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Offshore industry regulator performance

Australia’s National Offshore Petroleum Safety Authority (NOPSA) has released a report of its own OHS performance based on data from 2005 to 2007. NOPSA has been in the public eye far more than normal due to the Varanus Island explosion and the various investigatory reports.

The report seems to indicate that, as a regulator, NOPSA is performing to expectations. NOPSA’s CEO John Clegg has acknowledged that the industry is below the level of its overseas counterparts. This is peculiar given that other Australian resources industries, like mining, are ahead of other countries and that safety in the offshore industry has had a high profile ever since Piper Alpha.

The report identifies challenges that are difficult but not very surprising:

improving leadership – strong leadership is required for the Australian industry to move to the next level

dealing with a shortage of skilled personnel

managing ageing facilities and minimising gas releases

It will be very interesting to watch the benchmarking of NOPSA and its future role through the OHS harmonisation process that Australia is undergoing.

Below is the full report and the performance summary.

Kevin Jones

The real business cost of safety

In February 2009, BHP Billiton forecast a full-year production target of 130 million tonnes of iron ore. On 6 May 2009, the BHP president, Ian Ashby, has admitted that the company will be a “few million tonnes short”. The reason? Workplace deaths.

Ian Ashby was talking at a conference yesterday and pledged to improve safety however BHP, as has been pointed out in previous SafetyAtWorkBlog postings, has professed to place a high value on safety and its staff for some years. This is not a new issue for the company and that is what makes the statements of the president potentially hollow.

It is useful to look at the areas that Ashby has identified for additional attention for the implication is that this is where the OHS management system has been deficient. The measures to be adopted, according to media reports, include

restricting access,
improving traffic management, and
suspending non-essential night-shift work.

In 2008 the spot price for iron ore had reached $US190 per tonne. In late 2008, the price fell to $US77 per tonne. BHP is currently negotiating prices for its iron ore so no accurate figure of value is available. But let’s allocate a conservative figure of 3 million tonnes to the Ashby quote above and perform a rough calculation for the cost of poorly managed OHS in BHP.

3 million x $US77 = $US231 million; or

3 million x $US190 = $US570 million

Following the economic crisis of 2008-09, shareholders are going to be less forgiving on corporate performance. This has already been seen on the issue of executive salaries but the BHP experience should have shareholders asking why the management activity has not kept up with the safety rhetoric and the corporate values. Because soon the poor safety practices in the outback mines of Australia will be hitting the shareholders’ pockets and they are justified in expecting answers form the executives.

The trap for shareholders is to forget the deaths of the workers and only hear the commitments of the executives for the future. Should one believe the future promises when the corporate values of safety have not been upheld in the recent past?

Note: an independent government review was undertaken and a report was handed to the government in early May. The report has yet to be released and may not be.

Kevin Jones

UPDATE: 8 May 2009

A spokesperson for the West Australian Dept of Mines & Petroleum has advised SafetyAtWorkBlog that the report into BHP was undertaken under Section 45 of the Act and therefore cannot be released unless in the course of a prosecution. However, just as has occurred with the Melick Report into the Beaconsfield Mine collapse, there is always hope.

Australian Prime Minister talks to the great unwashed

The edge of panic is starting to appear in Australian concerns over swine flu. Some health officials, who should know better, are slipping slightly off message. The Queensland government’s chief medical officer has recommended that food should be stockpiled. This was quickly jumped on by the Federal Health Minister, Nicola Roxon, has tried to provide a more palatable context to the stockpiling:

“We want people to be aware of the risk of this disease, we want people to be taking sensible planning steps but we don’t want panic,” she said. “It’s very important that we don’t have a rush on products that people just during the course of their ordinary shopping might think about whether they have some of these extra supplies.”

The Australian Prime Minister, Kevin Rudd, has offered some of the blandest, but relevant, advice:

“For all Australians to engage in the simple practice of washing their hands with soap on a regular basis.”

Kevin Rudd is not the poster boy for personal hygiene unless eating one’s earwax is a suitable hygiene practice.

SafetyAtWorkBlog will continue to watch for evidence of the effectiveness of handwashing in influenza control.

Roxon’s advice is sound however in one very important way – sensible planning steps. Cut through the hyperbole. Listen to reputable health advice, and keep your colleagues and employees informed. If that happens, we’ll get through this threat.

Kevin Jones

The tenuousness of safety culture

Only a few days ago, SafetyAtWorkBlog questioned the usefulness of vision statements. A leaked internal memorandum from the structural mechanical process division of John Holland reported in the Australian media on 27 April 2009 shows just how tenuous such statements can be.

According to an article in the Australian Financial Review (not available online, page 3), the divisional general manager, Brendan Petersen, listed 81 injuries to subcontractors and employees and 51 near-misses in 2008. The memo acknowledges that the situation is “unsatisfactory and unacceptable” and Petersen makes a commitment to “do something about it”.

The trade unions have jumped on this memo as an indication that John Holland is not living up to its principles, although there is a lot of irrelevant and mischievous industrial relations baggage behind any of the current union statements about John Holland’s operations.

Petersen’s memo admits that, as well as his division’s performance being unacceptable

“we also have sites that consistently allow work activities to be undertaken in an uncontrolled or unsafe manner, sites that don’t take employee concerns about unsafe workplace conditions seriously and sites that don’t report near misses so as to learn from them and ensure the situations never re-occur again.”

That such an established company with such an active program of safety management acknowledges these deficiencies is of great concern.

On being asked about the memo, Stephen Sasse, John Holland’s general manager for HR, spoke of optimism and the safety efforts introduced since the 6 April memo however, behind his words is an acknowledgement that the safety culture has not been supported.

“To an extent [the memo] is an exhortation to middle management and supervision, and to an extent it is a warning that we cannot tolerate staff who do not share the John Holland values around safety…”

The John Holland values are listed on their website as

“Commit to the successful completion of a wide variety of construction, mining, services and engineering projects through our specialist and regional construction businesses

Commit to continuous improvement in all we do

Understand our clients’ businesses

Achieve our vision of “No Harm” through safe and responsible work practices

Build and maintain open lines of communication with our people’ our partners and our clients

Provide excellent returns to our stakeholders

Create an environment where our people are challenged, motivated and satisfied

Conduct business ethically, honestly and with diligence at all times”

The No Harm value is expanded upon through it’s “Passport to Safety” program.

In the AFR article, it is noted that Comcare currently has four federal court prosecutions occurring against members of the John Holland Group.

It seems trendy to broadcast the values of a company’s safety management system as if they are new and unique to their companies when, in fact, many of the values reflect legislative obligations under OHS law. The trap that many companies are facing is that reality does not match the ideal, and may never do so.

A strong argument can be made to be a quiet achiever on workplace safety – to just get down and get managing – without trumpeting the values that can become an embarrassment when the real world pierces the academic fog of the MBA. Perhaps true safety leadership comes from those who do it on the shop floor rather than than those who advocate it in the boardroom.

Kevin Jones

WorkSafe Victoria’s plans for the future

At the Safety In Action Conference in Melbourne last week the CEO Of WorkSafe Victoria, John Merritt, told the delegates that over the coming weeks and months we will see the following:

The “Homecomings” series of workplace safety ads have been purchased by Washington State and will be broadcast shortly. Merritt expects the campaign to spread across the United States and, maybe, into Canada;
WorkSafe has developed fake vending machines for use at exhibitions and trade displays which display replacement body parts, fingers as USB sticks (pictured below);
WorkSafe will be introducing an advisory support scheme for the medium-sized businesses, modelled on the Small Business scheme;
A team of advisers is targeting poor-performing large employers. Merritt said that “50 large employers account for 11% of all injuries WorkSafe sees”;
A major street art campaign will be launched by the end of April 2009
A new series of ads to be run on regional and rural television based on local sporting legends as part of the country football and netball sponsorship;
The graphic young worker advertisements will be re-run at appropriate times. Merritt acknowledged that the ads have generated many complaints but are transmitting the right message to the target audience.

WorkSafe will also maintain their focus on the “jugglers” those business people or administrative staff that are essential to each organisation because they are in charge of dozens of business processes. WorkSafe surveys of the jugglers have shown that less than 10% of their time is spent on OHS matters, around 30% of them are trained in their tasks and most operate without support.

Kevin Jones

Global pressures on Australian workers compensation schemes

Around 18 months ago the Victoria Government launched WorkHealth, a health prevention program that would be funded from the interest generated from the pool of workers compensation funds. SafetyAtWorkBlog has previously questioned how the program will be funded when its income source is likely to have been severely reduced due to the global economic problems.

On 1 April 2009 WorkCover in South Australia reported a half-year net loss of $313 million. WorkCover CEO Julia Davison said in a media release that

“the global crisis is, as expected, taking its toll. In the last six months stock markets have declined, investors have experienced significant losses, and interest rates have fallen significantly,” she said “Like all investors, WorkCover has been hit hard by the global financial downturn.”

Earlier in March 2009, the Chair of the WorkSafe Board Elana Rubin said

“the significant downturn on the world financial markets and reduction in interest rates had combined to drive a net loss of $1.42 billion for the half year. Whilst interest rate reductions are good news for those of us with mortgages, they have the opposite effect on our scheme – in the half year to 31 December 2008, the unprecedented level of interest rate cuts negatively impacted our net result by $645 million.”

On 1 April 2009 SafetyAtWorkBlog asked John Merritt why WorkHealth was not mentioned as part of his keynote presentation at the Safety In Action Conference. He reiterated the importance of the program in easing the recovery time, particularly, for manual handling injuries but acknowledged that the program’s funding source was based on interest

“from the [$600 million of the assets of the] workers compensation scheme over the next five years ….well there used to be interest from assets – there should be one day, there will be again – around $40 million each year for the next five years will be invested in worker health.”

It is good to hear that the WorkHealth program is going to continue but the fragility of the program’s funding should have been evident in the planning phase. Governments around the world are pulling back on government funded programs in a wide range of areas. Ideas that seem good in the good times are now looking like luxuries. It will be interesting to see if WorkHealth continues in the WorkCover area or moves to Health, where many of its critics have always said it belongs.

Kevin Jones

BHP Billiton deaths – government intervention

The West Australian government has taken the extraordinary step of talking directly to the senior management of Australian mining corporation BHP Billiton about the recent spate of fatalities at BHP’s worksites. The cynic would say that we now know the number of workplace fatalities that it takes to gain a Minister’s attention however, the fact that this high-level meeting is occurring is a clear indication of the severity of the issue. It may also indicate just how effective a union safety campaign can be. It is just regrettable the campaign is generated from multiple fatalities rather than preventive issues.

According to the Minister, Nick Moore

“Mines inspectors will now issue prohibition notices to BHP under the Mines Safety and Inspection Act 1994 – basically a stop work notice – for any breach of work practices or work place conditions that may constitute a hazard to workers.”

Mr Moore went on to say, according to one media article, “…the policy would remain in force until he had seen the report of a Section 45 review currently under way into safety management systems at all of BHP Billiton’s Pilbara iron ore mine sites.”

The article noted that

“The review, requiring independent engineering studies of BHP worksites to be carried out, is expected to be completed by April 30.”

BHP, meanwhile, has given guarantees of the following safety improvements:

Reduce site access;
Improve contractor management;
Enhance existing strategies to prevent excess working hours;
Move rail operations from the Mine Safety and Inspection Act to the Rail Safety Act;
Enhance traffic management standards, and;
Suspend all non-essential work outside daylight hours

Kevin Jones

Category: executives

Offshore industry regulator performance

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The real business cost of safety

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Australian Prime Minister talks to the great unwashed

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The tenuousness of safety culture

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WorkSafe Victoria’s plans for the future

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Global pressures on Australian workers compensation schemes

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BHP Billiton deaths – government intervention

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