Powerful new accountability agency emerges from Queensland’s #railfail

By Stephen Easton

Wednesday February 15, 2017

Following an especially dire administrative breakdown last year that earned the digital nickname #railfail, Queensland now has need of a powerful and independent accountability watchdog just to keep the trains running.

The government established the CityTrain Response Unit — initially for one year — on the recommendation of former Rio Tinto executive Phillip Strachan, who led a recent commission of inquiry into dysfunctional “crewing practices” at Queensland Rail and became its new chairman this month.

The new agency within the Department of Transport and Main Roads will chiefly “monitor, independently audit and report on” QR’s efforts to recover and rebuild, guided by Strachan’s report. Premier Annastacia Palaszczuk said she appointed consultant Jacqui Walters to lead the CRU on the strength of her international experience in “organisational transformation and restructuring” and her work with large transport companies like Indian Railways and Cathay Pacific, as well as all three tiers of government.

Strachan found serious administrative problems that went right to the top of the troubled organisation, and decided the powerful new accountability body was needed to reconsider the entire “governance, legislative framework and structure of passenger rail service delivery in Queensland” in light of the recent service failures as well as future challenges: new-generation trains and control systems, the Cross-River Rail project and the Commonwealth Games.

For starters, he gave the CRU four jobs. It will “assess, make recommendations on and oversee the implementation of a closely integrated public transport service … based on leading models of such integrated organisations” and “assess the requirement for and composition of” the QR board, which Strachan now chairs.

Phillip Strachan

The energy industry executive also wants the new watchdog to run a “whole-of-business review of Queensland Rail to identify any systemic organisational issues and develop actions to address these issues” and come up with a new “long-term industrial relations strategy to improve workplace flexibility and culture” — reflecting his findings that certain rostering and training arrangements agreed with unions had contributed to the mass cancellations.

Palaszczuk’s response to the Strachan inquiry was immediate, but she also accepted the bureaucratic paralysis that seized the agency late last year was “many years in the making” and her government has begun the task of convincing unions to accept changes to working arrangements, as the whole organisation is taken apart and re-assembled piece by piece.

The inquiry was commissioned in late October following outages that saw 12% of services cancelled, and the resignations of the chief executive and former chair. The inquiry started work a month later, but in the meantime the underlying problems bubbled away, boiling over with the cancellation of 36% of scheduled service on Christmas Day.

Next to resign was the chief operating officer, whose role will be abolished and replaced with two executive general manager positions as part of a major restructure. Strachan wants no more than five layers of management between the CEO and frontline staff.

The report notes the steps QR had already taken after October: re-jigging its timetable five times, “negotiating” more flexible work practices with a view to reducing demand for train crew and setting up a team of senior managers to lead longer-term reforms. It’s also making progress on a five-point plan announced by former Minister for Transport Stirling Hinchliffe, who recently stepped down from the front bench over the snafu, but Strachan advised the problems wouldn’t be fixed quick enough to satisfy the public:

“Even with this focus, Queensland Rail only expects to recover full timetabled services by late 2018, which is not likely to meet public expectations. Furthermore, Queensland Rail is yet to finalise plans to address underlying organisational and governance issues, which will be critically important to ensure similar issues do not arise again or in other parts of the organisation. “

Acting minister Jackie Trad, who held the portfolio before Hinchcliffe, said the task for QR was “to improve culture and in turn productivity” by methodically implementing Strachan’s recommendations. She has opened negotiations with union representatives around changing some of the crewing practices:

“I have had positive initial discussions with the board and union representatives and we will be identifying ways to fast track driver recruitment and training immediately.”

Four problems left to fester

While the opposition and supportive newspapers are understandably playing up the role of unions, the senior leadership clearly lost control of the organisation. Four underlying problems with CityTrain crews had “compounded and grown over time” according to QR’s new chairman, the simplest of which he reserved for last:

“Queensland Rail’s vast remit, and its complex and unclear governance arrangements, made it difficult for the Chief Executive Officer to maintain effective oversight of operations.”

According to the report, the first problem was an increase in demand for train crews over several years in combination with “more restrictive crewing rules” in an enterprise bargaining agreement, which have cut productivity by 7% in Strachan’s view.

Next was a 4% drop in qualified drivers, which he attributed to several factors, including “a practice of providing overtime opportunities” that meant the agency preferred to run with a 5-10% “undersupply” of train crews. Strachan also took aim at “restrictions on the ability to recruit train crew externally” and decisions to cut down on training new drivers, noting the 18-month training process was unusually long in the industry and recommending it be halved.

As these problems festered, it appears nobody really understood or took responsibility for the growing shortfall between scheduled train services and crew to drive them. Strachan reported:

• The Train Service Delivery team was focussed on short-term operations and did not sufficiently recognise or escalate longer-term issues.

• The Operations chain of command did not provide sufficient active oversight nor resolutely act upon emerging issues.

• The Chief Executive Officer was not appropriately informed of emerging issues, relied on risk management processes that were not properly applied and did not actively investigate whether adequate measures were being taken.

• The Board was not appropriately informed about the risk and hence did not report this to the Government or public

• A culture within the Operations team of relying on intuition, complacency and being reluctant to share bad news suppressed the identification, escalation and resolution of issues.

The first 16 of Strachan’s 36 recommendations focused on understanding and managing demand for train crew and ensuring a robust and sustainable supply into the future. The next 15 points sketch out a wholesale management rebuild, with clearer lines of reporting, responsibility and accountability, less layers, and handy tips such as:

20. Minimise executive absences during periods of significant change, such as the introduction of a new timetable or the commissioning of an extension to the network.

21. Rely primarily on subordinates rather than peers to fill roles where temporary relief is required to maintain continuity of management and support learning and development.

Strachan wants the new QR to have a Lean Management System with “structured quantitative and visual reporting against annual operating plans and other operational metrics” and a risk management approach designed “to improve the effectiveness of all three lines of defence, including ensuring line management is capable of managing day-of-operations risks, consolidating corporate risk functions and relying primarily on independent providers to undertake internal audits”.

Strachan has started interviewing candidates for the unenviable job of full-time CEO, to replace acting CEO Neil Scales, who took the reins in November. In his report he told the government what attributes the chief would need:

(a) Strong customer service focus
(b) Significant operational experience, preferably in a world-class passenger transport organisation
(c) Track record of delivering large transformation programs
(d) Proven capacity to drive cultural change
(e) Proven ability to operate successfully in a complex stakeholder environment
(f) Prepared to serve a term of at least five years

The final five recommendations are for the Palaszczuk government to implement, in order to clarify the relationship and reporting lines between QR and government ministers via the Department of Transport and Main Roads, and it is here that Strachan indicates the need for a powerful and independent rail watchdog to keep an eye on the sweeping reforms. Queenslanders have been quite patient over the past few months, he believes:

“Throughout this period, customers have remained resilient and continued to use the network, despite ongoing disruptions to their daily lives. This highlights how important passenger rail services are to the people of South East Queensland, and emphasises the need to recover operations, ensuring that passengers arrive safely and reliably at their destinations going forward.”

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