Outsourcing Risk Governance

• In Event: The Impact of Outsourcing and Contracting on Accident Prevention in Complex Sociotechnical Systems (2)

Abstract

Studies on the nature of work have highlighted the increased risk to worker safety as a result of outsourcing and subcontracting, partly because complex employment arrangements make regulatory oversight difficult. What has received less scholarly attention is the trend towards outsourcing by regulatory agencies themselves.
This paper draws on two examples taken from the gas pipeline industry in Australia to investigate this trend. In both cases, lack of skilled regulatory resources has resulted in use of specialist consultants to review company technical compliance. In one case, safety regulators rely on supposedly independent auditors to examine field work practices for regulatory compliance. Such auditors are hired and paid by the companies involved, in line with the neoliberal principle of ‘user pays’.
The second case involves consultants employed by the economic regulator to review company proposals for expenditure on pipeline integrity. Acceptance of such proposals impacts the cost of gas supply to consumers. Consultants are effectively tasked with finding ways to reduce proposed expenditure, even for safety related items.
In both cases, consultants produce work that favours those paying the bill. Regulatory agencies without the capacity to critically examine the recommendations uncritically accept outsourced advice.
Risk governance in this context is important for public safety. No models of effective governance take into account outsourcing of regulatory functions and yet it seems to be a developing trend with the possibility of significantly impacting regulatory outcomes.

Authors

• Jan Hayes

• Dolruedee Kramnaimuang King, University of Sydney

• Lynne Chester, University of Sydney