More funding sought prior to trial

WorkSafe alerted officials that it was running out of money to fund its prosecution over the Whakaari/White Island disaster a month before the trial began last year.

The agency's prosecutions over health and safety failings in the lead-up to the tragedy have so far cost more than $17 million but it is not over yet, with appeals and a coronial inquiry still to come.

The judge-alone trial ended last September with the conviction of the company managing the volcanic island, Whakaari Management, after six parties pleaded guilty and six had charges dismissed.

WorkSafe initially charged 13 parties following its investigation, after the disaster killed 22 people and injured 25 others.

A briefing paper prepared by Ministry of Business, Innovation and Employment (MBIE) policy officials shows in June last year, a month before the trial began, WorkSafe expected to run out of funds within two months.

“At that time, WorkSafe indicated to MBIE that while it still retained $2.1m of its initial Budget 2021 funding, it would not have sufficient resourcing to complete the Whakaari case with the remaining funding expected to be exhausted during August/ September 2023.”

The agency requested that its shortfall for the remainder of the court hearings be covered - although that tally was redacted.

“This included only likely/certain costs and excluded any costs that may arise from a possible future Commission of Inquiry or other third-party review.”

In September, Cabinet agreed to make funding available to meet WorkSafe’s estimated costs, by reprioritising $1m of funding and setting up a tagged contingency fund “to be drawn down by request to joint Ministers once other funding had been exhausted”.

The amount set aside in the contingency fund was redacted, although the briefing document said the fund would expire in February 2025. “It is expected that future drawdowns will be requested quarterly throughout 2024, due to the ongoing nature of the case.”

WorkSafe received approval to draw down $862,000 from the contingency fund to cover its legal costs until March.

The extra funding will be recovered from the Health and Safety at Work Levy, which also funds WorkSafe’s general activities.

The levy is charged to all employers and is expected to generate just over $1.4 billion revenue this financial year and $1.5b the following year.

MBIE manager of health and safety policy Hayden Fenwick said they forecast a $7m surplus for the 2024/2025 financial year. “When establishing the Whakaari/ White Island funding contingency, it was determined that the Health and Safety at Work Levy Memorandum account had a sufficient operating surplus to fund WorkSafe's estimated costs for the remainder of the prosecution.”

The government granted MBIE and WorkSafe $19m in its 2021 budget to cover costs relating to the Whakaari prosecution.

“While WorkSafe's baseline funding is expected to cover its enforcement activity in the normal course of events, it was recognised this was a rare catastrophic event and would be the largest and most complex prosecution in WorkSafe's history and that additional funding would be required,” the briefing document said.