Auditor-General's overview

E ngā mana, e ngā reo, e ngā karangarangatanga maha o te motu, tēnā koutou.

On 15 March 2019, attacks at two Christchurch mosques left 51 people dead and a great many others with injuries that will stay with them for the rest of their lives. The violence on that day shocked and saddened our nation. It deeply affected the Muslim community, the first responders and hospital staff, the residents of Christchurch, and all New Zealanders. Many people had believed that New Zealand was highly unlikely to see such an attack, and the effects were felt worldwide.

As part of the response to the attacks, Parliament passed the Arms (Prohibited Firearms, Magazines, and Parts) Amendment Act 2019 on 11 April 2019. The Act prohibited firearms with the ability to cause harm in a rapid and highly destructive way from a distance.

The Act, supplemented by a set of associated statutory regulations, included a provision for a firearms buy-back and amnesty scheme (the scheme). The scheme allowed owners of newly prohibited firearms, magazines, and parts to hand them in to the New Zealand Police (the Police) in exchange for compensation. The purpose of the scheme was to improve public safety. We examined how effectively and efficiently the Police implemented the scheme. My appointed auditor, Ernst & Young, provided assurance to the Police during the scheme's implementation.

We thought it important to provide the Police with real-time feedback so that they could make any improvements the scheme needed quickly. The Police were open to receiving and acting on Ernst & Young's feedback and recommendations. I commend the Police for the open approach they took to this assurance work.

We make no comment on the policy decision to have a buy-back scheme because commenting on policy decisions is outside of my statutory mandate. The extent to which the changes to firearms regulation and the implementation of the scheme will make New Zealand safer will become apparent only over time. We have recommended that the Police evaluate and report on the difference that changes to firearms regulation and the implementation of the scheme have made.

A Royal Commission of Inquiry is investigating events relating to the Christchurch mosque attacks. It might comment on the Police's performance in managing firearms regulation. Our report does not assess the Police's performance before the attacks. Nonetheless, some of the matters raised in this report suggest that the Police experienced challenges in getting information about the operating environment under the previous regulatory regime for firearms.

The Police managed the scheme effectively

Implementing the scheme was a complex, challenging, and high-risk task, and the Police had to do it in tight time frames. The Police provided people with many opportunities to hand in their prohibited firearms, magazines, and parts, including at 605 local collection events, 43 firearms dealers' retail stores, and police stations. The Police also collected firearms, magazines, and parts from people's homes in exceptional circumstances (for example, if someone had large quantities of firearms or parts) and arranged for private collections at gun clubs.

The Police bought back firearms dealers' stock of newly prohibited firearms and parts at cost (essentially at wholesale or import price) if it was not possible for dealers to return that stock to the manufacturer for a refund. This process continues but has proved more challenging than the Police anticipated.

The Police's provisional information,¹ as at 13 February 2020, showed that:

• 61,332 newly prohibited firearms had been collected and destroyed, or modified by Police-approved gunsmiths so that they complied with the new requirements and remained the property of their owners; and
• 1750 endorsement applications had been received to continue to use newly prohibited firearms for a specific legal purpose.

At the time of writing this report, no firearms that were part of the scheme had been lost, stolen, or not accounted for while in the Police's custody. The Police tagged, tracked, and traced all firearms from when they were handed in to final destruction.

There was a planned and co-ordinated approach to health and safety to keep the public safe. This included reporting and reviewing incidents that could have caused harm.

Despite this, there were two incidents where firearms were discharged. Although these happened in secure and non-public spaces, the consequences could have been extremely serious. The Police responded by improving how they checked that firearms were not loaded and providing additional training to staff.

The Police communicated with the public well

For many firearms owners, having to hand in their firearms was distressing. Most of the newly prohibited firearms, magazines, and parts were previously lawfully owned property and used for activities such as sports shooting, hunting, or pest control, or were owned as an investment. Some firearms were part of private collections, and others were kept as family heirlooms. It was important that the Police treated firearms owners fairly and with empathy.

We found that the Police, assessors, and support staff treated people handing in firearms with empathy and respect. Firearms assessors were trained extensively to make fair decisions on compensating people for their firearms.

An independent organisation surveyed people at 19 local collection events and found that 93% of respondents were positive about their experience of the events. The number of formal complaints, including to the Independent Police Conduct Authority, was low. However, we found that the Police's process for resolving disputes about compensation could have been clearer and more transparent.

Determining the level of compliance with the scheme is difficult because of uncertainty about the number of prohibited firearms, magazines, and parts

Neither the Police nor any other agency knows how many prohibited firearms, magazines, and parts were in the community when the law was changed. The Police have several estimates based on historical data. Taken together, these estimates range from about 55,000 to 240,000 firearms.

The New Zealand Institute of Economic Research (NZIER) carried out work on the Police's estimates. It concluded that, although it would be possible to improve the reliability of the estimates with significant investment, confidence in them would remain low. This is because import data categories do not match the types of newly prohibited firearms, and the ease of using parts to modify firearms makes the boundaries between what is prohibited and not highly permeable.

As at 13 February 2020, the Police's provisional information reports that 61,332 firearms had been handed in or modified. This is at the lower end of the range of the Police's estimates of the number of newly prohibited firearms in the community.

Firearms covered by an E endorsement

The Police have records of only certain types of firearms held by certain categories of firearms licence holders. This includes military-style semi-automatic firearms, which a person previously needed an E endorsement on their firearms licence to own.

Deficiencies in how the information was recorded in the past mean that the Police's records of the numbers of firearms covered by an E endorsement are not certain, ranging from 13,175 to 15,037.

The Police were successful in obtaining and locating the types of firearms covered by an E endorsement. As at 20 February 2020, 10,009 firearms covered by an E endorsement had been handed in, and 4211 were in progress (this includes pending P endorsements,² pending applications from dealers, and some applications for unique and prohibited items).

The Police are actively following up on the remaining estimated 817 firearms covered by an E endorsement to determine their status. Those firearms include those:

• that are legitimately being retained by licensed firearms owners for modification;
• that are no longer prohibited because prohibited parts were handed in (for example, extendable magazines for shotguns);
• that people have indicated would be handed in but have not been and for which no endorsement has been sought; and
• where there are issues with the accuracy and/or currency of the recorded information.

The scheme was supported by good systems and processes

The Police used a software system to register and track handed-in firearms and process compensation payments. This system was well designed and thoroughly tested before it went live. Although it mostly worked well, some internet connectivity issues caused delays at some local collection events.

In December 2019, a change to the system, that the Police did not authorise, resulted in some firearms dealers potentially having access to the details of individual firearms owners. According to the Police, one firearms dealer accessed this data. The Police shut the system down when they found out about the security incident. Access to the system was reinstated for police staff after rigorous testing. The Police decided not to reinstate public access to the system.

Although it was a provider of services and not the Police that made the unauthorised change, the Police are ultimately responsible for the stewardship of the private information they hold to operate the scheme. They remain accountable to the public for this.

Compensation payments did not exceed what was appropriated, and ACC's contribution was compatible with its statutory functions

The 2019 Budget included an appropriation of $150 million in Vote Police to fund compensation payments for people handing in their prohibited firearms, magazines, and parts. The Police's provisional information at 20 December 2019 shows that compensation payments to that date totalled $102 million. The final compensation cost is currently unknown, but it will be more than this amount because the Police have not finished processing applications for compensating firearms dealers and modifying firearms. The Police estimate that the final compensation cost will be about $120 million.

The Accident Compensation Corporation (ACC) decided to contribute up to $40 million towards the compensation costs of the scheme because it is an injury prevention scheme. This contribution was made possible by the Government's decision to have a firearms buy-back scheme.

We reviewed how ACC made the decision to contribute funding and concluded that the assumptions behind it were reasonable but based on a high degree of judgement. The decision was compatible with ACC's statutory functions. ACC will monitor firearms-related injuries to understand the effect of the scheme on its Outstanding Claims Liability. To date, ACC has contributed $20 million of funding to the scheme.

Administering the scheme cost considerably more than estimated

In March 2019, the Police produced an initial estimate that administering the scheme would cost $18 million. The 2019 Budget included $18 million as a new initiative as part of the General Crime Prevention Services appropriation for these costs.

The estimate was based on limited information from the Australian buy-back scheme and was completed quickly, before the costs of the supporting technology were fully known. The Police now estimate that, once fully completed, administering the scheme will have cost up to $35 million. This includes costs of tracked staff time, contractors, and goods and services.

This is nearly double the $18 million the 2019 Budget provided and includes about $5.5 million the Police spent on the scheme in 2018/19. The Police used baseline funding from the General Crime Prevention Services appropriation to cover the excess administrative costs.

There were appropriate financial controls over administrative spending, including procurement. We saw no evidence of wasteful spending by the Police when implementing the scheme.

The Police need to finish implementing the scheme and make improvements to support their regulatory responsibilities

The Police still have much work to do to complete the scheme. Regulations were amended in November 2019 to allow for applications for endorsements to be processed after the scheme ended on 20 December. The changes also allowed dealers to continue to hold stocks of newly prohibited firearms until applications for compensation are completed.

The process of implementing the scheme is ongoing and has proved more challenging than the Police anticipated. Some firearms still need modifications to comply with the new regulatory requirements, and the Police are still processing applications for endorsements to use newly prohibited firearms for a limited range of purposes. In my view, the Police should continue to report publicly on the performance of the scheme until they have completed this remaining work. The Police should also report to Parliament about the final outcomes of the scheme.

Importantly, the scheme is only one component of firearms regulation the Police have to implement. The Government introduced a Bill on 13 September 2019 that includes a wide range of controls on the use and possession of firearms. Parliament was considering this Bill at the time we were writing this report.

In my view, regardless of any changes made, the Police should build on the knowledge and relationships they have gained through the scheme. This includes continuing to improve their understanding of the firearms environment, realising opportunities from strengthened engagement with firearms owners and dealers, and making effective use of relevant information they have gathered to support their regulatory responsibilities.

Concluding thoughts

The Police managed the scheme well. They were effective in providing people with a wide range of opportunities to hand in firearms and receive compensation, which was paid in a timely manner. The public was kept safe at local collection events, and the Police made considerable efforts to treat people with empathy and respect. However, there is still much work to be done, and the Police should continue to focus on completing the scheme.

We do not yet know how effective the scheme was in removing all newly prohibited firearms, magazines, and parts from the community. This is because there is no reliable picture of how many newly prohibited firearms, magazines, and parts remain in the community. Without this picture, I cannot determine whether implementing the scheme has delivered value for money.

In my view, given the high level of public interest and expenditure, and the importance of this scheme for the well-being of all New Zealanders, more work should be done to find out what level of compliance with the scheme has been achieved and the extent to which it has made New Zealanders safer.

I thank staff from Ernst & Young who carried out assurance work on the scheme, representatives of the Council of Licensed Firearms Owners, Gun Control New Zealand, and the New Zealand Police Association, police staff, and members of the public who shared their experiences of the scheme with us.

Nāku noa, nā,

John Ryan
Controller and Auditor-General

4 May 2020

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1: The Police's provisional information is unaudited and subject to revision over time.

2: A P endorsement enables firearms owners to use a newly prohibited firearm for a specific purpose.