Regulators nearly halted part of KiwiRail's TranzAlpine tourist train service from running after the state-owned company struggled to address the "safety risk" of people potentially evacuating a "poorly maintained" 8km tunnel on foot.
Officials told the Transport Minister last July that KiwiRail's risk management process had been "reactionary and backward-looking" over how it used the tunnel near Arthur's Pass.
Concerns about how the 100-year-old Otira tunnel was being used and maintained were serious enough that Waka Kotahi NZTA communications staff were preparing to brief the media about suspending parts of the passenger train service.
Meanwhile, Waka Kotahi's director of land transport and the heads of WorkSafe and Maritime NZ later cited the incident when accusing the state-owned company of "prioritising operational matters over safety".
Michael Wood was made aware of the situation with the tunnel in early July, according to ministerial briefings released under the Official Information Act.
NZTA officials told Wood that the agency and WorkSafe had been "seeking assurances" since 2013 on the safety of all train services through the tunnel.
KiwiRail had made "several safety improvements" but "significant concerns" remained, particularly about passenger rail services.
On July 8, officials wrote: "In 2020, Waka Kotahi determined KiwiRail's rail activities in the Otira tunnel could cause death, serious injury, or significant property damage.
"The findings of a special safety assessment were accepted by KiwiRail and resulted in KiwiRail being given a Notice of Requirement to take remedial action".
"KiwiRail's identification and management of risks associated with the conduct of rail services through the Otira tunnel remains reactionary and backward-looking."
The company's tourism division has advertised the TranzAlpine as a "premier service" and "one of the world's great train journeys" with a five-hour coast-to-coast journey from Christchurch to Greymouth.
The TranzAlpine service as a whole carried around 110,000 passengers in 2019.
Part of the service involved travelling through the 8km Otira tunnel.
Regulators were concerned about any potential emergency evacuation of passengers during a fire or a derailment.
"The overall underlying safety risk that Waka Kotahi, as rail regulator, is concerned about is situations where passengers are required to evacuate the tunnel on foot.
"The primary concern of Waka Kotahi is that KiwiRail has not demonstrated a level of risk assessment and risk planning to the standard that the regulator would expect for an underlying safety risk of this nature," officials wrote.
Transport regulators wrote last July that another "sub-set" of concerns related to the age of the tunnel's infrastructure itself. Previously, the Government has pinned maintenance woes across the country's rail network on 1990s-era privatisation and underinvestment.
"Waka Kotahi considers the infrastructure is old and poorly maintained, and the condition of the infrastructure is a key factor in both an emergency event occurring and the ability to manage the emergency event to avoid death or serious injury."
A draft press release announcing the suspension of service through the tunnel was attached in the briefing to Wood. It was not used as the necessary "material requested" from KiwiRail was provided, NZTA said.
"If the issues are able to be resolved quickly, then the statement will not be issued. If more than one service will be affected, then the decision to issue the statement will be made," officials wrote on July 14.
Last month, a spokesperson for the then-transport minister told 1News that Waka Kotahi had raised "concerns" and that "the immediate safety risk" had since been addressed.
"Waka Kotahi have advised that KiwiRail has undertaken sufficient action to address the immediate safety risk in the tunnel, and has worked with Waka Kotahi to ensure that the tunnel is managed appropriately," a spokesperson for Wood said in May.
"[T]he regulator was ensuring that KiwiRail undertook preventative steps to address identified risks and avoid future incidents."
Meanwhile, KiwiRail's chief operations officer Siva Sivapakkiam suggested the issues at Otira were primarily about how it "demonstrated and documented" its safety processes.
"We have welcomed the opportunity to show evidence that our controls are documented in a way that assures our regulator that Otira Tunnel is safe for the travelling public," he said in a statement to 1News.
"As part of demonstrating our risk management practices, Waka Kotahi and KiwiRail agreed to put in place a safety improvement plan for the tunnel.
"We believe we are continuing to deliver on our obligations under the Safety Improvement Plan, and provide regular progress updates to Waka Kotahi.
"The issue at Otira centred on how we demonstrated and documented the risk management and assessment processes at the tunnel, rather than our actual operation.
"No change has been required to our safety operating standards."
Over the past two years, KiwiRail had invested $2.5 million in the tunnel that had "unique challenges" with a "dedicated team of 16 permanent staff at Otira", Sivapakkiam said.
Regulators cite incident while criticising KiwiRail
A month after a potential prohibition notice was was raised with Wood, KiwiRail's then-new chief executive Peter Reidy received a heavily-critical joint letter from transport regulators outlining broader concerns about the state-owned enterprise's approach to safety.
"Recent discussions between the regulators have identified common concerns where commercial drivers are being prioritised at the expense of safety," the letter read.
"Regular assessments and investigations by the regulators frequently result in the discovery of non-compliances and deficiencies."
First reported by BusinessDesk last October, the letter was jointly authored by Waka Kotahi's director of land transport, and the heads of Maritime NZ and Worksafe.
"The prioritisation of operational matters over safety was clear during the reintroduction of the Te Huia service and in the response to the Otira Tunnel remedial actions, and a high number as well as late exemption applications for ferries," the regulators wrote.
"Our observations are that the KiwiRail executive are primarily concerned with operational matters, and this organisational posture cascades through KiwiRail setting a culture focused on commercial outcomes, rather than safety."
KiwiRail told 1News last year that it treated the "matters raised in the letter seriously, as it does all safety issues" as it was a "core value" for the company.
"To help us understand and improve our safety culture, we’re starting a whole of KiwiRail safety leadership cultural and maturity assessment programme, in late November, to us an indication of where we sit across leadership, systems and processes compared to global best practice," a spokesperson said.
"KiwiRail is partnering with global safety leadership firm dss+ to complete a whole of KiwiRail safety leadership cultural and maturity assessment programme. DuPont have worked with thousands of companies to transform organisations safety belief, leadership and culture.
"This started in late November, and will give us an indication of where we sit across leadership, systems and processes compared to global best practice.
"We will then work with our teams to focus on the right initiatives to build a safety mindset, visible leadership, critical risk and controls, frontline engagement and the right assurance and accountability discipline, to ensure we work to care and protect our people and build a high-performance safety culture."
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