The Prime Minister was asked about Pike River in Question Time yesterday, and the impact of deregulation on the disaster, and he made a statement to the effect that no company is ever going to put profits over the lives of their employees.
Which is true, in the trivial sense that if the Board of Directors is offered a million dollars to kill ten employees they’re (probably) going to decline the offer. But decision making in modern corporations is diffuse. If the mine-safety officer asks for more money to ensure safety, and the CEO goes to his financiers to ask for an increase in operating costs, and they refuse because their risk manager won’t let them put any more money into the venture until revenues improve, then the CEO is unlikely to close down the mine and sack all his staff. Instead he’s going to tell his Safety Officer something like ‘do more with less or I’ll find a Safety Officer that can’.
And the Mine Safety Officer might even something to the effect of ‘I’ll make a cut-back that will make our mine 0.1% more dangerous’. That’s not very much, and the Safety Officer and CEO can agree that they’ll re-implement whatever gets cut when they have the money. Only that day never comes. Instead the operating budget shrinks, the financiers get very unhappy, the CEO’s job and the jobs of all the employees are on the line, and the easiest way to balance the books is to make further tiny incremental cuts in safety, because, after all, nothing bad happened the last time.
All those cuts might add up to a 1% chance of a major disaster per day, which still seems like pretty good odds until you realise that means three to four major disasters per year. But everyone involved is strongly incentivised against coming to that realisation.
John Key’s perspective on workplace regulation is that of orthodox neoliberalism: a business understands itself and its operating environment better than any government department ever can, so will always make superior decisions about how to balance issues like safety vs profit. But that assumes that the people running the business are rational, impartial agents with wide scope to make decisions when they probably don’t have any of those qualities. Any rational, impartial decision makers are going to be employees of a government regulatory body, who don’t have huge financial and emotional stakes in the continued operation of the company.