Weighing the costs of health and safety

Dr Bryce Wilkinson
The Dominion Post
12 January, 2015

We should not pay through the roof for small safety benefits, argues Bryce Wilkinson

How would you react to being told that government regulations have added 50 percent to the cost of replacing a tin roof on a house?

I ask because a long-standing professional builder told me in a chance encounter shortly before Christmas that scaffolding requirements under the Health and Safety in Employment Act 1992 mean that a small re-roofing job that would have otherwise cost $4,000 may now cost $6,000.

He added that he knew of some local builders who had given up building and invested in scaffolding. To increase patronage, some would drive around neighbourhoods and "dob in" to Department of Labour inspectors any builders who were doing roofing work without scaffolding.

Clearly, the builder considered this cost impost to be absurd. Who was I to argue? After all, it is his body that is at risk and he has been in the business for decades.

Yet, the reaction of a family member during the Christmas break was the opposite: it was along the lines of "about time, there are far too many workplace accidents in New Zealand. Firms are too slack about safety and the loss of life is unacceptable".

Well, accidents cannot be eliminated from human affairs. No public road, or public or private building is completely safe. Beyond some point, the costs of greater safety exceed the benefits. This applies to spending on roads, earthquake strengthening, hospital safety, and anything else.

In the case of public roads, the Ministry of Transport's June 2012 update assessed the statistical value of a human life to be $3.77 million. On that basis, imposing a scaffolding cost of $2,000 a time would be justifiable if it saved one statistical life for every 1,885 occasions.

Well, there are 1.8 million dwellings in New Zealand. If roofing work is required every 20 years on average, and scaffolding costs $2,000 on average, the annual cost of associated scaffolding work to 90,000 dwellings is $180 million. On the Ministry of Transport's estimate we could justify spending $180 million annually on safety grounds if it saved 45 statistical lives annually.

So how many fatal roofing accidents are there in New Zealand that might be prevented by greater recourse to scaffolding? A 2005 study by the University of Otago's Injury Prevention Research Unit of deaths between 1985 and 1994 found seven deaths from workers slipping off a roof and one from being blown off. That is a rate of less than one a year, commercial and residential building combined.

I don't know how many of these eight deaths could have been reduced by better scaffolding. Perhaps greater use of safety harnesses would be a better option anyway. After all erecting and dismantling scaffolding is a dangerous activity in itself.

The same study identified eight deaths in the construction industry from falls from ladders. These were surely potentially avoidable to some extent by scaffolding. On the other hand, falls from scaffolding caused eight deaths.

So a mandatory scaffolding requirement is potentially big business for scaffolders–and a massively disproportionate cost for home owners. Plausibly, vastly more human lives could be saved by spending such money elsewhere, for example on rumble strips or median barriers on the roads.

To illustrate, no deaths have occurred on the Centennial Highway north of Wellington since a wire-rope median barrier was installed at a one-off cost of $15 million between 2005 and 2007. During the previous 10 years, there were 16 deaths. On one estimate, putting median barriers on 157 km of the most risky roads could save 90 lives annually, at a one-off cost of $236-$471 million.

Of course these calculations are merely illustrative. Their purpose is make the point that it is irresponsible to regulate for safety without a competent assessment of benefits relative to costs.

Regrettably, the Health and Safety in Employment Act 1992 fails to require such an analysis. Section 6 requires employers to take all practicable steps to ensure safety. Section 2A defines this to mean all reasonably practicable steps.

The Department of Labour's guidance concerning what is reasonably practicable states that "if there is a risk of serious … injury or harm, then spending a greater amount of money to deal with the hazard is considered reasonable". That guidance ignores the central question of value-for-money.

So the open question is whether any official assessment exists of the costs and benefits of current regulatory requirements relating to scaffolding. If not, why not?

Bryce Wilkinson is a Senior Research Fellow with The New Zealand Initiative. He was a member of the government's Regulatory Responsibility Taskforce, the 2025 Taskforce and the ACC Stocktake Group.

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