5. Rationale
37. The review of the safety regime for electrical and gas work is in line with the Government's Strategic Result Area (SRA) 7:vi on "...improving the regulatory and administrative frameworks for public and workplace health and safety...so as to minimise the risks, incidence and impacts of illness and injury..." and SRA 2, which emphasises providing clear law that minimises compliance costs.
38. The review team believes that there is strong justification for intervention in the way in which gas and electrical work is carried out because of the nature of the risk involved and, therefore, the severity of the consequences of potential market failure.
39. Electricity and gas are inherently hazardous. The risks involved in working with and consuming electricity and gas are of high magnitude (there is the risk of death), risks may be unknown, and may be beyond the individual's control (i.e. the risk is involuntary).
40. There is a danger that electrical and gas accidents will occur as a result of market failure. For example, if there are information problems. Consumers may not have the information, time, or ability to judge the competence of the service provider, or the safety of the completed work. Similarly, electrical and gas workers may be confronted with new technology or unfamiliar procedures, or may work in an organisation that does not have formalised safety procedures or does not make them known to their workers. There is also a risk of market failure where there is no strong incentive to ensure safety where a safe outcome is essentially a public good. For example, there is little incentive for any one individual, organisation, or sector of the industry to co-ordinate overall supply of electricity or gas and monitor the quality of that supply, yet these functions are essential to delivering a safe and effective product.
41. Legislation is needed to assign liability when market mechanisms are either not available or are too costly. For example, while responsibility for personal injury that is the result of unsafe work may be clear, compensation by those at fault is generally not possible under the Accident Compensation regime. The exception is where criminal proceedings are brought against those at fault. Without appropriate regulation, prosecution would not be possible and there would be reduced incentives for industry participants to maintain safety standards.
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