Public Accounts Committee on June 5th, 2008

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Help me to understand that. I understand that there are different levels of risk in the elevation of mountains. I understand there would be different levels of risk in high winds, like we have on the east coast. You talked about fog as well. We have a lot of fog, by the way, at Munro International Airport. It's adjacent to my riding.

Is that going to create a huge disparity in aircraft maintenance and aircraft safety inspection? Is that going to create a lot of disparity between regions?

[Marc Grégoire]

No.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

You had mentioned that $9.8 million in extra resources were appended to the transition. I'd like to ask you so we have it on the record, are you saying that there is no risk now with these added resources, that neither the traditional inspection process nor the transition to SMS will be, for lack of better words, robbed of resources, even temporarily, as this transition goes on?

[Louis Ranger]

The current situation now is in addition to the base budget that Mr. Preuss has. In recent years, I've authorized an additional $9.8 million. But where does the money come from? It actually comes from other programs, and we have sources of revenue as well. Over time, as we implement SMS, I'm hoping I can reallocate some of that money to either rail safety or other areas. We will use our best judgment to determine where the highest risk resides. Over and above the base budget, I've allocated $9.8 million.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Sweet.

Colleagues, that concludes the first round.

I have just a couple questions.

The first one is for you, Mr. Ranger, just to follow up on the last question by Mr. Sweet. This is on the whole area of resources. This is a very serious issue, and I'm sure every member of Parliament considers it to be very serious. Can you as the accounting officer and deputy minister give us assurances? You're going from a regime of traditional oversight to the SMS, but you're keeping the traditional oversight too. It seems to me, from a common-sense point of view, that you will need Parliament to allocate additional resources so you can do your job.

Are you giving assurance to Parliament that you have sufficient resources to continue your traditional role of regulatory oversight while implementing in an effective way the SMS, and that you have those resources available at your disposal?

[Louis Ranger]

I think we have appropriate resources to assume our responsibilities. There's never enough money. But when we've identified problems and we've been given proper resources, the issue for us—and we have to answer that question all the time—is whether we are making the best use of the resources we have. I believe we are meeting our responsibilities with the resources we have now. We feel that as traffic grows, instead of adding inspectors directly in proportion to the increase in traffic, there's a way of maintaining and actually improving safety with the same budget, or possibly less. We'll monitor that, based on observations and performance.

[The Chair, Liberal, Shawn Murphy]

Over to Mr. Preuss.

One of the issues I just want to clarify for my own knowledge is the whole operation of the SMS. We're dealing with a very competitive industry, one in which it seems every company that operates is either going into bankruptcy or coming into bankruptcy or operating under chapter 11. We have had a number of high-profile bankruptcies here in Canada over the last 10 years, so obviously with the increase in the price of fuel oil, I'm sure it's tight for each and every company operating in this sector. My own suspicion would be that after they take away the food, the second thing to go would be safety.

Could you take me through what happens if you do an analysis on the SM system being implemented by one of the companies and it's not up to date? Do you lower the boom immediately? To give an example--and I don't know if these media reports are accurate or not--there's been some high-profile media reporting about some of the incidents involving First Air. If your inspectors go in and you see that everything is not up to par, do you immediately and automatically shut them down until they can show the regulatory authority that everything is above board and that they do have proper and efficiently operating systems to ensure the safety of passengers?

Of course, my biggest fear is the cozy relationship, which is not perhaps in the airline industry, but we've seen it in Westray, we see in the crane operation in New York, and we've seen it in a whole host of others. A cozy relationship develops between the regulators and the people who operate in industry, and--I believe Mr. Grégoire has said--there's a lot of movement back and forth. This is a pretty important issue, especially for those of us who travel back and forth every weekend. We're very interested in it.

So could you assure us that if there were a situation in which your employees felt that the SMS was not operating properly, that airline would be shut down until the corrections were made?

[Merlin Preuss]

With respect to the process, if there's an immediate threat to safety discovered by any means, through the compliance-based means or the systematic risk management process, we'll take immediate action as required. The situations we come across are not, obviously, black and white. When they are, we take the appropriate action. As time goes on, though, when we follow through the process, we're discovering more and more of what is actually at the root cause of the accidents. Therefore, with the reporting processes in place right now and the requirements of this additional regulatory framework, we're catching these problems before they get to be the catastrophes to which you're referring. But, yes, if there's a question of safety, they are on the ground right away.

[Louis Ranger]

Mr. Chairman, I think it's a very good question. It's something we're very much aware of. On the one hand, we're asking our inspectors to know the companies very well--who are the managers, what is their background?--to have a very personal understanding of that operation. Yet we don't want them to get too close. We have different ways of monitoring that. Whenever something is brought to our attention, we just deal with it, but it's part of our challenge. It exists in different sectors, as you indicated, and certainly it exists in our sector.

Marc alluded earlier to the fact that sometimes they come from the private sector, and they're also well trained, but we're very mindful of the consequences of that. We'll definitely try not to assign those people to the companies where they worked before, obviously.

[Marc Grégoire]

It's all about risk and it's all about managing this risk. We have never hesitated--never--in the past to shut down an airline, to pull an airline operating certificate and to ground a company, and we will never hesitate in the future if we have any doubt about the safety of the operation. But it's not black and white. It's something that has to be assessed and judged by inspectors, and also by us when you talk about a big company.

[The Chair, Liberal, Shawn Murphy]

Okay, colleagues, we're going to start the second round of four minutes.

Mr. St. Denis.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Thank you, Mr. Chair.

If there's time in my round, I'll give it to my colleague Mauril.

Thank you very much for being here, all of you.

I had a couple of thoughts, among many, while I was listening to the presentations. One was ISO. The other was what the Mike Harris government did in Ontario with forestry. Here's the relevance. In the forestry sector the province, in the mid-nineties, transferred responsibility for silviculture to the companies. They cut back Natural Resources staff. So in a way they were oversight, and companies were responsible for delivering all the elements of sustainable forestry. There's still some debate and the jury is out on whether that has worked.

First of all, does the ICAO certify when you implement SMS in a country? For instance, ISO will certify if you want to be an ISO company or agency. You seek, apply for, and get certified eventually. Do you get ICAO certification that your SMS is compliant with a set of parameters?

[Louis Ranger]

I personally love the example of ISO. I guess some of our people who are closer to it find that there are flaws in that comparison, but certainly ISO resonates with me. In a sense, as I understand the processes, we are the ones doing the certification, whether for Air Canada, WestJet, or Air Transat. We are the ones that are certifying it. In fact, the four phases that are identified in the Auditor General's report indicate the different phases of acceptance of the process.

[Marc Grégoire]

You mentioned ICAO. We're very lucky in Transport Canada, because not only are we being audited by the OAG, but we're also being audited by ICAO. So we have been audited twice in the past by ICAO. The second time, I believe, was right at the beginning of the implementation of SMS, and we expect to be audited again in the future by ICAO. Those safety audit reports done by ICAO are actually published. We publish those reports on our website. So ICAO, in their next audit, will audit us against their standard. I should mention, though, that our standard for SMS goes further; it goes beyond the minimum requirements imposed to all countries by ICAO.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

It is a quasi-certification. If you pass their audit, then you are--

[Marc Grégoire]

It's not certification. It's more a validation than certification. They would validate that Canada is meeting the ICAO requirements, but it's not a certification per se.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Is there a break point below which an airline, say, a small charter company or a medivac company, is below the radar for SMS? Or does it apply from the very large to the smallest commercial company?

[Marc Grégoire]

The vision is that SMS will apply to all the stakeholders eventually, but we're not there yet. For now, it only applies to the larger companies.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Is there time for me to give...? I'm sure there will be time anyway for Mauril.

Finally, then, there is this emerging obligation on the airline industry, so it's an additional layer of oversight. Do I take it that your inspectors will not be doing as much? You'll be more like CRA, where you do the “by exception” audits.

[Louis Ranger]

Just to use your earlier example, if there's a fairly new operator, two years in business, as Marc said, we would want SMS to apply to all, but we probably would do more spot-checking on that company, being new, for which we have no history. That's where more inspection time would be spent, and probably less on one that's been in business for 30 years with a very good record.

[Marc Grégoire]

But when we assess SMS in a company, we can also do a normal inspection on an as-required basis, which we will do when the inspector feels it is required once he's on site.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. St. Denis.

Mr. Sweet, four minutes.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Thank you, Mr. Chair.

I'd like to clear up a couple of last things. To the casual reader, it looks as though there could possibly be some disagreement between the department and the Auditor General.

Let me just get to the first one, paragraph 3.44, which talks about training. I understand the complexity of the training, because you were pioneers in this. But the Auditor General points out that there's no regular recurrent SMS training. In your response following her recommendation on the same page, page 17, you state that “Employees implementing the SMS regulatory framework are trained and kept current...”.

Is there some dispute about this fact that there was a recurring...or has the environment changed that much that you can make that vehement statement?

[Merlin Preuss]

The formal recurrent training you will find in other sectors of our oversight mandate does not exist in the same way under SMS. The main reason is that we are still very much in a learning phase as we go through this. So to package the recurrent training as a broadly targeted training is probably not very efficient or effective at this time.

For example, there are some comments in there about the validation process that also indicated that after we went through this, the reports came back and some issues had to be dealt with. We dealt with them. The information was passed on through the pre-evaluation briefings, the pre-validation briefings, through a network of inspectors that are directly tuned in to any changes. It's almost like a fact sheet that comes out all the time, and the inspectors who are working in the SMS world.... And understand, not everybody is working in the SMS world. The vast majority of the oversight is still done the old way. But these people have kept up through the network on an as-required basis.

At the end of the day, once we come to a good knowledge of what's needed, you'll find the same framework for recurrent training as you have for all the other activities we do.