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MINISTRY OF BUSINESS,
INNOVATION & EMPLOYMENT
HiKINA WHAKATUTUKI

BRIEFING
Options for Pike River Recovery Agency
-- - ------
IDate: 13 November 2017 Priority: High
I

ISecurity ~
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~nsitive I Tracking
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080217-18
j classification: number:

Action sought
r~C!On ! OUgh_! _ 1
Deadline
--i
l
I Ho~ Andre; Little a Indicate your preferred option IAs soon as possible, but

Minister Responsible for Pike River

following your discussion with the ideally not later than
Re-Entry Pike River families Tuesday 7 November if
1
Ib Discuss with MBIE officia ls at your
you wish cabinet
I decisions to be made by
earliest convenience 20 November in order
for legislation to be
j comfortably passed
I
_ _ _ _ _ _ _ _ _ _ _ _,__ _ _ _ _ _ _ _ _ _ _ _ __._,before Christmas

{ Contact for telephone discussion (If-required)

Name Position ___ _ _r_e_le_p_h_o_n_

e _ _..--_ _ _ _ _ _
1s_t_contact i
I Joanne Hughes

IBruce Parkes
Head of Office of the Chief I
Executive
Unit Lead
-+ ___
04 901 8593

Pike River Re-Entry Agency i n/a .,/

I
Establishment Unit --~-----~------'---- __ _J

Minister's office to complete: ~roved D Declined

0 Noted 0 Needs change
Oseen D Overtaken by Events
0 See M inister's Notes 0 Withdrawn
Comments
'
MINISTRY OF BUSINESS,
INNOVATION & EMPLOYMENT
HTKINA WHAKATUTUKI

BRIEFING
Options for Pike River Recovery Agency
--- - ------ --------,
IDate:
ISecurity
1 classification:

j 3 November 2017
Sensitive
-----I ;::~ --~, ::~217-18
number:
1

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Purpose
This paper sets out advice on two options for the institutional form and operating model of a Pike River
Recovery Agency.

Summary of the two options

1. This paper sets out two options for the institutional form and operating model of a Pike River

Recovery Agency. The options are summarised in Table One below and discussed more fully in the

section that follows, focusing particularly on the way both options can ensure family involvement

and the pros and cons of each option.

2. There are a range of options and variants that could be designed (Appendix One contains the full
range of options we provided to you in our initial advice on 26 October). The purpose of expanding
the two options is to assist with a decision between the two basic models of an independent decision
maker on entering the drift and the M inister as the decision maker.

3. MBIE considers this choice as one of the critical decisions for setting up a new agency. MBIE
recommends that the Pike River Recovery Agency be set up in a way that it is empowered to develop
a safe re-entry plan for the drift, in consultation with the Pike families and their experts and
assuming it is satisfied that the risks can be adequately managed, be responsible for implementing
the plan.

4. MBIE's recommended option- an Autonomous Crown Entity (ACE) - will enable the Government to
communicate its priorities to the agency, appoint its Board members and allow the way that the
families' participate in the evaluation process to be codified in law if desired. The possibility remains
that the Agency may decide the re-entry to the drift is not sufficiently safe but, provided there is
sufficient t ransparency around the decision making process and that the decision makers are highly
credible, there would be a high degree of confidence that there was a robust and open process
followed to reach this conclusion.

5. The second option is for the Minister (or Cabinet) to take the decision on re-entry on the basis of
advice from the Agency and the direct the agency to execute re-entry. This option gives the
Government more control of the outcome but has the downside that it could require amendment to
how the entity is treated in relation to Health and Safety law, with possible precedent effects. This is
SSC's preferred option because it is more flexible, responsive and accountable to Parliament. Under
this option the Chief Executive could have statutory independence in decision making should
M inisters' wish it.

6. The 100 day plan notes that advice on the form of the entity should be considered by it by 30
November. Should you wish to ensure legi~lation is introduced and passed by Christmas we will need
a decision on the entity form by Tuesday 7 November so that a cabinet Paper can be submitted on 9
November and policy decisions confirmed by Cabinet on 20 November. This is a very tight

0802 17-18 Sensitive

 timeframe for consultation with families, agencies and Ministers. This could be addressed by taking
another week before lodging (on 16 November) with Cabinet consideration on 27 November. This
would leave only one week for the Bill to pass under urgency before Christmas. If there were a
week's sitting t ime in January this would provide more flexibility also.

Table One: Options for the institutional form and operating model of a Pike River Recovery Agency

Autonomous Crown Entity (which makes the decision Government department (Ministerial decision re re-
re re-entry and executes it) entry and department executes It)

Legislation

Legislation is required to set this up. The legislation Legislation is not req uired for creation of a new

would define matters such as functions, membership,

government department, which can be created and run

and decision-making, inclu ding setting out family

under existing State Sector legislation.

involvement and any public consultation or

transparency expectations around the re-entry plan.

As discussed in the Health and Safety section below,
legislation would be needed if you want to make changes
to existing liability arrangements.

Governance

Board appointed by the Minister. The legislation could Chief Executive appointed by the State Servi ces

set out the skills and experience required of the Chair

Commissioner following consultation with appropriate
and members. The Board then appoints a Chief Ministers.
Executive who would lead the process of developing a
safe re-entry plan.

Decision making

Board makes final decision - drawing on advice from The responsible Minister (in practice likely to be Cabinet)

agency and other sources as it sees fit . The decision

makes the final decision. Assume the department takes

could be subj ect to statutory criteria in the governing

the lead in advising Minister/Cabinet on safe re-entry
legislation.
plan, drawing on expert advice and using agreed
mechanisms for working w ith family and experts groups.
Minister could have own advisor/seek independent advice
in making the decision.

Involving t he Pike River families

The M inist er could directly involve the families in the
process for selection of the Board. Legislation can set
expectations as required for family involvement in the
decision making process, and transparency of decision
making.
Minister can set expectations / give directions to
department as required on the process for family
involvement in the decision making process, and
transparency of decision making.

Assets and liabilities

The Crown Entity holds the asset until handed over to Department holds the asset until handed over to
Department of Conservation. Department of Conservation.

Health and safety

The Crown Entity Board and management have
responsibilities under the health and safety legislation
for mine re-entry activities.
Health and safety legislation does not preclude re-entry
of the drift. The focus of a re-entry plan would be
ensuring health and safetv is manaaed in a way that is
Ministers are not caught by any liabilities currently under
workplace heal th and safety legislation - t hough those
they instruct (e.g. the Chief Executive and other entitles
such as contractors) involved in executing the plan will.
These duty holders would need to be assured themselves
that re-entry was consistent with their duties unless

0802 17-18 Sensitive 2

,

Autonomous Crown Entity (which makes the dec:lslon Government department (Ministerial decision re re-
re re-entry and executes it) entry and department e><ecutes it)

reasonable and proportionate to the risks. legislation was in place to remove these duties.

The agency's statutory purpose means it would actively Same as the Crown Entity option, i.e. health and safety
seek means to achieve re-entry in a way that is legislation does not preclude re-entry.
compatible with health and safety legislation.

Recommended action
The Ministry of Business, Innovation and Employment recommends that you:

a. approve option one following your discussion with Pike River families (MBIE's preferred option); or

approved/ not approved /discuss

b. approve option two following your discussion with Pike River families LSS;E'<HW:P

approved/ ot approved /discuss

c. note that the Cabinet paper will need to be submitted Thursday 9 November if legislation is to be
passed comfortably by Christmas, so a decision is ideally needed on your preferred option by Tuesday 7
November

noted
d. discuss with MBIE officials at your earliest convenience
9(2TCaJ

9(1) a

l anne Hughes Andrew Little

\ t,
Head of Office of the Chief Executive ~lster Responsible for Pike River Re-Entry
1BIE l ..... / ...... / ......
..... I ..!... I ..IJ ~

080217-18 Sensitive 3
Discussion of options
Option 1: Autonomous Crown Entity
1. A Crown Entity, depending on the Crown Entity type, has varying degrees of 'arms-length' decision
making from Ministers. MBIE recommends an Autonomous Crown Entity (ACE) as the entity type as it
has the right balance between independence of decision making and the ability of the Government to
ensure its policy is taken into account. Examples of ACEs are the Public Trust and t he Broadcasting
Commission.
2. An ACE would need to be set up in legislation. The legislation would define the functions of the agency,
and could set out the skills and experience required on the Board, e.g. potentially:

A Chair with governance and statutory decision-making expertise (who will likely hold high public
confidence).

Members with expertise in matters such as mining and health and safety.

A Pike River family representative could be appointed to the Board. This would need some careful
handling as there would be some matters that it would not be appropriate for a board member
with strong family connections to be involved in (e.g. the final decision on whether to approve or
not the entry plan).

Ensuring that families had input into who was appointed to the Board would be critical to ensure
there was a high degree of buy-in and confidence from the families and wider public

3. While an ACE has independence in its decision making, the responsible M inister has considerable
influence on its direction and operations. In particular:

The Chair and Members of the ACE are appointed by the Minister

The Minister can set a general direction and annual expectations for the ACE

The legislation governing the ACE also can enable Ministerial powers of direction on certain matters
(for example, the process for engagement with the Pike River families).

The Minister has the power to direct the ACE to have regard t o government policy

4. The Board appoints a Chief Executive -who Is responsible for the day to day running of the
organisation, though decision making and accountability responsibilities remain with the Board.

5. The ACE may choose to configure itself in different ways as best suits its business - e.g. forming sub
committees of the Board that includes external experts. The legislation setting up an ACE also could
specify particular processes or decision-making criteria to be followed . For example, the legislation
could set out the fa ctors that must be considered, or the transparency of decision making, when
making decisions on re-entry of Pike River.

6. The key mechanisms to provide engagement with the Pike River families could include:

Your engagement w ith the Families Reference Group (FRG) in selection of appointments to the
entity.

Recognit ion in the ACE's legislation of the role of the FRG (e.g, this could set out how the FRG is
involved in the ACE' s decision-making processes).

Using your Ministerial expectation-setting and direction powers to outline how you wish the ACE to
work with the FRG and the Families' experts.

0802 17-18 Sensitive 4

'

7. Under this option the Chief Execut ive would coordinate development of advice to the Board on t he
options for Pike River drift re-entry. The Board would make the final decision - based on the statutory
criteria in the governing legislation, and other relevant considerations (e.g. health and safety legislation
and any government policy it has to have regard to).
8. The 'pros' of this option are:

Independent decision making, within the context of a formal role in engaging effectively with the
Pike River families, should provide a high level of public confidence in it.

An expert Board will ensure a diversity of perspectives and range of expertise will be brought to
bear before a final decision is made.

The legislation governing t he entity can be tailored to provide for whatever decision making and
process requirements the government wishes.

9. The 'con' of this option is that it requires new standalone legislation and the appointment of a Board,
which adds some time and complexity to the set-up phase.

Option 2: Stand-alone department with Ministerial I Cabinet decision-making

10. A Pike River Recovery Agency could be established as a government department (through an Order in
Council), except that legislation may still be required for the health and safety issues discussed below.
The key features of a government 'public service department' (in comparison to a Crown Entity under
Option 1) are:

Public service departments are closer t o Ministers- and part of the collective legal 'Crown'

(whereas Crown Entities are legally distinct agencies).

The Chief Executive is appointed by the State Service Commissioner.

Some departments have functions exercised independent of M inisters (e .g. enforcement decisions),
though the M inister retains overall responsibility for the functioning of the department.

11. Under this option, advice on safe re-entry of the drift would be commissioned and provided to Chief
Executive of the Department. Recommendations would then be made to the responsible M inister. The
Minister would take this decision to Cabinet.

12. Under this option you would be closer to the day to day decision making and could be involved in all
key decisions around funding, resourcing, t imeframes and approach.

13. Once the Minister/Cabinet has made a decision, the Chief Executive of the department would be
respon sible for its implementation.
14. Under Health and Safety legislation the Chief Executive (of any organisation, including sub-contractors)
has an independent legal responsibility to take reasonability practical steps to ensure the safety of its
workers. Ther~fore, there is a small possibly that the agency will reach a different conclusion to
Cabinet, and decide that re-entry is not safe and therefore not give effect to your decislon.1

15. You have some options about how you manage this:

Change accountabilities in legislation - You could consider changing the legislation so that
theagency and contractors were not covered by all the duties under health and safety legislation.
However, this would need careful consideration as t his would in effect give the workers re-entering
the mine less protections than were in place for the Pike River men -this could be mitigated by
giving PCBU and Officer duties to the Government and yourself for the purpose of re-entry.

1
A Chief Executive cannot carry out a Minister's instructions if he or she considers they are unlawful.

0802 17-18 Sensitive 5

 An Autonomous Crown Entity or Statutorily Independent Departmental Chief Executive
Establishing an independent decision maker from the outset, provides clarity on who is accountable
for the decisions around safety. It sets a clearer level of expectation around single focus and
impartial decision making. If you wished to retain a departmental model to keep the entity closer
to government, then the Chief Executive (rather than the ACE) could be given the statutorily
independent role of determining whether re-entry should go ahead.

16. In addition, without legislation, the M inister could potentially be exposed to accessorial liability in

the event that something goes wrong in the course of re-entry activities.

17. As with the Crown Entity option above, there are many ways in with the FRG could be involved in
deliberations around Pike River drift re-entry. For example, formal terms of reference could set out
the department and Minister will engage with the FRG and the families' experts. This could include,
for example, setting how they can contribute to discussions on options for drift re-entry; or are
consulted on the final advice to Ministers.

18. The 'pro' of this option is administrative simplicity- no new legislation is required, except for
potential health and safety changes. This option also provides a high degree of Ministerial oversight.

19. SSC considers this to be the best option (although they are open to a Chief Executive with statutorily
i
independent decision making) because it is more responsive, can accommodate changing //
circumstances and has closer accountability to Parliament.

20. The 'cons' of this option are:

The decisions on mine entry are highly technical decisions about putting people into a high risk
environment. It is critical t hat the decision is made on the risks and the ability to mitigate those
risks. There is potential for the M inister as decision maker, even with an expert advisor by their
side, to be perceived as being influenced by other factors and pressures when making the decision.
This may be seen as undermining the credibility of any decision and public confidence in it.

Having the Minister involved in the decision complicates accountability arrangements around r
health and safety requirements. It would potentially need to be made clear that the Chief h
Executive and department is not responsible for the decision about whether to re-enter the d 1ft
under health and safety legislation and the Minister may wish to assume those responsibilities.
Otherwise there is a potential tension between the Minister's decision and t he Department's
responsibility to implement the decision .

There is also a possibility of other liability issues (e.g. under the Crimes Act) that may need t o be
managed. We can provide further advice on this as required.

0802 17-18 Sensitive 6

.

APPENDIX ONE: POTENTIAL AGENCY FORMS

Option and Key Features

Stand-alone department
with the Minister and Cabinet taking key decisions

I
'S
C
Advice on safe re -entry is provided by the Chief Executive, which the Minister and Cabinet
can consider when taking the decision
Minister or Cabinet directs Chief Executive to implement decision, although Chief
0 Executive will still need to assure themselves they are meeting their duties of care to the
I people they employ or engage before going ahead w ith recovery

I
'S
Established by order-in-council following Cabinet decisions
Chief Executive appointed by the State Services Commissioner
Stand-alone department with statutorily Independent functions

t (e.g. Canterbury Earthquake Recovery Authority)

The Chief Executive or other person in the department has a statutorily independent role
to take certain decisions - most likely on the design of the recovery plan and on its

'eI
'S
e,cecution
Department established by order-in-council and statutorily independent role and powers
established by legislation
Chief Executive appointed by the State Services Commissioner
Crown agent
Ij (e.g. Fire and Emergency New Zealand, Earthquake Commission)
Governed by a Board appointed by the M inister, Board appoints the Chief Executive
% Ministerial power to direct agency to give effect to a government policy that relates to the
agency's funct ions and objectives

- Established by legislation and subject to the Crown Entities Act

Autonomous Crown entity
'S ! (e.g. Public Trust, Broadcasting Commission)
li
.! -
Governed by a Board appointed by the Minister, Board appoints the Chief Executive
Ministerial power to direct entity to have regard to Government policy that relates to the
e:, "C
ii agency's functions and objectives. This means the boa rd must consider the direction, but
- II
make up their own mind on the issue
II Governed by a board
E Established by its own legislation and subj ect to the Cro wn Entit ies Act
Independent Crown entity
.. (e.g. Transport Accident Investigation Commission, Law Commission)

.i
C
Governed by a Board appointed by the Minister, Board appoints the Chief Executive
The Government can't direct on an independent function
e Established by its own legislation and subject to the Crown Entities Act
j Company Crown entity
....C (e.g. Crown Irrigation Investments Limited, Radio New Zealand)
Governed by a Board appointed by the Minister, Board appoints the Chief Executive
C
I Operates as a business but Crown can specify additional policy objectives
Established by order-in-council and company constitution
Subject to the Crown Entities Act and the Companies Act.

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