in areas other than health and safety, notably immigration.

256. Indeed, this lack of focus on health and safety was an issue across the most senior

management in DOL. Health and safety was a relatively small subset of their overall responsibilities, and within that the visibility of the mine inspectors and the problems they faced was negligible.

257. Senior managers were highly preoccupied over most of the relevant period with managing major change processes. For example, Ms Haines, who was acting in the Deputy Secretary Workplace on 19 November 2010 and who had been acting since February 2010 told us about her priorities over that period. These included responsibility in leading a major change process to separate DOL’s policy from its service delivery functions, delivering an urgent review relating to ACC policy and leading a labour reform work programme required by Ministers as well as dealing with the introduction of a new corporate model within the department.

258. As a result of these demands Ms Haines had very little time to focus on the operational

aspects of health and safety regulation during her time acting as responsible Deputy Secretary. Responding to the Pike River tragedy was her first real exposure to the operational work in the group. Prior to that, her only other involvement with mining was in May 2010 when she had a role in responding to the coroners’ inquest into the mining fatality at Black Reef mine. Her media release on 14 May 2010 noted that DOL needed to learn from that event in order to make mining safer, but also went on to reinforce DOL’s stance on employer responsibility:

“The coroner’s findings are first and foremost a reminder to all employers of their responsibilities under the Health and Safety in Employment Act to provide a safe and healthy workplace.”

259. We think it is striking that DOL’s own core strategy in this area overlooks the critical roles

and responsibility that it has to regulate health and safety. This view, in particular the emphasis on the primary responsibility of the employer was very clearly an important consideration for most of the managers we spoke to.

260. The Royal Commission outlined reasons why it reached the conclusion that DOL had been

ineffective as the regulator of health and safety in the underground mining industry. These included that there was “insufficient departmental focus and expertise regarding health and safety, especially at the senior management levels.”144 This is undoubtedly so, based on the evidence we have seen and heard. None of the senior managers we spoke

144

RC 24:53


to had health and safety expertise. Whilst this is understandable bearing in mind the breadth of responsibilities second tier managers had (including policy, employment relations and ACC) it seems striking to us that as regulator no mitigation strategy to address this lack of expertise was in place. Senior managers were inevitably focussed on organisational change priorities that took up significant amounts of their time. The indicators they used to help decide on health and safety management and strategy were ‘reactive’ and principally revolved around workplace death statistics.

261. The department constantly emphasised the primary responsibility of employers for health

and safety in workplaces in its strategies and communications. The corollary is that DOL constantly downplayed its own critical role as regulator in this area. There were also numerous instances where DOL’s overriding concern appeared to be protection of its own reputation.

262. While we have found that there had been some discussion amongst DOL senior leaders of

low frequency/high consequence events, it was also evident that this had not been able to be translated into an effective framework to allow the risk posed by such events to be assessed and managed. No such framework could ever be completely effective in anticipating and preventing all such risks. However, it could ensure that DOL, as health and safety regulator, was employing resources in the areas it needed to, that it understood the areas of most risk and had strategies to address those risks.

263. The lack of such framework was all too evident at Pike River. As the Royal Commission

concluded, “the Department of Labour did not have the focus, capacity or strategies to ensure that Pike was meeting its legal responsibilities under health and safety laws.” 145

Conclusions 264. We consider that there were actions or inactions of staff of DOL as health and safety

regulator that contributed to the tragedy that occurred at Pike River.

265. In particular, and as was found by the Royal Commission, we consider that the mine inspectors could have taken a stronger approach on enforcing certain aspects of the Mining Regulations and health and safety legislation. We believe that if they had done so, it is possible that the tragedy might have been avoided.

266. In this respect, we consider that there were inactions of the mine inspectors that fall

within the frame of our Terms of Reference. 267. Our Terms of Reference further require us to consider whether there were any systemic

failings that might have contributed to such actions or inactions. Again, we consider that there were. As we have described above, there were a large number of such failings, including:

inadequate regulations, policy and guidance for the mine inspectors;

insufficient training and tools;

a lack of access to specialist technical support; and

poor overall resourcing, unreasonable workloads and inadequate management support.

145



268. We consider that these significant systemic issues were major contributors to the relevant actions or inactions of the mine inspectors. Overarching all of these was an organisational approach to regulation that tended to place the emphasis on educating employers and negotiating agreements with them rather than taking proactive enforcement action against them where appropriate.

269. This conclusion accords with that drawn by the Royal Commission in the area. Whilst the

Royal Commission Report identified significant areas of detail where individual mine inspectors could have or should have taken further steps or adopted a different approach with Pike, in their Overview the Royal Commission said “DOL’s compliance strategy did not require an assessment of Pike’s safety and operational information. The inspectors did not have a system, training or time to do so. When, at the hearings, they were shown examples of safety information obtained by the commission from Pike’s records, the inspectors were visibly dismayed. This was not a case of individual fault, but of departmental failure to resource, manage and adequately support a diminished mining inspectorate.”146

270. According to our Terms of Reference we need to consider whether any actions or

inactions of a current employee of MBIE might warrant a formal employment investigation taking into account the relevant systemic issues.

271. We consider that the systemic issues we have outlined above are critical contributors to

the individual actions or inactions of the mining inspectors. For example, In considering Mr Firmin’s response to Pike’s main fan proposal discussed above, we agree with the Royal Commission that an effective regulator would have responded differently, and would have challenged Pike harder.

272. The engagement between Mr Poynter and Pike were longer and more involved than Mr

Firmin’s, and as already noted we have not been able to speak with him. Obviously he no longer is employed by MBIE and no employment investigation is possible against him. Despite this, we think it is appropriate to observe that from what we have seen, a very similar picture emerges in assessing his actions with Pike. There were a number of opportunities for him to take stronger, more effective action than he did. With the benefit of hindsight in particular, it can be seen that there were a series of warning signs that could have caused him to re-evaluate his stance with Pike.

273. In considering the various opportunities both mine inspectors had to take an effective and

proactive approach with Pike, we have come to the same conclusion. In each case while the decisions, actions or inactions may be criticised, we think the criticism is more fairly directed at DOL’s failure to resource, guide and support the mine inspectors. In terms of their overall approach, the mine inspectors were in our view largely doing what they understood the department expected them to do.

274. In these circumstances we do not recommend that you commence an employment

investigation against Mr Firmin as the remaining mine inspector employed by MBIE.

275. We have further considered whether there might be actions or inactions potentially contributing to the tragedy on the part of the team leaders who directly managed the mine inspectors, or on the part of other MSG members (given that that group had some level of oversight of the approach to mining inspection).

146



276. While it can be argued that there were opportunities for the relevant team leaders to have directed or encouraged stronger enforcement action by the mine inspectors, we consider that they too were hampered by a lack of specialist knowledge, and were acting according to their understanding of DOL’s general approach to health and safety regulation. We do not recommend that any employment investigation be commenced against the team leaders.

277. We also needed to consider whether any individual or senior manager might properly be

held responsible for one or more of the systemic failures that we have outlined. For example, if a senior manager had breached policy or acted in a negligent or careless manner so as to cause one or more of the systemic issues we have identified, then they too may fall for consideration as to whether an employment investigation should be commenced.

278. One example where there was potential for this conclusion to be reached is in the

department’s approach to resourcing of the mine inspectors We have found in our investigation that serious concerns were being raised by the mine inspectors, through their team leaders up to the MSG. This was discussed by that group and eventually led to a memorandum requesting a third mining inspector from WSMT. This request was refused.

279. In considering whether that management decision was an ‘action or inaction’ that could

be considered to have contributed to the tragedy, we consider the linkages to become increasingly speculative. It is evident for example that there were long lead in times for recruitment, which means that even if the decision had been in favour of recruitment, it is not obvious that a further mining inspector would have been recruited by the time the tragedy occurred. Even if this had happened, the proposal was for the additional mine inspector to be based in the North Island. While this would have had a flow-on effect in improving the workload for the South Island mine inspectors, the link then to possible different decisions or approaches with Pike is tenuous.

280. While in hindsight the decision made by WSMT can be criticised, we think there is clear evidence that that group was grappling with significant resource pressures, and real concern about capacity to deal with demands in other high risk areas such as geothermal and petroleum.

281. Likewise the failure to consider in detail the underground mine electrical safety

inspections transfer, the decision to have mining inspection specialists managed by generalist managers and the lack of a clear strategy to manage low frequency/high consequence events can all be regarded as examples of DOL actions or inactions that contributed to the systemic issues impacting on the mine inspectors. In each case it is difficult to trace a clear causal link to the tragedy which occurred. Perhaps more importantly, we have not found any instance in these or similar cases where we have found evidence of a manager acting contrary to policy, or in a negligent or careless manner that might warrant the commencement of an employment investigation.

282. When we consider the fundamental reasons for the systemic issues confronting the mine

inspectors in dealing with Pike, we do not consider that these flow from individuals acting negligently, carelessly or contrary to policy. Accordingly, we do not recommend that you commence an employment investigation against any senior managers involved in health and safety over the relevant period and who are still employed at MBIE. Rather than finding a basis for an investigation into the actions of any one or more individual, we


believe the systemic issues result from DOL’s overall approach to health and safety, and an evident lack of appetite for effective and proactive enforcement in this area. The approach was reflected in the department’s core policies and strategies in the area, and were regularly reinforced by its senior managers to the very top level.

283. That overall approach is clearly changing in a number of significant ways. Some of these changes, like the establishment of a high hazards unit, were implemented prior to the release of the Royal Commission Report; some, including the establishment of an independent health and safety regulator are in response to it. In our view the changes that have been undertaken and are proposed are both appropriate and positive. A summary of the key changes underway is contained in Appendix 7.


6. Recommendations

There have been a number of major legislative, policy and organisational changes undertaken

since the Pike River tragedy and the release of the Royal Commission’s Report. The most

significant of these are summarised in Appendix 7.

Crown Minerals: In terms of the Crown minerals permitting and monitoring functions, a bill is

before the House to strengthen legislation in this area, and to ensure that the health and safety

regulator’s view is taken into account. New regulations and minerals programmes will follow.

Pending these legislative changes, an informal process has been adopted to ensure that there is a

cross-check with the health and safety regulator when considering relevant permit applications.

We understand that the current approach taken by Crown Minerals involves greater internal

scrutiny of applications, and a broader view of how good mining practice should be assessed than

was taken in the case of Pike.

We recommend that:

in reviewing the minerals programmes, the opportunity is taken to simplify and remove

ambiguity wherever possible;

that a post-implementation review be carried out following introduction of the new

regulations that explicitly references the lessons of Pike River and the Royal Commission

Report; and

that the post-implementation review further explicitly assesses the adequacy of the

operational guidance provided to staff to ensure that expectations are clear.

Health and Safety: In terms of the health and safety function, major changes have taken place

already. Additional resourcing has been put in place to support the mining inspectors with

improved capacity, tools and methodologies, and access to specialist assistance. An expert

reference group has been established to support the development of an effective regulatory

framework for the mining industry.

A ‘high hazards’ unit has been formed to improve the focus on high hazard industries generally, not just mining. A key opportunity for improving health and safety regulation generally is the creation of a stand-alone Crown agent to undertake the health and safety regulator function. It is vital to make the most of this opportunity. We recommend that the work currently being undertaken by MBIE in developing the approach and strategy around high hazards, reviewing the focus and structure of the health and safety function and preparing for the transfer of the function should aim to provide a platform for the new Crown agent to drive a culture shift across the function that emphasises:


clarity about and ownership of the responsibility that the agency and all of its staff has as

health and safety regulator;

a focus on the importance of ensuring that risks are escalated swiftly, effectively and

transparently at all levels;

the development and understanding of risk frameworks so as to allow effective decision-

making on risks; and

an overarching focus on the protection of New Zealanders rather than a focus on the

reputational or organisational risks to the Crown agent.

We are available to provide input into transitional planning to assist with this. We also consider that this Investigation and the Royal Commission Report serve to underline the possible consequences of transferring functions between agencies without ensuring that there is a robust process to prevent things “falling between the gaps”. The transfer of the health and safety function to the new Crown agency will be a major undertaking. We recommend that you take steps to ensure that a post-implementation review be undertaken following this transfer, that explicitly factors in the Royal Commission findings and recommendations, as well as the findings of this Investigation.


Appendix 1: Terms of Reference for Independent Investigation

MINISTRY OF BUSINESS, INNOVATION, AND EMPLOYMENT Pike River Tragedy: Independent Investigation Process

Terms of Reference Introduction

The Chief Executive of the Ministry of Business, Innovation, and Employment (the “Chief Executive”) has received a copy of the report of the Royal Commission on the Pike River Coal Mine Tragedy, dated 29 October 2012 (the “Royal Commission Report”). That report is critical of the performance of the former Department of Labour and of the former Ministry of Economic Development for failure to take appropriate steps when issuing Pike’s mining permit and in failing to provide adequate oversight of the mine in terms of health and safety. The Chief Executive has commissioned an independent investigation to provide advice to him about:

- Any actions or inactions of individual employees connected with the issue of the mining permit and/or the discharge of health and safety functions that may have contributed to the tragedy.

- Any systemic failings within the former Department of Labour and/or the former Ministry of Economic Development that may be identified as having contributed to such actions or inactions of individual employees.

- Whether any such actions or inactions may warrant a formal employment investigation. For these purposes, an independent investigation is to be carried out by David Shanks of Ministry of Social Development and one other to be confirmed. Approach

The following provides guidance to the approach to be adopted.

The findings in the Royal Commission Report will be used as a basis to commence investigations.

To avoid duplication of data gathering the investigation will make use of material that was gathered to support the Royal Commission.

The above material will be supplemented when necessary through other relevant material, including other agency records.

Selective interviews may be undertaken to assist information discovery and clarification.

The actions of individuals will be assessed against the expectations and obligations of employees of the former Department of Labour and /or the former Ministry of Economic Development, including those described in employment agreements, job descriptions, annual performance agreements, any policy or Code of Conduct, any other related documents, and in legislation, applying at the relevant time.


Procedural fairness will be observed throughout the investigation, based on the principles of natural justice.

The investigators’ findings will be provided in a written report to the Chief Executive. Scope & Process

The investigation is to cover any actions and inactions of individuals associated with the former Ministry of Economic Development including matters of policy, resourcing and enforcement linked to approving the mining permit in 1997 that may have contributed to the tragedy.

The investigation is to cover any actions and inactions since 1 January 2005 of individuals associated with the former Department of Labour including matters of policy, resourcing, and enforcement linked to the start-up and on-going monitoring of the mine that may have contributed to the tragedy.

It is anticipated that the investigation will cover

o Establishing the operating and decision making context of both the Ministry of Economic Development and the Department of Labour relevant to the time period of these Terms of Reference

o Identifying the staff forming part of the operating and decision making systems, including establishing those staff still employed by the Ministry of Business, Innovation, and Employment.

o An initial assessment of whether any individual through action or inaction within the context of the operating and decision making systems may have contributed to the tragedy.

o Recommendations as to whether any formal employment investigations ought to be commenced in relation to any such actions or inactions by any staff still employed by the Ministry of Business, Innovation, and Employment.

o An identification of any element of the operating and decision making systems that may have contributed to the tragedy.

In addition, if any related matters come to the investigators’ attention during the course of their investigation; they may raise these matters with the Chief Executive who will decide whether or not to incorporate them into the scope of the investigation.

The investigators are to be provided access to all relevant information related to the matter.

Any employee of the Ministry of Business, Innovation, and Employment who may be identified as having acted in possible breach of their employment expectations and obligations will be informed and will have the opportunity to respond to these proposed findings before the report is finalised. This may involve providing those employees with a copy of all or part of the draft report for comment before the report is finalised. Identified employees also will be advised of their right to representation.

The investigators will ensure that other affected persons have had a proper opportunity to respond to any proposed findings against them before finalising their report. This may


involve providing those affected persons with a copy of all or part of the draft report for comment before the report is finalised.

It is not the purpose of this investigation to reconsider the detailed findings in the Royal Commission Report, or to challenge those findings. However, the investigators must also recognise that any affected individuals will be entitled to challenge those findings as part of a disciplinary process.

Timing

Project initiation – 19 November 2012 Data collection – no later than 21 December 2012 Analysis and consultation with affected individuals – no later than 31 January 2013 Final report – no later than 28 February 2013 Sponsor

The Chief Executive, Ministry of Business, Innovation and Employment. Secretariat

The investigation team will be supported by a small Secretariat. The role of the Secretariat will be to provide information and support to the investigation, as required. Reporting

A thorough report is to be provided to the Chief Executive outlining the investigation process and the findings of the investigation. Use of the report

The investigation is to provide information to the Chief Executive to enable him to determine whether a disciplinary process should be initiated with any employee. The investigation is to provide information to the Chief Executive as an input to possible changes to the operating and decision making system related to mine health and safety and issuing of mining permits. Any decision about outcomes, and in particular, the need for and outcome of any disciplinary process, if a disciplinary process is deemed to be necessary, is for the Chief Executive to make after considering the report. The Chief Executive may publish the report in part or in full.


Appendix 2: Glossary Defined terms in this report, additional to those used in the Royal Commission Report:

“Chief Executive” means the Chief Executive of MBIE “CM” means Crown Minerals “CMA” means Crown Minerals Act 1991 “Coal Programme” means the Minerals Programme for Coal 1996 “ESS” means the Electrical Safety Service within MED “Gunningham and Neal” mean Professor Neil Gunningham and Dr David Neal SC’s independent internal review of DOL’s interactions with Pike River from February to July 2011 “Investigation” means the independent investigation initiated by David Smol, the Chief Executive on 19 November 2012 to provide advice to him in accordance with the Terms of Reference “MBIE” means the Ministry of Business, Innovation and Employment “Mining Regulations” means the Health and Safety in Employment (Mining- Underground) Regulations 1999 “MSG” means the Mining Steering Group within DOL and described at paragraphs 205 and 206 “ORP report” means an Operational Review Process report “RMA” means the Resource Management Act 1991 “Royal Commission” means the Royal Commission on the Pike River Coal Mine Tragedy, appointed under Letters Patent dated 14 December 2010, as amended on 7 February and 27 August 2012 “Royal Commission Report” means the report of the Royal Commission published in October 2012

“Terms of Reference” means the terms of reference for this independent investigation as attached at Appendix 1 “WSMT” means the Workplace Services Management Team

NOTE: In footnotes, RC denotes a reference to the Royal Commission Report and RC XX:XX denotes a reference to the second volume of the Royal Commission Report, indicating the chapter and paragraph. For example RC 27:3 denotes a reference to Royal Commission Report Chapter 27, paragraph 3.


Appendix 3: List of Interviewees

Interviewee Position held Period

Department of Labour

Andrew Annakin

General Manager Employment Relations 21 May 01 – 30 Jun 04

Deputy Secretary Workplace Group 1 Jul 04 – 2 Jun 08

Deputy Secretary Workforce Group (Acting) 3 Jun 08 – 11 Dec 09

Deputy Secretary Workplace Group 14 Dec 09 – 7 Feb 10

Other Public Sector Secondment 8 Feb 10 – 8 Feb 13

Director NZ Petroleum and Minerals 11 Feb - present

Craig Armitage

Programme Director 24 Sep 04 – 15 Apr 05

Group Manager, Information and Promotion 18 Apr 05 – 9 Apr 07

Group Manager, Workplace Policy 10 Apr 07 – 17 Jun 08

Deputy Secretary Workplace (Acting) 18 Jun 08 – 11 Dec 09

Group Manager, Workplace Policy 14 Dec 09 – 14 May 10

Other Public Sector Secondment 17 May 10 - 9 Jun 12

Craig White

Service Leader, Auckland Compliance Branch Workforce

29 Nov 04 – 28 Dec 05

Immigration Manager, Auckland Airport, Workforce 29 Dec 05 – 30 Jun 06

Branch Manager, Auckland Airport, Workforce 1 Jul 06 – 3 Aug 07

Service Manager, Manukau, Workplace 6 Aug 07 – 29 Apr 11

Service Manager, North Harbour, Workplace 2 May 11 – 10 Jun 11

Irene Campbell

Team Leader, Canterbury West Coast, Workplace Group

9 Jul 05 – 30 Nov 05

Team Leader, Christchurch, Workplace Group 1 Dec 05 - present

James Buwalda Chief Executive Jul 03 – 21 May 07

Lesley Haines

Manager Policy, General Managers Office, Workforce

15 Nov 04 – 8 Apr 05

Group Manager Policy, Workforce 11 Apr 05 – 3 Jul 09

Deputy Secretary Work Directions (Acting) 6 Jul 09 – 20 Sep 09

Group Manager Policy, Workforce 21 Sep 09 – 20 Nov 09

Deputy Secretary, Workforce (Acting) 23 Nov 09 – 5 Feb 10

Deputy Secretary, Workplace (Acting) 8 Feb 10 – 30 Nov 10

Deputy Chief Executive - Labour Group (Acting) 1 Dec 10 – 31 May 11

Deputy Chief Executive - Labour Group 1 Jun 11 - present

Maarten Quivooy

Group Manager Professional & Specialist Services 6 Jul 05 – 30 Jun 06

Group Manager Workplace Services 1 Jul 06 – 31 Aug 11

Margaret Radford

Service Manager, Canterbury West Coast, Workplace Group

1 Jul 01 – 30 Nov 05

Service Manager, Christchurch, Workplace Group 1 Dec 05 - present

Michael Cosman

National Operations Manager, Health & Safety 13 Feb 04 – 28 Dec 05

Chief Advisor, Health and Safety, Workplace Group

(Acting) 29 Dec 05 – 5 Sep 06

National Operations Manager, Health & Safety 5 Sep 06 – mid Nov 06

Establishment Manager – Technical Support Services Mid Nov 06 – 27 Apr 07


Michael Firmin

Ministry of Commerce – H&S Inspector 1 Jul 95 – 30 Jun 98

Xfer to DOL - Inspector H&S - M,Q,T 1 Jul 98 – 30 Jun 01

Inspector H&S - HSNO/MINING 1 Jul 01 – 28 Dec 05

Health & Safety Inspector 29 Dec 05 – 31 Aug 11

Specialist Health & Safety Inspector 1 Sep 11 - present

Sheila McBreen-Kerr Regional Manager, Southern Region, Workplace Group

14 Aug 06 – 01 Nov 11

Ministry of Commerce/Ministry of Economic Development

Alan Sherwood

Senior Geologist, Minerals Unit, Crown Minerals Group

29 Jun 06 – 1 May 11

Senior Production Geologist, NZ Petroleum & Minerals

2 May 11 – 19 Dec 11

Principal Geologist, Coal, NZ Petroleum & Minerals 20 Dec 11 - present

Paul Stigley Unit Manager Permitting 8 Aug 96 – 30 Sep 97

Business Manager Minerals 1 Oct 97 – 13 Jan 04

Declined Interview Position held Period

Chris Blake Chief Executive 23 Oct 07 – 23 Dec 11

Kevin Poynter HSE Inspector 07 Apr 08 – 24 Jun 11


Appendix 4: Timeline of MED/Pike River major events/interactions relating to grant of the Pike mining permit Timeline of relevant events and interactions with MED relating to grant of the Pike mining permit Date Event

1946 - 1996 Prospecting and exploration activities undertaken by various companies in the Pike River Mine area

1982 Exploration permits transferred to Pike River Coal Company

1986 West Coast Accord

1987 Paparoa National Park established

25 March 1993 Application for Exploration Permit by Pike River Coal Company Ltd

8 July 1993 Grant of Exploration Permit [40131]

Oct – Nov 1993 Drilling Programme undertaken

21 March 1996 Application for Mining Permit by Pike written [MPA 41453]

Envisaged as an underground operation at 400,000 tonnes a year at maximum production. Noted that a full feasibility study would be done following grant of permit and consents. Extraction of coal envisaged as continuous miners and hydraulic mining, but other mining options also considered

1 April 1996 Application for Mining Permit by Pike received by MED

Nov 1996 West Coast Conservation Management Strategy publicly notified

17 June 1997 Technical Assessment of MPA 41453 in terms of section 12a of the CMA signed by senior geologist; Evaluation of the Pike mining permit application and grant, which included an evaluation against some MP 1996 criteria.

18 August 1997 Briefing with recommendation to Secretary of Commerce to agree to grant the permit. This brief contains all substantial analysis and information relating to reasons for grant.

Proposed Secretary grant permit under delegated authority of Minister of Energy under sections 25 and 32 of CMA.

Briefing included: o sections on application details; legislative framework; applicant

details, evaluation of application, work programme approval, point of valuation and reporting period, Treaty of Waitangi, reasons for grant and recommendations.

o Map of Pike River coal field o Second schedule, conditions of mining permit 41453 o Appendix A: Development of the Pike River Coal Field as

Proposed by Pike River Coal Limited

Signed by Unit Manager – Permitting.

Signed by Secretary of Commerce, 17 September 1997.

22 Sep 1997

Recommendation to Secretary of Commerce to sign permit grant documents

June 1998 on Applications for resource consents [West Coast Regional Council; Grey District Council]

4 Nov 1998 Annual Work Statement for 1998-1999 received from Pike

July 1999 DOC appeals grant of resource consent

27 October 1999 Annual Work Statement for 1999-2000 received from Pike

1999-2007 Drilling Programme


20 April 2000 Briefing to Minster of Energy regarding appeal by DOC to Environment Court on environmental impacts of coal field development and proposal by DOC to rezone coalfield as Remote Experience Area.

12 April 2000 Application for extension of land

15 May 2000 West Coast Accord cancelled

May 2000 Final feasibility study for 1 million tonnes a year

11 August 2000 Grant of extension of land

Oct 2000 Formal application by Pike to DOC for access agreement

31 October 2000 Annual Work Statement for 2000- 2001 received from Pike



25 November 2002 Application to amend conditions of permit from commencement of mining within 5 years to 7 years

3 Dec 2002 Grant of amendment to conditions


October 2003 Grant of access arrangement DOC

30 October 2004 Annual Work Statement for 2004 - 2005 received from Pike

2005 Road construction commenced

1 Nov 2005 Annual mining summary 2005-2006 received from Pike

24 Oct 2006 Annual mining summary 2006-2007 received from Pike

22 Nov 2007 Annual Work Statement 2006-2007 including mine plan

June 2007 IPO (initial public offering). Production of over 1 million tonnes a year forecast by 2009

Aug 2006 Road completed

Sep 2006 Construction of access tunnel commenced

17 Oct 2008 Coal reached

28 Nov 2008 Mine opened

19 Dec 2008 Mine Summary Report and Mine Plan

24 Nov 2009 Mine Plan

27 Nov 2009 Annual Work Statement 2008-2009 received from Pike

Feb 2009 Collapse of ventilation shaft

Nov 2010 Explosion


Appendix 5: Timeline of some of DOL’s interactions with Pike

1982-1995

Exploration of Coal Fields

[RC 3:1]

1995 - 2005

Mine Feasibility Studies → Final Investment Decision

[RC 3:1]

2005 - 2010

Mine Development

[RC 3:1]

1 Apr 1993

Health & Safety Act 1992 came in

to force

1996

HSE (Mining Administration)

Regulations

Sep 1997

approval of Pike's mining permit

application

1999

HSE (Mining - Underground)

Regulations

1 Jul 2004

DOL Structural change →

Workplace

Workforce

Work Directions

established

9 May 2005

DOLs first contact with Pike

[RC 15.21]

18 May 2005

Workplace H&S Stategy

for NZ to 2015 released

2006

MINEX Health & Safety Council for the NZ Minerals

industry established

Feb 2007

Firmin primary responsibility for

Pike

13 Feb 2007

First Mine Inspection (Firmin/

Davenport). Presentation by

Whittall included explanation that main ventilation

fan was to be located

underground, east of Hawera fault

[RC 15.22-15.23]

27 Jun 2007

CAB Social Development

Committee agreed ↑ appropriation

[SDC Min(07) 9/2]

27 May 2008 Poynter's 1st visit

to Pike, accompanying

Firmin.

[RC 15.45]

Jul 2008

Poynter has primary

responsibility for Pike

13/14 Nov 2008

Notication of ingnitions to

Poynter.

Mine decided to be a gassy mine

[RC 15.32]

14-19 Nov 2008

Bell phone call to Poynter indicating he had been told

there had been ‘10 ignitions in the past fortnight’.

[RC 15.33; KP 19/10/11 Stmt to

RC para 75]

Apr 2009

DOL's policy on enforcing HSE Act

1992, Keeping Work Safe, published

14 Feb 2010 Roadheader

incident Investigation

[RC 15.66-15.71]

17 Feb 2010

WSMT considers MSG request for

extra mining inspector

Sep 2010

Pike commenced Hydro Mining

using auxilliary fans

2 Nov 2010 Poynter's last

inspection before explosion,

[RC 15.52-15.53]

10 Nov 2010 Main fan fully

commissioned

19 Nov 2010 Explosion

ON-SITE VISITS KEY ( Gunningham and Neal page 141, updated to match Michael Firmin and Kevin Poynter Witness Statements filed with Royal Commission, dated 19 October. NB. The Royal Commission found some of the “site inspections” were not “site inspections” in their view)

s

18/11/04

W/place info visit

Site visit Site Inspection

13/2/07

2/5/07

6/11/07

11/3/08

27/5/08

30/5/08

15/7/08

16/10/08

26/11/08

12/2/09 9/10/09

22/1/10

9/2/10

23/3/10 2/11/10

8/4/10

11/6/10

12/8/10

K Poynter appted Apr 08, responsible for liaison & inspections of Pike from

July 2008 – 24 June 2011 [Kevin Poynter Witness Statement filed with Royal Commission, dated 19 October 2011 para 28]

3/12/08 3/6/09

16/7/09

14/2/10

B Taylor 5 Jul 05 - 6 Dec 06

M Firmin Sole mining inspector

Oct 04 – Jul 05 [RC 22.36]

M Firmin – sole mining inspector Dec 06 – Apr 08, responsible liaison/inspections of Pike from

2007 – mid 2008 [RC 22:36; 8:1]


Appendix 6: DOL organisation chart as at 19 November 2010


Appendix 7: Summary of Key Changes Post Pike River Tragedy and Implementation of Royal Commission Recommendations High Hazards Unit

1. In late 2011 (prior to the Royal Commission Report release) a High Hazards Unit (HHU) was

created within DOL through the appropriation of extra funding. The HHU has increased

resourcing and a specific focus on high hazard industries and employers including the

mining, petroleum and geothermal areas. The HHU is jointly headed up by the Chief

Inspector Extractives and the Chief Inspector Petroleum and Geothermal who report

through to the General Manager High Hazards and Specialist Services, a tier 3 management

role.

2. In February 2013, a Chief Inspector Extractives (High Hazards and Specialist Services) was

employed. He was the Principal Mines Inspector with the Health and Safety Executive in the

UK.

3. In March 2012 an Australian audit methodology and tool (“Safeguard”) was adopted and

“audits” of mines began. Further work is being undertaken to fully implement this approach

including the training of inspectors in the use of this tool.

4. A formal one year contract has been entered into with the Queensland Department of

Natural Resources and Mines to provide coaching, development and professional support,

expert advice and access to specialist assistance for specialist mining areas, expiring on 30

June 2013. The new Chief Inspector Extractives is to decide what further assistance is

required thereafter.

Independent Taskforce on Workplace Health and Safety

5. On 16 April 2012 Cabinet agreed to the establishment of an Independent Taskforce on

Workplace Health and Safety to undertake a strategic review of whether the New Zealand

workplace health and safety system remains fit for purpose.

6. Consultation with the public and a wide range of stakeholders took place from September

2012 to the end of November 2012. Summaries of the submissions obtained and reports on

the submissions were released in January 2013.

7. The Independent Taskforce on Workplace Health and Safety’s final report, which is due to be

provided to Government by the end of April 2013, is currently being finalised following a

period of consultation and of consideration of submissions and expert advice.


Pike River Implementation Plan 8. The Government released the Pike River Implementation Plan on 12 December 2012. This

details how and when Government has and will respond to the 16 recommendations of the

Royal Commission. This includes making changes under the following broad headings:

Crown Entity establishment

legislation

core regulatory approach to mining

health and safety as part of the permitting process and integration into the Crown

Minerals regime

training and qualifications

worker participation

emergency management

Codes of Practice

9. As a part of the Pike River Implementation Plan work, MBIE established an Expert Reference

Group to provide independent and expert advice to the Ministry on the development of an

effective regulatory framework for health and safety in the mining industry. Specifically

they are to:

provide officials with access to expert and independent subject-matter advice;

ensure that mining regulatory and emergency management proposals meet

international best practice, moderated as necessary for New Zealand conditions;

provide independent and transparent scrutiny of mining regulatory proposals; and

strengthen the credibility of proposals released for public consultation and presented to

the Government for decision.

Health and Safety Inspection Services Re-design 10. On 26 February 2013, the health and safety group within MBIE released the H&S

Inspectorate detailed redesign - “Lifting our Game”.

11. Lifting our Game includes a focus on the quality processes for investigations through the

recognition of quality roles and procedures in the new organisational structure.

12. An increased “outcome” focus rather than “output” focus in the HSE service delivery area is

also a feature as documented in the “Blueprint” to Lifting our Game.

New workplace health and safety agency to be established

13. On 21 February 2013, the Government announced the creation of a stand-alone crown

agent to enforce workplace health and safety regulations and work with employers and

employees to promote and embed good health and safety practices.

http://www.mbie.govt.nz/what-we-do/pike-river-implementation-plan/new-workplace-health-and-safety-agency-to-be-established


14. It is expected that staff in the Ministry’s Health and Safety Group (including those in the High

Hazards Unit) will be transferred to the new agency.

15. The new crown agent is intended to be operational by December 2013.

16. The Government has set a target for the crown agent of a 25 per cent reduction of New

Zealand’s workplace fatality and serious injury rates by 2020.

Crown Minerals (Permitting and Crown Land) Bill

17. On 20 September 2012 (prior to the Royal Commission Report release) the Crown Minerals

(Permitting and Crown Land) Bill (“Bill”) was introduced.

18. Following the release of the Royal Commission Report, a Supplementary Order Paper No.

152 amending the Bill (“SOP”) was introduced on 28 November 2012. The SOP sought to

amend and include provisions in the Bill that will strengthen the CMA in light of the Royal

Commission report on the Pike River Coal Mine tragedy. Such changes include:

A requirement that the health and safety regulator’s view is taken into account in permitting and that the Exercise of a permit is conditional on grant of applicable health and safety approval.

A requirement that the Minister must be satisfied that the proposed work programme is consistent with ‘good industry practice’ before granting a permit.

19. The Bill and SOP are being considered by the Commerce Committee, who are to report back

19 March 2013. The creation of fresh regulations and minerals programmes will also stem

from the new Bill.

20. Pending the introduction of these changes, Crown Minerals staff have adopted interim

operating procedures that include consultation with mine inspectors when appropriate.

Documents

Pike River report of the Independent Investigation … · Report of the Independent Investigation . to the Chief Executive of the Ministry of Business, Innovation and Employment