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To review the findings of the previous chapter, the Ministry has concluded that the present regime is characterised by the following shortcomings:
Accordingly, the Ministry proposes developing a regime to address these concerns. To assist in identifying possible solutions, it has drawn up the following assessment criteria.
The preferred option must have clear objectives and clear accountabilities. Above all, it must be practical to implement and operate. That option must deliver certainty for motorists as well as managers. For example, the preferred option must impose consistent standards (of traffic management systems as well as engineering quality) on comparable roads. Sudden changes in the road environment can confuse drivers and generate serious road safety risks.
While providing consistency on comparable roads, the preferred option must also be capable of being adapted to a diverse range of circumstances. For example, while the principles of the safety regime should apply to all road controlling authorities, safety factors on urban motorways will not be the same as those on lightly trafficked rural roads or suburban streets. The preferred option should also be flexible enough to take account of changes of either a technical or social nature.
The guiding principle of structural and regulatory reforms in the transport sector over recent years has been "safety at reasonable cost". This requires assessments of costs and benefits. The preferred option must be one where the safety benefits outweigh its costs (for example, compliance and economic costs).
The preferred option should accommodate impartially all road controlling authorities or private sector providers.
The preferred option must promote a "safety culture" within the road controlling authorities, and generate a sense of responsibility for safety issues. It should discourage any tendency to trade off cost effective safety and traffic management projects against other claims on resources, where these claims do not deliver greater benefits to the community.
The National Land Transport Strategy will guide policy and funding decisions in the land transport sector. The National Land Transport Strategy, when developed, could include some directions on road safety policy. The option chosen must be able to fit easily within the National Land Transport Strategy framework.
As mentioned above the Ministry, having reviewed submissions on this document, will issue a further discussion paper developing in greater detail the option, or combination of options, to be pursued. This further paper will address the range of transitional issues which will arise. At this early stage it is sufficient to acknowledge that whatever option is chosen, road controlling authorities will need sufficient time to start operating in the new environment. It is noted that when a requirement for a safety system was imposed on rail operators they were given three years in which to produce one.
The Ministry has identified the following five options to address the issues outlined in chapter two above. For the sake of completeness, the status quo is also included:
Not all of the options are mutually exclusive, and some may be implemented in combination. For example, the safety system approach may be applied in conjunction either with a licensing system, as it is in the rail sector, or in conjunction with a performance-based funding contract. Further, as in the case of the aviation sector, a licensing system may be operated in conjunction with Rules (that is, a legislative element) or, as in the case of the rail sector, without Rules.
From time to time the regulatory regimes applying to various other transport modes have been held out as models for roading and some of these are explored in the following pages. However, these sectors generally have a simpler, more unified institutional structure. In the rail sector for example, one body owns and operates not only almost all of the infrastructure, but also the majority of the rolling stock (and may thus be expected to control the "system")..
By contrast the roading system in New Zealand is complex. No one organisation controls all the "rolling stock" or even a majority of it (around 3 million different motor vehicle owners are listed on the Motor Vehicle Register) and the infrastructure is split amongst at least 75 different organisations, including road controlling authorities and the Crown. An effective management regime needs to recognise this complexity.
Nevertheless, while acknowledging the inherent difference in the infrastructure of the other transport modes, there is much in the regulation of other modes that is relevant to roading.
A table summarising the following analysis is provided in Chapter five.
The term "Detailed Legislative Prescription" refers to the setting in Acts and regulations of standards and procedures to be applied to whatever activity is being regulated. This approach has traditionally been used by governments when setting safety standards. Often the provisions are quite detailed. A feature of this approach is that the emphasis is on following the letter of the law, at the expense of any flexibility in achieving the desired outcomes or responding to a changing environment. "Detailed Legislative Prescription" is generally accompanied by a regime of external inspection which is often funded by the Government. It is usually backed up by a range of penalties which can be imposed by the Courts.
Rules are also a form of legislation. They are made by the Minister, under an Act, and are subject to Parliamentary scrutiny. However, they are considered to be qualitatively different in that there is a requirement that they be developed in consultation with sector groups and the wider public, and may be presented in a range of formats. The intention is that Rules will better take into account the realities of the sector and thus will be more effective in achieving the desired outcomes than the regulations which they replace.
The "Detailed Legislative Prescription" approach was widely used in the past. In recent years however, it has been criticised as being inflexible and unwieldy (See 4.1.5 below).
The former civil aviation regulatory regime contained a high degree of prescriptive legislation. For example, detailed maintenance schedules were set out in regulations. There was a high degree of Government funded external inspection to monitor compliance. Inspectors were present at all large airports and some medium-sized airports.
Under this option the duties of road controlling authorities would be prescribed by legislation, probably a combination of statute, regulations and Rules. The duties could include compliance with road and traffic engineering standards. Procedures for ensuring a safe roading system would also be set out in legislation. There would be frequent inspection by the LTSA as the safety regulatory body to identify breaches. The Courts would have the power to impose fines for breaches of standards.
This option should promote compliance with road and traffic engineering standards. The penalty provisions would provide a clear signal about the need to adhere to these standards. The possibility of any non-compliance with the standards being publicised would reinforce this message. Potentially such a system can bring certainty to managers, especially in the case of simple systems, as it gives detailed guidance on the standards to be followed.
Depending on how the legislation was written, this approach could be neutral between statutory bodies and the private sector.
Acts and regulations can be a clumsy tool for setting procedures and standards. It is often difficult to capture complex technical standards in such a form. Acts and regulations cannot usually be amended quickly or easily, so are likely to go out of date. For example, there have been difficulties in amending the provisions of the Traffic Regulations relating to sign posting to reflect changes in policy and practice. The risk is that roading authorities may simply ignore the regulations and implement new measures willy nilly. Alternatively, authorities respecting the legislation may find themselves locked in to outmoded technology and practices.
If a new National or Regional Land Transport Strategy requires a change in safety policy priorities, it is most unlikely that the legislation could be amended in a timely manner to reflect this. Furthermore, legislation cannot easily be tailored to local conditions and therefore, discourages innovation.
Government inspection is costly and staff-intensive. An externally imposed detailed prescriptive system does not encourage individual managers and their staff to take responsibility for safety themselves, or in other words, to "take ownership" of safety. For this reason it does not promote effective accountability for outcomes.
Prosecutions in such systems tend to focus on technical breaches of regulatory requirements. In other words the focus was on inputs rather than outcomes. This was the case under the former civil aviation regime. By contrast the new regime in the civil aviation area has had the effect of shifting the focus from these technicalities to the more substantive matters of causing danger.
As mentioned above, a high degree of legislative prescription and inspection can be an effective means of maintaining standards within simple systems. However, it is much less effective for regulating sophisticated or complex systems where a large number of (costly) inspectors would be needed and the chances of detecting errors are slight. This approach was abandoned by the civil aviation sector for that reason.
Prescribing the duties of road controlling authorities in legislation also raises the issue of what may happen if a breach of the legislation causes property damage or economic loss. Such a breach may give rise to rights of legal action against the roading entity. However, legal action can be costly and time consuming. In addition reliance on the threat of legal action may not be the most effective way of promoting good traffic management practices or encouraging staff to be accountable.
Licensing is used to control entry into a wide range of sectors, from professional services (eg practising medicine or law, operating specialised equipment) to large scale commercial or industrial operations (operating an airline, prospecting for minerals). The purpose may be to safeguard the interests of the public by setting minimum levels of competency or safety standards, to protect the environment, or simply to raise revenue.
Generally the issuing body will determine eligibility for the grant of the licence and will impose duties on the licence holder. The ultimate sanction for not meeting licence conditions is the withdrawal of the licence.
A licensing system has the potential to be more flexible than the Detailed Legislative Prescription approach. The conditions of the licence can, within the limits of any empowering legislation, be negotiated between the issuing body and the applicant for the licence.
Maritime, rail and civil aviation activities are all subject to licensing. In both the maritime and aviation modes, licences are called "documents." All participants in the maritime and aviation sectors must hold the required documents. Legislation does not specify the content of the documents, or the qualifications required to obtain a document, but enables Rules to be made which can do this. The documents are granted by the respective Transport Safety Authorities which have the power to suspend, impose conditions, or revoke the documents.
The Transport Services Licensing Act 1989 requires every operator of a rail service to be licensed. As a transitional measure, rail operators in existence when this provision of the Act came into effect on 1 April 1993 were allowed three years to satisfy the licence conditions. The licence is granted by the LTSA which has the power to revoke it. The legislation contains some criteria as to the eligibility to hold a licence, in particular, that the applicant is a fit and proper person, has certain qualifications, and has developed an "approved safety system" (see also Option Three below).
Under this option road controlling authorities, including existing road controlling authorities, would be required to hold a licence. The licence could set out duties in relation to road and traffic engineering standards, including safety performance.
Certain fundamental matters may still be specified in legislation. For example, the legislation could require that certain matters be included in the licence. It could specify, as in the rail licensing regime, that an "approved safety system" be put in place. It could also require that licence holders comply with Rules (as in the maritime & civil aviation regimes). On the other hand there may be no Rules, with all standards contained within the licence itself. If a Rules system were used, in conjunction with a licence, the licences could include special variations to the Rules relating to local conditions.
Non performance of licence conditions, (for example, failure to adhere to the approved safety system), could result in:
A licensing regime is more flexible than the "Detailed Legislative Prescription" approach, as the requirements of the licence could be tailored to local conditions. It could also recognise any differences between Transit New Zealand, territorial authorities and any other road controlling authorities.
A licence, by setting out all the obligations of the licensee, could give certainty to that person or organisation.
The priorities expressed in the National or a Regional Land Transport Strategy could be embodied in licence conditions. However, it may not be easy to change licences, once they have been issued, in response to a change in strategy).
The threat of licence cancellation, or publicity about breaches of the licence, would be an additional incentive for the road controlling authority to take more responsibility for compliance with road and traffic engineering standards. This may promote good accountability for outcomes.
A requirement for a licence would clash with territorial authorities' historical duty to provide roading and with Transit New Zealand's statutory objective to operate a safe and efficient State highway system. A licensing regime would effectively replace these duties with a conditional power to provide roading, subject to meeting licence obligations.
It is not clear what the appropriate criteria for the grant of a licence to a road controlling authority should be. For example, would the "fit and proper person" requirement in the Transport Services Licensing Act be appropriate?
It is possible that a licensing system would need to be linked to a system of external inspection if the public was to have any confidence in safety levels.
The possibility of licence cancellation also raises other issues. What would happen to the roads for which the defaulting road controlling authority was responsible? In other sectors (notably the present system of schools administration), the Government can install its own administrators. There are costs associated with this. It may also be impractical in the case of a road controlling authority.
In summary, the sanction of licence cancellation could be seen as costly and impractical. A range of other penalties would also be required. However, there are disadvantages to relying on the threat of legal action (as outlined in 4.1.5 above).
The Safety System approach focuses on outcomes, rather than inputs. It requires those involved at each stage in a process to be aware of their responsibility for the quality of the final product and take their responsibility seriously. It is a development of the quality assurance system used in manufacturing. It is based on the principle of "building in" quality (in this case, safety and good traffic management practices) during the process, rather than relying on subsequent inspection by an external agency, such as a Government inspectorate, to identify any problems and require them to be rectified. In this way it requires all participants in the process to think about the impact of their actions on quality and safety, rather than leaving this responsibility to some other person.
The quality assurance approach involves:
In other words, by requiring a high level of accountability for outcomes (as apposed to simply imposing the letter of the law), this approach is designed to improve the quality of those outcomes.
Applicants for a rail service licence are required to develop a safety system. The industry regulator (the LTSA) is responsible for checking and approving the safety system. The legislation (section 6B, Transport Services Licensing Act 1989) sets out what must be included in a rail safety system. This includes:
The audits mentioned above are not external inspections - they are carried out by an auditor employed by the railway operator itself and are an integral part of the safety system. This is in keeping with the principle of full accountability. The LTSA may however, initiate a "special audit", using its own consultant. The cost of the special audit is borne by the operator who is being audited. Generally, special audits are imposed if the LTSA has some particular concerns about safety.
The rail safety system may be amended at any time if the LTSA agrees. The LTSA may also require a safety system to be amended if it considers that this is necessary to deal with a serious safety concern.
The civil aviation regime is based on the following hierarchy:
Section 12(4) of the Civil Aviation Act obliges certificate holders to establish and follow a safety management system if required to do so by a Rule. Rules cover various aspects of the sector: not only aircraft but also infrastructure, such as air traffic control systems. In general the Rules require safety procedures and systems to be put in place but do not specify the type of procedure or system. For example, the following are extracts from the Rule on "Air Traffic Service Organisations":
"Each applicant for the grant of an air traffic service certificate for an air traffic control service ... shall establish procedures and criteria for the prevention of excessive fatigue of staff on operational duties."
"Each applicant for the grant of an air traffic service certificate for an aerodrome control ... unit shall establish procedures to ensure that each unit is kept informed of operationally significant conditions on the movement area ..."
The CAA may issue guidelines suggesting what the procedures and /or criteria might be, but the guidelines are not binding. Therefore the type of procedures and systems is left to the discretion of the applicant. However, the safety systems must be documented and then approved by the CAA before it will grant a certificate to the applicant.
The holder of the certificate must also have in place an internal audit system to monitor the safety aspects of its business. In addition, the CAA conducts an external safety audit as part of its regulatory responsibilities. The CAA audit checks whether the safety system is being properly followed by the certificate holder.
As outlined in Chapter two, the safety system approach is already known in the roading sector in the form of the "safety management strategy." What is proposed here would build on what is already being achieved and formalise it in a legal requirement for all road controlling authorities.
Road controlling authorities' safety systems would be negotiated with the LTSA. The safety systems would be tailored to reflect the individual characteristics of the road controlling authority involved. There may need to be some standards which are not negotiable - these could be set by way of Rules, with a requirement that they be adopted in every safety system.
This principle could be introduced in stages. For example, as a first step all road controlling authorities might be required to ensure that their contractors have in place a safety management strategy. Subsequently an explicit duty would be imposed on road controlling authorities themselves to adopt a safety system.
The advantage of this option over the "Detailed Legislative Prescription" model is that a safety system can be designed to suit the individual circumstances of a road controlling authority and can be changed in response to changing conditions.
A merit of the safety system approach is that it is designed to increase an organisation's commitment to safety. Placing an obligation on all staff of a road controlling authority to consider the safety implications of their decisions should bring significant safety benefits. The possibility of any non-compliance with the safety system being publicised provides an added incentive.
In so doing, the safety system clarifies the responsibilities of staff in a more effective way and gives a greater degree of certainty than would be possible by means of detailed regulations. As a result, the safety system approach promotes a high level of accountability for outcomes on to the monitoring body on behalf of road users.
The safety system approach could ensure that local authorities fully consider road safety needs as well other, possible competing, objectives in determining expenditure and policies. As local authorities have competing objectives, the question arises as to whether road safety issues will be given sufficient weight to influence the decision making process. Consideration will need to be given to how this will affect council discretion in prioritising.
There will be some initial costs in documenting procedures and systems. This may be a particular problem for small road controlling authorities where staffing resources are not great and few specialist roading engineers are employed. In the rail sector existing operators were allowed three years to develop a safety system . A similar transition period could be designated for road controlling authorities.
One disadvantage of this option is that it simply requires a safety system to be adopted and makes no provision for penalties for poor performance. This is one of the reasons that a safety systems approach is usually incorporated with another management regime, such as licensing.
A contract is a very flexible instrument and can be used to regulate many activities. Generally contracts are used to specify the nature of a service or goods to be provided in return for payment, with penalties if the service or goods are not up to standard. In the health sector, the Regional Health Authorities, on behalf of the Crown, contract health providers to provide specified services, in accordance with specified performance measures. In the transport sector regional councils contract for public transport services on routes which are not commercially viable but which one considered to be socially desirable.
A contract based approach could include a requirement for a safety system, combining the benefits of both.
The Minister of Transport contracts with the Meteorological Service (a State Owned Enterprise) to provide weather forecasts and warnings.
The principle of contracting for services is not new to the roading sector. Road controlling authorities are required to contract out construction and maintenance work. Transit New Zealand contracts out the day to day management of the State highways to "network management consultants". Furthermore, Transfund this year is introducing a system of contracts designed to commit road controlling authorities to meet certain standards in respect of projects which involve Transfund funding. These contracts will require adherence to certain engineering standards, procedures for assessing the eligibility for funding of proposed projects, and procedures for contracting out work.
This option would expand on the work that Transfund is now doing. It would replace the existing statutory relationship between Transfund and the existing road controlling authorities with a contract setting out the responsibilities of each party. Funding would be linked to performance of the contract.
The enabling legislation could indicate in general terms what matters the contract would address, in particular a requirement for an approved safety system or other requirements in respect to safety. The detail however, could be included in the contract and any non negotiable principles included in the Act or Rules.
The contract could be negotiated between the road controlling authority and funding agency, with significant input from the LTSA (representing the public interest in road safety). There would be scope for some variation according to territorial conditions. It could also recognise the differences between Transit New Zealand, territorial authorities and other road controlling authorities.
One option would be to negotiate contracts every year. Alternatively, contracts could be valid for a longer period, such as three years, along the lines of contracts for network management consultants. A longer duration would reduce costs for the parties to the contract.
The LTSA would monitor safety performance. It would have certain rights to intervene to maintain safety standards if these were being breached. Ultimately it would have the power to seek remedies (such as, a reduction in funding or a recovery of monies already paid) from road controlling authorities which did not meet their contractual obligations.
A contract-based system has great flexibility. It can be updated regularly. It does not undermine territorial authorities' duty to provide roads as the licensing option does. A contract would give certainty as all the duties of a roading entity would be set out in its contract. Transfund advises that the contract system it is implementing will impose greater accountability on road controlling authorities and make the task of monitoring adherence to the standards set out in the contract more straightforward.
Reduction of funding, which exists under the present system and has proved to be effective, allows a graduated response to poor performance, rather than the drastic remedy of licence cancellation or Court action. The possibility of a reduction in funding will promote a greater degree of attention to performance by the roading body. As mentioned above Court action can be expensive and time consuming.
If a new National or Regional Land Transport Strategy introduced new priorities, these could be taken into account when the contracts are reviewed.
As this option provides for a safety system it includes all the benefits of that option, namely:
Negotiating a contract and monitoring performance will incur costs. The size of the costs will depend inter alia on the frequency of reviews of the contracts. However, these costs should be more than offset by improved safety outcomes.
The use of severe penalties, without any other prior intervention, could be counterproductive. The regulatory body would have to exercise great care before imposing severe penalties.
Including safety matters in contracts rather than legislation may diminish their status. It is also unclear in this system how the LTSA will be a party to the contract.
There is also the cost of setting up a safety system.
The Health and Safety in Employment Act 1992 sets a broad objective which is backed up by heavy penalties. The Act takes a non-prescriptive approach as it, for the most part, leaves employers free to decide how to meet the requirements of the legislation.
The objective takes the form of a "General Duty of Employers", which is to take all practicable steps to ensure the safety of employees at work (section 6, Health and Safety in Employment Act). There are also a number of more specific duties, which are nonetheless couched in fairly broad terms. These include:
The legislation provides for codes of practice. Although these are not generally compulsory many employers have adopted them. This enables an employer, if he or she comes before a Court, to demonstrate that he or she was actively trying to fulfil the duties set out in the Act. A court must have regard to the code of practice.
This approach has not generally been used in the transport sector.
There could be a general duty on road controlling authorities to take all practicable steps to ensure the safety of road users with heavy penalties where it can be shown that the breach of the duty has caused an crash.
The approach is flexible, simple and non-prescriptive. It includes clear enforcement measures.
There is ample scope to reflect changing priorities of a National or Regional Land Transport Strategy. As the regime is so broad, it would be able to easily accommodate a range of different road controlling authorities.
The regime may be too general for road management, and it gives no guidance to managers beyond the threat of large fines. As a result managers may lack certainty as to their precise obligations. Consequently they might adopt an excessively cautious approach which is likely to incur unnecessary costs and reduce safety expenditure in other sectors such as public health.
This disadvantage could be mitigated to some extent by the issue of codes of practice (which would operate as evidence of good practice, as explained above). Court action can be slow and expensive, and reliance on the threat of Court action could add costs to the management of the system.
The broad regulatory regime can be justified in the context of the Health and Safety in Employment Act in that the variation between workplaces is large, therefore legislation covering all workplaces has to be correspondingly flexible.
It is, however, arguable that road management is a more specialist activity and that the broad scope of the Health and Safety in Employment Act is not really necessary.
The Health and Safety in Employment regime also involves an element of external inspection to identify breaches of the employer's duties, which has the disadvantages associated with Option One above.
This option assumes that the existing legislation would be left in place, and existing administrative arrangements would not be changed in any way.
There would be no immediate and visible costs as no change would be implemented.
The difficulties outlined above would remain. In addition, if no changes to the status quo were made, there is a risk that over time the lack of a clear duty on local authorities to provide a safe and efficient roading system could impose significant costs.
If the private sector was discouraged by the present legislation from providing roads, there would be an opportunity cost - alternatively there is a risk that the private sector might provide roads to a standard inconsistent with the public roading network.