NZTA clears backlog of regulatory compliance cases

Steve Haszard, a managing partner of Meredith Connell. He has been leading a change in NZTA's approach to regulatory compliance. Photo / Greg Bowker

After five months, around $5 million of taxpayers' money and close to 36,000 dodgy warrants of fitness, the New Zealand Transport Agency has finally cleared a backlog of more than 850 compliance cases.

The open cases built up under a dysfunctional system that operated at the agency, a Crown Entity, which prioritised education over enforcement.

So far nearly 36,000 vehicles have needed to be reinspected to ensure they were safe after the work of dozens of vehicle certifiers was investigated.

The review of the NZTA, announced by Transport Minister Phil Twyford and board chairman Michael Stiassny in October, has cost taxpayers around $1 million a month.

Steve Haszard, a managing partner at Meredith Connell law firm which was brought in last October to oversee the review and take over regulatory compliance, said it had been an extraordinarily difficult time.

When he took over on October 15, the NZTA's regulatory compliance was in disarray, without even basic processes in place.

"Just the breadth and depth of the things that weren't being done and the potentially catastrophic consequences of not doing it right," Haszard said.

"When we first came in, we could only take on what we thought were the riskiest areas and then start shining a spotlight into the dark corners that we didn't have a chance to get to, that we perceived to be less risky," he said.

While the 850 open compliance files was not a large number for a regulator the size of the NZTA, it was the fact they were not being progressed that was concerning.

Haszard gave the example of Dargaville Diesel Specialists. The company issued a Warrant of Fitness for a car in which 65-year-old William Ball was a passenger when it crashed in January last year.

Ball died 26 days after the crash. His seatbelt was frayed and failed in the crash.

The NZTA admitted knowing since 2011 that Dargaville Diesel Specialists was failing to carry out critical WoF checks.

"Dargaville Diesel was a classic example. That had been 10 months where literally, nothing had been done despite the fact that NZTA was fully aware of just how bad that situation was," Haszard said.

He said it was hard to tell whether any other deaths or injuries had occurred in other cases where NZTA had failed to act.

"There are so many factors that go into a serious death or injury accident.

"What I can say, though, is that NZTA wasn't doing what it ought to be doing to reduce the risk of vehicle certification or transport operators contributing to the cause.

"I know regulatory failure when I see it. I know what the main root causes were and I know what needs to be changed."

QC Kristy McDonald, who was brought in to review the Dargaville Diesel Specialists file, concluded that NZTA failed to prioritise public safety, with the result that appropriate regulatory action was not taken in a timely or responsive manner.

The failures in that case were examples of wider systemic failures within NZTA's regulatory function that had existed for some time, she said.

There are about 60,000 regulated parties under the NZTA's jurisdiction, 45,000 transport services licences, up to 12,000 vehicle certifiers and up to 4000 taxi drivers.

"It's a really big market, and you're always going to get a proportion of that market that ought not to be in the market any longer. Our challenge is to find those and deal with those," Haszard said.

The entire review had so far cost about $5m, money that came from NZTA's multibillion-dollar budget.

The number of vehicles that have needed to be recertified is around 36,000, the majority of which arose from investigations into bigger businesses around Auckland and Hamilton.
So far there have been 130 notices of suspension or revocation of approval issued, with 53 immediate suspensions and 24 revocations.

It is not just vehicle certifiers and their businesses that have faced action. Course providers, bus and rail services, truck drivers and trucking businesses have also come under scrutiny.

Just last week NZTA ordered 75 trucks from Stan Semenoff Logging in Northland off the road due to the company's alleged continued failure to address safety concerns identified in two audits.

Semenoff, a former Whangārei mayor, has said he will appeal against the decision to revoke the company's transport service licence.

Haszard said there were plenty of cases, and they were all put on the NZTA website.

"Sunlight and detergent are incredibly important for transparency with regulatory work, and that's what we're doing."

The episode has claimed the scalp of NZTA's chief executive Fergus Gammie.

He sat with Twyford and Stiassny when the review was announced in October but resigned in December. He said at the time he hoped the review and improvement of the regulatory function at the agency could be completed without distraction.

Former Chorus chief executive Mark Ratcliffe is leading the agency until a new chief is named.

The Ministry of Transport is also reviewing NZTA's regulatory performance. That review had been due to be handed to Twyford shortly but has been pushed back to mid-April.

PwC is also looking into claims of driver licensing fraud among truck driver course providers.