A leaked report from the New Zealand Transport Agency paints a picture of demoralisation and chaos – and the situation appears to be getting worse with one in five employees wanting leadership to “work differently”.
Each year the NZTA conducts an “ask our team” survey which takes the mood of the organisation’s staff. The organisation has begun conducting smaller “pulse” surveys, the most recent of which has been leaked to Stuff.
More than half of NZTA’s staff expressed dissatisfaction with the organisation’s leadership, with just 48 per cent saying the leadership’s actions are “consistent with our organisation’s DNA”. Other questions regarding leadership also drew negative responses.
The chaos continued after Gammie’s departure, with controversial board chair Michael Stiassny resigning after serving just one year of a three year term.
Responses to the 14 “assertions” measured in the survey were categorised into red, orange, yellow, and green. Responses in red indicate areas “that need focus”, while orange shows “potential concerns”. Yellow means “good” and green means “excellent”.
None of the 14 responses were “good” or “excellent”, five categories showed “potential concerns”, with the remaining nine showing a need for focus, the most negative response.
All but three of the categories showed a worsening response since the last survey, which was completed using 900 responses from NZTA staff. The organisation cautioned comparing this survey with previous surveys as the sample size was smaller.
Leadership was a particular concern. Just 45 per cent of employees believed “leaders make and deliver hard decisions in an effective way”.
About 1300 staff also texted responses to the survey. These responses were also critical of leadership.
“We need true empowerment. We need to stop the micro-management. We need to see ownership of bad decisions made,” read one response.
Culture has been a concern at NZTA for some time. Stuff has also obtained a leaked report from 2017. That report also raised questions about senior leadership at NZTA, noting “low” ratings of senior leaders on matters of “internal communications,” “culture,” and “leadership”.
That survey noted that members of the leadership team rated themselves “significantly higher” than the rest of the organisation. It noted concerns with emerging silos, and a “blame culture”. It said the agency needed to do more to make staff feel “safe to speak the truth”.
Interim NZTA chief executive Mark Ratcliffe told Stuff the last year had been difficult.
“It is no secret that the past year has been a very challenging one for this organisation, and that is no doubt reflected to an extent in this feedback,” Ratcliffe said.
But he said that recent changes, including the appointment of new chair Sir Brian Roche, would help “stabilise the organisation”.
“Our people take a lot of pride in what they do, and I’m confident that we can rebuild a strong and positive culture in the Transport Agency,” Ratcliffe said.
National’s Associate Transport Spokesperson Brett Hudson said the survey showed a need for action from NZTA’s leadership.
“If this was a private sector organisation, the board would be calling for a performance improvement plan,” Hudson said.
He said the organisation needed to ask itself how it could get back on track and get staff believing in it again.
Hudson said he was particularly alarmed by the fact that so few of the agency’s employees believed that what they were doing aligned with NZTA’s overall objectives.
“People think there’s a misalignment between what they’re supposed to be doing and what they’re actually doing,” Hudson said.
Hudson called on Transport Minister Phil Twyford to demand better performance from the Agency.
Motor Trade Association advocacy and strategy manager Grieg Epps said results from the survey aligned with MTA members’ experiences with NZTA.
He said he was particularly concerned with lower levels of the agency not feeling empowered to make decisions.
“It is difficult to get a decision made, if the agency wants to get more responsive it needs to provide its staff with more empowerment,” Epps said.
He was hopeful that the refresh of leadership at the agency would take it in the right direction.
“They know things need to change and there’s a willingness to change,” he said.
Transport Minister Phil Twyford declined to comment, a spokesperson said the matter was operational for the NZTA.
It’s been less than a year since the sky fell on NZTA. Thomas Coughlan looks at what went wrong and what the future could hold for the troubled Government agency.
On October 15 last year, Transport Minister Phil Twyford, flanked by the NZTA’s chair and chief executive, summoned reporters into his office to deliver an embarrassing press conference. The agency, which spends anything up to $3 billion a year on building transport infrastructure and looks after everything from state highway speed limits, licensing, to building the Waterview tunnel, was in crisis.
NZTA was found to have neglected its role as regulator. As many as 850 cases involving WoF issuers, driver licensers, and other transport firms were flagged for being potentially suspect. As many as 20,000 vehicles could have been on the roads when they perhaps shouldn’t have. Later in the year, we’d learn that one motorist was even killed as the result of driving a vehicle that was given a WoF even though it had a deeply faulty seatbelt.
The story might have set the agenda for the day, but just hours later at 12.54pm, MP Jami-Lee Ross unexpectedly started tweeting, saying his then-leader Simon Bridges would blame him for another kind of transport crisis — the leaking of Bridges’ Crown limousine expenses. Reporters quickly filed their NZTA stories and moved on to the Ross affair, which burnt its way through the rest of the week.
The NZTA crisis rumbled on too. The 850 “open compliance files” were examined by law firm Meredith Connell, leading to scores of businesses being struck off as WoF issuers. By November, the agency was forced to come clean that motorist William Ball had been killed in preventable circumstances relating to the non-compliance scandal. Heads eventually rolled, from the bottom up. In the interim, Twyford announced the Ministry of Transport would review NZTA’s regulatory function to see what went wrong, a move that was itself criticised as the Ministry of Transport’s responsibilities over NZTA meant that it was equally likely to be at fault.
And the safety problems are just the start. There have been troubles with NZTA’s function as the funder and builder of roads too. Councils complain that long-signalled projects like the Melling interchange have been kicked back by a decade. Other projects like the extension of the Roads of National Significance programme, which would have built further large high-capacity highways on key routes close to urban centres, were effectively cancelled.
NZTA’s quarterly reports show that it’s struggling to get money out the door. In the last financial year, funding disbursed by the National Land Transport Fund (NLTF) was between 7 and 9 percent under budget most quarters, largely due to underspending on budgeted projects. That was a significant departure from the last years of the National Government where the NLTF booked slim surpluses or large deficits. Regional projects have been particularly hard to get off the ground. In the last quarter, disbursements from projects funded by the Provincial Growth Fund were $72.9 million – 90 percent below budget.
The troubled agency
At first glance, the tight-knit network of agencies, central and local, that govern New Zealand’s transport system appear to make no sense. The overlaid and interlocking responsibilities appear almost medieval — a road is a road, after all.
Well, not quite. Depending on where that road is it might be funded by NZTA, others may be funded by NZTA and a local council. Likewise, two near-identical roads might have their speed limits set by local politicians or bureaucrats in Wellington depending on their classification.
The process seems overly complex and arcane — but it’s the result of an evolution in some several government agencies beginning in the last 1980s and continuing right up until the dying days of the last Labour Government, when NZTA was formed just three months before the election that propelled the last National Government to power.
Transport is a thorny issue for democracies. It’s one of the parts of government that people interact with most. Sure, at some points in your life you’ll rely on the health service, or public eduction, but for most people, the relationship with transport is both daily, and lifelong. Whether you drive, bus, walk, or cycle, a substantial portion of each day is spent interacting with transport.
In some countries, elections make this complicated. In competitive seats, candidates can promise to deliver popular roading projects, regardless of whether or not they make sense — or promise to make unpopular projects go somewhere else. A culture of pork barrelling prevails in which competitive electorates dine out on the largesse of governments, while uncompetitive electorates starve.
One of the functions of NZTA is to take the politics out of deciding who gets what from transport spending. Every three years, governments can set the direction of transport — more rail, fewer highways, for example — but they can rarely dictate precisely where roads will go, though that doesn’t stop some from trying.
NZTA takes the temptation away from governments. Every three years, the Transport Minister delivers a Government Policy Statement on Transport, outlining roughly how they’d like transport money to be spent, which the NZTA responds to with its own National Land Transport Programme. The agency then works with local governments to build projects that fit into what the government wants. NZTA guards the purse strings. The road user charges and fuel taxes that fund transport work go into its coffers, rather than those of the core crown account, and it uses its own modelling to try to allocate funding to the most worthy projects. It uses things like benefit-cost ratios (BCRs) to decide which roads should be built and how high up the list of priorities they should be.
Even so, the temptation is never wholly gone. Steven Joyce was able to get his fleet of Roads of National Significance built despite chronically low BCRs, while the current Government tried to reform the system to meet its own priorities. Benefits accruing from supposedly shorter journey times shift down the priority list, while benefits accruing from densification are bumped up.
The agency was created by former Transport Minister Annette King, who merged Land Transport New Zealand (which looked after things like road safety and licensing drivers) with Transit New Zealand, which planned and funded the state highway network. There were some big projects in the works — the Waterview Tunnel in particular, and it was thought that merging LTNZ with Transit would help to deliver the projects well.
Problems began early. Labour stacked the board with friendly voices, including Mike Williams, former president of the party. By December 2008, Williams had been forced to resign after John Key indicated he expected appointees of a “political flavour” to step aside.
While no one has the time or patience to mount any radical change like, say, stripping the regulatory function out of NZTA, it remains to be seen whether the agency continues to pay attention to the issue with Stiassny gone.
National changed the focus. Labour launched the agency with a plan that, on the face of it, was not totally dissimilar from the current Government’s priorities: climate change mitigation, public transport, and more freight travelling by sea and rail. After less than one year in office, National reversed the focus and restored funding to the state highway projects by reallocating money Labour had stripped away. Labour had wanted to drop state highway funding to 22-24 percent of the transport budget; Joyce reversed this, upping the budget to 33-34 percent of the total.
It was in National’s first term that problems began to emerge with NZTA’s regulatory function. LTNZ, as a standalone regulator, had managed to make inroads into the road toll, cutting road deaths by close to 15 percent, and deaths per capita by almost 20 percent. NZTA had some success in this area too, and the road toll continued to fall when the agency was created, but sources have said it was obvious that road safety, and the agency’s role as regulator was no longer central to its organisation. In 2011, the first complaints were laid against Dargaville Diesel Specialists, the WoF issuer that passed the vehicle which killed William Ball. Repeated complaints were laid until DDS was finally stripped of its right to issue warrants in 2018.
There were other issues at the agency too. A 2017 survey of NZTA employees obtained by Newsroom found a “relatively low” perception of the organisation, particularly on issues of communication, culture and leadership. Ironically, the senior leadership team rated itself “significantly higher” than the rest of the organisation. Even more alarmingly, the survey identified the agency needed to do better for employees to feel “safe to speak the truth”, and address a bullying culture.
When NZTA came clean, it said it had taken an “education” rather than “enforcement” approach to regulatory compliance, but this now appears generous. The multitudes of WoF issuers struck off since the scandal broke have been for problems as diverse as passing vehicles with rust, damaged fuel lines and poor seat belts.
NZTA noted several issuers had been passing a suspicious number of vehicles with just one vehicle inspector, implying vehicles were passed by people who were unqualified, or the vehicles were not inspected properly. It was fairly obvious the problem wasn’t education, but enforcement. Less than a year later, action has been taken against 40 certifiers, with tens of thousands of vehicles affected.
The issue appears not to have been high on NZTA’s agenda, until Twyford appointed Michael Stiassny chair of NZTA’s board in April 2018. The insolvency specialist was known as one of New Zealand’s premier corporate undertakers, and had already enjoyed a slew of high-profile board appointments. He had a reputation for being disruptive, bolshy and difficult — but capable of turning organisations around.
It’s unclear why Twyford, a minister already with a lot on his plate, appointed a man of Stiassny’s disruptive reputation to the board. Board minutes before Stiassny’s arrival show a limited focus on regulatory compliance. Sources say the issue had been raised at the agency before Stiassny was appointed, but only at low level. Stiassny himself later said that he happened upon the issue whilst reading board papers.
“I was supplied with papers to read, to get to know the business and among these papers were significant papers around regulatory compliance matters,” Stiassny told a Parliamentary select committee last year.
On October 5, then-NZTA boss Fergus Gammie formally notified the board of the regulatory compliance faiulre, and law firm Meredith Connell was engaged to look through open compliance files.
Despite the best of bureaucratic intentions, when it comes to transport, the meddling fingers of electoral democracy are really never far way.
At the same meeting, the board was told the agency was looking into problems regarding conflicts of interest in vehicle imports. Vehicle importers had already been flouting lax rules intended to manage conflicts of interest that could occur when a certifier was tasked with inspecting an imported vehicle owned by another part of the same company.
The current rules stipulated conflicts had to be declared and managed, but when a large importer revealed it had previously hid the fact it was certifying its own cars, NZTA took no punitive action and continued to look the other way.
In the interim, Newsroom published a story on the conflict of interest scandal, paving the way for the rule changes to be formally announced shortly after. The board, apparently driven by Stiassny, wanted to change the rules to outlaw conflicts of interest altogether. They initially wanted to have new rules published and consulted on before the end of the year, an unusually brief period of time. Finally, they responded to an appeal from the firm at the centre of the importing scandal to extend the consolation period into the next year.
In November, the cost of the scandal was laid bare when NZTA conceded William Ball had been killed as a result of a vehicle that should never have been on the roads. His seatbelt, which had passed a WoF just months before, was dangerously frayed and failed to protect him in a car accident.
Behind the scenes, tension between Gammie and Stiassny over the regulatory compliance scandal was reaching breaking point. Stiassny brought a “tumultuous” style to the agency. He was known to jump into email chains and text senior leadership – mudding the distinction between the managerial roles undertaken by the board, and its oversight functions. On December 10, Gammie resigned. A new chief executive has yet to be appointed.
While NZTA soul searched for its long-lost regulatory function, the side that had traditionally performed well — spending money on roads — had begun to get lost as well.
In April, the coalition Transport Ministers put out their draft Government Policy Statement on Transport. The document guides how the money raised by fuel taxes and road user charges is spent. Being a new Government, the GPS was somewhat different to what had come before. It brought in the concept of “mode neutrality” meaning it would be agnostic towards road, rail, and public transport and look at the transport system as a linked-up whole. It also prioritised road safety, but encouraged the retrofitting of existing roads with safety enhancements. Put simply, big new highways were bumped down the pecking order, while public transport, rail, and retrofitting old roads were bumped up.
NZTA’s role as one of, if not the, leading infrastructure provider in New Zealand is often forgotten. The agency can spend up to $3 billion a year on infrastructure investment. By comparison, all of New Zealand’s local councils together spent just $5 billion on infrastructure last year. NZTA alone spends almost a third as much money on capital projects as the entire rest of central Government, which has pledged to spend $42 billion over the next five years, roughly $8.4 billion each year. When spending from NZTA starts to dry up, the rest of the country can feel it.
The rest of government, and particularly local government, has gotten used to NZTA building “leading” infrastructure. The agency will invest in a road, creating new demand in an area, and the rest of government, including local government, will then build around the project. In these projects NZTA comes first. Problems arise when these projects don’t go ahead. The Melling interchange, north of Wellington, is one such example, with the Hutt City Council planning to leverage a new roading project into other new urban developments that would eventually open up the focus of Hutt City to the Hutt River.
With the project now canned for at least the next decade the council is left with the unenviable choice of jumping the gun, and building for a project that may never exist, or torn up in 10 years anyway. This story is repeated up and down the county, causing no end of frustration for cash-strapped councils which have already poured money into planning for developments that may never arrive.
Meanwhile, NZTA is understandably taking its time to adjust to a new way of working. It’s having to upskill in areas like light rail, and change thinking about the merits of densification. These projects may be valid, but the substantial stand-down period between winding down pet projects of the previous government and breaking ground on the new Government’s priorities has many frustrated. But defenders argue that this happened in the first three years of the last government too.
Change takes time, but once NZTA hits its stride, projects like Auckland and Wellington’s light rail will be much easier to fulfil. The lag, however, is problematic and fits a whole-of-Government pattern for not being able to get money out the door fast enough. The issue has serious downstream consequences as it means an economy crying out for stimulus isn’t getting the investment cash it craves.
An uncertain future
In April, Stiassny exited NZTA having served just one year of a three-year contract. He has not responded to repeated requests for an in-person interview since his departure. Stiassny said he’d managed to achieve what he set out to do, but other sources have said the circumstances around the departure were more complex. Just a few months earlier, Stiassny had appeared before a Parliamentary committee expecting further exits and more turmoil.
“I would think it is more than likely that a number of people will decide to leave,” Stiassny said, predicting more of the senior leadership team would depart. True to form, Martin McMullan, a senior manager understood to be close to Gammie, resigned in March when it was found he failed to disclose serious conflicts of interest.
The agency is keen to consolidate and move. Its new chair, Sir Brian Roche, is experienced, having chaired the organisation before. It appears from Roche’s appointment that whatever Twyford wanted to achieve with Stiassny, he’s quite content not to have it happen again.
Insiders say things are finally calming down, although they wait expectantly for what will likely be a damning review of the regulatory compliance failures. While no one has the time or patience to mount any radical change like, say, stripping the regulatory function out of NZTA, it remains to be seen whether the agency continues to pay attention to the issue with Stiassny gone.
Also unclear is how successful NZTA will be at embracing the shift to mode neutrality and whether it will be able to spend infrastructure money as fast as the country needs. Here, it finds itself in an awkward position, sandwiched between councils like Auckland and Wellington, who are keen to jump on board the public transport revolution, and those like Tauranga, who drag their feet.
Those councils also have a choice to make: whether to embrace the new way of doing things and plan accordingly, or bank on things returning to the status quo after a change of government, which may not be that far away. Despite the best of bureaucratic intentions, when it comes to transport, the meddling fingers of electoral democracy are really never far way.
The Government has appointed Sir Brian Roche as the new chairman of the troubled New Zealand Transport Agency (NZTA), ending a period in which the agency had no permanent leadership.
The NZTA has gone through an extremely rough patch after it was revealed in 2018 the agency had been failing to properly check up on the companies who certify vehicle safety and give out licenses.
Law firm Meredith Connell were brought in to help complete a backlog of 850 open compliance files. A separate inquiry into the failure to properly regulate is expected to report back soon.
The appointment ends a period in which NZTA had no permanent board chair or chief executive.
NZTA chief executive Fergus Gammie resigned in December of 2018 and has not yet been permanently replaced.
In April, NZTA chair Michael Stiassny announced his resignation following the completion of the compliance review, saying his work shaking up the agency was complete.
Roche will serve for a three year term from June 2019. He previously served as board chair of NZTA in 2010.
As a condition of the job Roche resigned from a post at Wellington Gateway Partnership, a grouping of contractors who have significant business with NZTA.
He will remain on the board of City Rail Link Limited in Auckland, but told Stuff he would manage any conflict-of-interest issues with that project if they arose. At this stage none were foreseen.
Roche told Stuff NZTA had gone through a significant period of instability and he would be looking to right that as soon as possible.
“I think it is critical that any agency have stable leadership. NZTA is an incredibly important government agency, it has a significant influence on how the how country operates,” Roche said.
“One of the tasks ahead of me is to get that stability at a governance level and management level.”
He hoped to have a new chief executive in place within the next three months and to halt what was currently a high level of staff turnover.
Transport Minister Phil Twyford said Roche brought the track record needed to the job.
“He brings a wealth of experience and a steady hand to transport sector governance, having previously chaired the Transport Agency and the Auckland Regional Transport Agency and is currently the chair of City Rail Link Limited,” Twyford said.
“The Transport Agency has a crucial role to play in creating a modern and sustainable transport network and I’m pleased to appoint someone of Sir Brian’s calibre to lead this work.
“There is currently a review of the Transport Agency’s regulatory functions underway, which the Government expects to receive shortly. A key focus for Sir Brian will be implementing the direction signalled from that review, and I am confident in Sir Brian’s ability to make that happen.”
“I’d like to thank interim chair Nick Rogers and acknowledge the work of the previous chair Michael Stiassny who uncovered and led the fixing of the Agency’s regulatory issues.”
Roche has a long track record in the public and private sector with roles at PWC, Housing NZ, NZ Post, several iwi, and the department of prime minister and cabinet.
National’s transport spokesman said he thought Roche would do a “good job” and after a period of “chaos” it was important NZTA had strong leadership.
“The critical thing is getting NZTA working effectively. Because it is a big part of the fact that they have been making extremely slow progress on major transport projects in the last 18 months,” Goldsmith said.
He hoped that an NZTA chief executive would be appointed “smartly” and that the agency stop the “revolving-door” of leadership.