Swain Paul: Railways Bill — First Reading 
Swain Paul: Railways Bill — First Reading 
[Volume:610;Page:7409] 
Hon PAUL SWAIN (Minister of Transport) 
: 
 I move  
That the Railways Bill be now read a first time. 
 At the appropriate time I intend that the bill be referred to the Transport and Industrial Relations Committee—the House will be relieved to know—with no conditions. 
The rail industry in New Zealand is moving away from being vertically integrated with one major operator to being fragmented with a number of different key players. This devolution creates safety gaps at the margins which need to be effectively covered by legislative change. I flagged the introduction of this legislation late last year but a few issues relating to how the bill would affect small heritage operators meant that introduction was delayed. However the bill is now ready and its introduction should not be delayed any further. 
This bill will have a positive effect on rail safety as it brings a more robust system and it will help those who are interested in investing in New Zealand railways to understand the proposed regulatory regime. The safety legislation will apply to all rail participants regardless of who they are. New legislation needs to recognise changes in rail ownership and operational activities. This Government has made a commitment to recognise the recommendations made by the Ministerial Inquiry into Tranz Rail Occupational Safety and Health 
2000 also known as the Wilson Report. A subsequent review of the state of the infrastructure conducted by Halliburton KBR has reinforced the need to introduce changes. 
This bill consolidates legislation relating to rail safety from the Transport Services Licensing Act and the Land Transport Act into a single Act. It also incorporates relevant parts of the Railway Safety and Corridor Management Act and contains remedies for a number of deficiencies in the current rail safety legislative framework. At present rail operators are accountable for rail safety through their approved safety management systems. In future however there will be participants in the rail sector whose activities are fundamental in the safe delivery of a rail service but who will not be covered by a safety management system. 
This bill extends the licensing regime to cover a greater portion of rail participants. It requires a clear and visible chain of responsibility between licence holders and subsidiary organisations. It improves the audit process by introducing a wider-ranging process of safety assessment and it enhances the range of powers available to the regulator—the Land Transport Safety Authority—to enforce safety. Operators who perform well in their safety assessments will be rewarded with reducing compliance costs over time. Operators who do not perform well can expect more regulation including more regular assessments and the requirement to produce safety improvement plans. At the moment it would be very difficult to prosecute a member of the public or perhaps an employee who might do something that has a serious safety consequence. The bill changes that. Although the safety manager is responsible for the overall safety of the operation an individual could be held accountable for his or her actions if necessary and the court will be allowed to decide a penalty suitable to the level of the offence. 
The bill also contains new provisions in which the Minister can make rules which are a form of legislation to do with a wide range of issues including driving hours and drug and alcohol standards. Current law requires only rail operators to have a licence and before a licence can be granted operators must have a safety system approved. Because Tranz Rail and heritage organisations were vertically integrated the safety of the whole rail operation was managed through the rail operators’ safety system. However with the sale of the Auckland rail network we have moved away from that model. Similarly further possible changes in track ownership outsourcing maintenance or contracting train control will mean that those activities are no longer covered under a single rail operator’s licence or its safety system. Extending the licensing regime to include those who provide access to the track means that access providers will also require a safety system. All rail participants will be captured under the safety system of either the rail operator or the access provider through interoperability agreements. Those agreements will be approved by the regulator and must demonstrate a chain of responsibility from the licence holder right through to the individual contractors who are part of the wider operation. This is important in order to maintain accountability. 
Both the Wilson and Halliburton reports criticise Tranz Rail’s safety management systems for being voluminous and unwieldy. Their sheer size makes it very difficult for the regulator to navigate and in practice reduces their efficacy. Rail licence holders will still have a safety system. The bill requires a safety case—a high level public document that contains among other things an overview of the rail operation’s key activities and a description of the safety policy and objectives. This safety case must include a strategy for managing identified risks and an outline of the safety monitoring and reporting regime. 
In addition key documents relating to the operation will be listed in the safety case. The safety case will be approved by the regulator and should that licence holder wish to make changes to it those changes also need to be approved by the regulator. Secondary documents and manuals relating to the operational practice will sit underneath the safety case as part of the wider safety system. Those documents will not require approvals for variations but in the case of a safety assessment they will be subject to audit to ensure that an operation is complying with its own standards. As well the regulator can require the safety risks to be remedied. That means that licence holders will be required to change aspects of their safety systems or add to them if deficiencies are found. 
The current audit process is a paper-based test that ensures an operator’s records match the standards set out in the safety management system. That means that it does not matter what the standard is just that it is consistent. There is no provision for the auditor to make sure that the standards required of the regulator are actually being carried out. If we are to achieve full safety assurance for rail operations a combination of audit inspection investigation discussions with staff and the use of accident-reporting data must form the basis of safety assessment. The bill provides for that level of safety assurance. 
Under this bill the regulator will negotiate with the licence holder the frequency with which the operation should reasonably be assessed. For those who demonstrate a consistently good safety record the time between assessments may be extended thereby reducing their compliance costs. The regulator may require an operator with an unacceptable safety record to develop a safety improvement plan. This plan recognises continuous improvement and allows the licence holder to work proactively with the regulator to achieve agreed safety outcomes. It should also help the licence holder achieve a good safety record and reduce compliance costs in future. While the current audit system merely checks compliance with a system that may be outdated or ineffective this bill will allow the regulator to review the safety case. That would occur in situations where the regulator can reasonably demonstrate that the nature of the business has changed considerably and that the operation is significantly different from that for which the safety case was originally proved. 
I am committed to ensuring that non-commercial operators and particularly small heritage operators are not unduly penalised by the costs associated with this new safety regime. Those charges are still being finalised but they will be kept to a minimum where possible. Over the next few months officials will consult the industry over the structure for fees and charges under the bill and will also encourage heritage operators to address the issue in submissions to the select committee. I should add that I have had discussions with the heritage operators and they have indicated to me what their concerns are. We have indicated that we will meet them some of the way. There are still a lot of details to be worked through but they have my assurance that we are trying to ensure that compliance costs are kept as low as possible given the charitable nature of many of those organisations. I am also conscious of the need to minimise paperwork for small operators. The Director of the Land Transport Safety Authority may if appropriate allow an operator to use the documentation required for its current licence as its safety case. 
The bill will make the sanctions regime more effective by allowing the regulator a series of ramped-up powers that can be used accordingly and in relation to the seriousness of a safety breach. The current sanctions regime relies on imposing conditions on the operator’s licence or suspending the licence. Both options are restrictive and impractical. There is no scope to effectively enforce lesser breaches without disrupting the whole operation. Graded powers will allow the regulator to acknowledge small breaches without having to impose hefty penalties. It will also encourage licence holders to be proactive andidentify their own risk without incurring a penalty if the risk is managed quickly and effectively. 
The bill proposes a number of positive changes to the way the rail industry is regulated and how safety is assured. Given the direction the industry is taking moving from vertical integration to fragmentation New Zealand would be sensible to learn from the mistakes made in other countries—particularly in the United Kingdom where poorly managed safety gaps have resulted in disastrous rail accidents that have taken many lives. This Government has a vision for transport in which rail plays a significant part. If we want to fulfil that vision we must improve our rail safety performance up to international best practice. We must ensure the continued success of our efforts to reduce serious injury and deaths in the rail area. The bill does that and I commend it to the House.