Editor's Chronicle

Volume 6,  Issue 1, 2002

Has Victoria's Major Hazard Watchdog Been Muzzled?

On the afternoon of September 17, 2001, the leadership of the Major Hazard Division within the Victorian Workcover Authority was ambushed and removed from office. The Director was told that she was no longer the Director and the chief technical adviser was told that his contract would be paid out and that he was not to return to the office.

Does this mean that the Major Hazard Division has changed direction and will now go easier on the companies it regulates? VWA spokesmen repudiate any such interpretation and say simply that the Division needed more project management skills. It is hard to see how this justifies ambushing the incumbents in this way.

The Major Hazards Division (MHD) was set up in response to a recommendation of the Longford Royal Commission. It has been well staffed with highly competent people and by most accounts was doing an excellent job in bringing hazardous industries in Victoria into line with the requirements of the new Victorian major hazards regulations. It has been far and away the best resourced such unit in Australia and in many respects embodies world's best practice. A mid term review carried out by the consultant, DNV, concluded that the Division had brought about significant safety improvements in Victorian major hazard facilities and that it led the world in terms of encouraging worker involvement. Even some of the companies with whom the Division has been working sing its praises.

In the absence of an adequate explanation from Workcover for this precipitate staffing change, speculation is rife.

It is known that some companies complained to Workcover about the requirements being imposed on them. They argued that the MHD had exceeded its brief and become too involved in the details of how companies were managing their own affairs with respect to safety. The view is widespread that the sackings were a response to pressure exerted by these companies for Workcover to call off its watchdog.

We are not privy to the decision making process and have no way of knowing how accurate this suspicion is. But we wish to observe that the new regulations reverse the trend towards the de-regulation of safety and are quite prescriptive about what companies must do to comply with the law. This is in line with the recommendations of the Royal Commission. The Commission concluded that the self-regulatory regime which was in place at Longford contributed to that accident and it recommended a far more rigorous regime for the small number of major hazard sites in Victoria.

Some Victorian major hazard industries assumed that they were already largely in compliance with the new regulations and that they would simply need to demonstrate their existing practice to the regulator in order to get the license which is required under the new regulations. They believed that Esso had been an exception and that they were managing their own major hazards far more effectively. These firms were surprised when the MHD appeared to take a different view. Complaints that the MHD has exceeded its brief need to be viewed in this context.

A second widespread rumor is that Workcover acted as it did because it was frightened of litigation. If a license to operate a major hazard facility is granted only after Workcover has approved the fine detail of how safety is being managed, then were a major accident to occur, might not Workcover be held liable for having approved defective procedures?
Experience from around the world suggests that when a major accident occurs it is not because the procedures that may have been approved by a regulator were defective; it is because procedures and controls, which were supposed to be in place, were not being followed. This is in no way the responsibility of the regulator.

But if fear of legal liability is what stands in the way of effective regulation, then the Workcover Authority should seek legislative immunity.

Legal liability is potentially a major issue for Workcover. A major accident can cost billions of dollars, witness the Longford accident. As a workers' compensation authority, Workcover controls very large assets and therefore represents an attractive litigation target. There is some speculation that Workcover has acted as it has in order to protect its insurance fund. If so, this raises yet again the issue of the conflict of interest in which Workcover potentially finds itself. The Royal Commission commented as follows:

"It has been suggested that there is a conflict of interest between the role of VWA with respect to accident compensation and its role as the supervisor of workplace safety regimes. The Commission is in no position to reach a conclusion whether such a conflict exists, but it is clear that if there is to be a Major Hazard Division within the VWA, it should be given the independence necessary to ensure that any conflict is eliminated."

Recent events raise again the question of whether the MHD has the necessary independence.

The currency of these rumors suggests that Workcover has a credibility problem with respect to the MHD. One aspect of the philosophy embodied in the new regulations is transparency. Stakeholders, and that includes the public, are entitled to know how companies are managing safety. Public confidence in the safety of major hazard facilities also requires transparency with respect to the way the Major Hazard Division is operating. The extraordinary dismissal of the leadership of the MHD is a matter in which the public has a legitimate interest.

Andrew Hopkins, Reader in Sociology, Australian National University
Tore J. Larsson, Professorial Fellow, Monash University Accident Research Centre