Public Accounts Committee on June 5th, 2008

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Departments have the responsibility of setting out performance measures, and indicators need to be established. I read in the documents that having uniformed indicators throughout all regions of the country is causing difficulties.

Did you deal with this problem?

[Louis Ranger]

I will answer that.

Recently, Treasury Board has encouraged us to completely rethink our Program Activity Architecture. Our department, which is rather large, had 184 programs. We did a major housecleaning and managed to reduced that number to 65. Now in terms of managing the programs, we have achieved much greater clarity on who is responsible for what. In some cases, not one single manager has sole responsibility. But at least we know who is accountable. This is referred to the governance of this Program Activity Architecture.

In fact, for each of the programs, the setting of targets and indicators has become much tougher. As Mr. Grégoire said, we submitted a very comprehensive submission to Treasury Board, which will truly give direction to our program management for the next 10 years.

[Marc Grégoire]

On a higher level, one of our main objectives is to lower the accident rate and the other is to maintain and increase public confidence. Under these programs, we have established specific targets. The fact remains that everything stems from these two main objectives.

[The Chair, Liberal, Shawn Murphy]

Merci beaucoup, Mr. Lussier.

Mr. Sweet is next for seven minutes.

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

Thank you, Mr. Chairman, and thank you to our witnesses.

You have an extraordinary task of responsibility, with 99 million passengers in 2006, and of course you're talking about that increasing exponentially.

Whenever the Auditor General takes a sampling of files, we usually find some very interesting things written, so I would like to give credit where credit is due. In paragraph 3.25, 21 files were assessed. I won't read the whole paragraph, but it appears you had some glowing results from that. You followed up where you found problems. So that's good.

I think the Auditor General has also done a good job of explaining that you are pioneers in this. You began the process before the rest of the member states or the OECD countries. Are the rest of the major OECD countries well on their way in this process as well?

[Louis Ranger]

They're well on their way. Mr. Preuss is too humble to say this, but we are truly world leaders. We're not only recognized by the ICAO; we're recognized by many countries that actually come here by the busload to get presentations on how we do things.

We have an incredible partnership with China, for example, which has been here repeatedly. Mr. Preuss has become a great friend of China. Because of Mr. Preuss, we now have Chinese pilots being trained in Canada and learning from us how to manage safety management systems.

So it was not perfect, and I think Madam Fraser has recognized that, but we're honestly quite proud of the leadership we're showing in this area.

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

I trust we're getting some cost-recovery on that training.

Of course, the key thing is, are the others along the way to the point where we're actually getting something out of the exchange, where benchmarking is taking place and we're getting some reciprocity as far as some benefit in helping us with the SMS process is concerned?

[Louis Ranger]

I will let Merlin answer that, but I think there are probably more commercial impacts of this than we can imagine. The fact that we're showing leadership as a regulator probably makes our manufacture of simulators much more attractive to those countries and makes our airlines more accessible to those countries.

Maybe Merlin wants to elaborate a bit on the co-benefits of all this.

[Merlin Preuss]

The co-benefits, I guess, would be in the area that this is where the aviation industry globally is going, and any part we can play in making that move is very important to us, to our reputation. We have somewhere around $25 billion of industry, and not one aeronautical product or service moves across our borders or is used in our country without some sort of safety certification. So we're very cognizant about our reputation as we take a leading role in this area, and we continue to be recognized.

I've just returned from an SMS-focused conference. It's now in its 25th year of operation, sponsored by the EASA, which is a European group, and the FAA. I chaired a panel discussing issues associated with SMS. Just the very fact that we're invited to participate at this level indicates, again, the respect the world has for us, but more importantly, my staff and I take back an awful lot of information, listening to other countries and other organizations in the industry move towards this approach to managing safety risk.

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

I'm glad we happened to get on that, because I didn't know there was a lot of public and private spinoff coming from it.

On page 9 of the Auditor General's report, there is a paragraph that is worrisome, and I'd like you to address it:

However, the Department did not document risks, such as the impact of the transition process on oversight of air transportation safety, or prepare mitigating actions. It also did not forecast overall expected costs for the transition.

And I could go on.

But particularly around the costs, one of my concerns is that if you haven't forecast properly, that means tough decisions often are made that certainly should not be made when it comes to the safety area. Going back to Mr. Bélanger's concern, this juxtaposition of two systems without the appropriate resources available may mean a give or take in one or the other.

Because I know my time is running out, I'll leave it to you to answer in aggregate.

Then bouncing over to paragraph 3.29, it seems there's no standard on individual inspectors. They're going to do inspections at their own judgment. I have a real concern about that as well.

Could you answer those two concerns for me, please?

[Louis Ranger]

I will try to answer in the aggregate, as you said, and then my colleagues can elaborate.

Because it is truly a second layer, it is true, we acknowledge, that there was no formal assessment of risk. You used the word “formal”. It doesn't mean that we did not assess the risk, but we did not document it properly. But in our mind, because it's clearly an additional layer, we took a lot of comfort in the fact that everything that is there remains there, the accountability is there, and the responsibilities of individuals are clear.

On the comment about not being clear how things are managed from one region to another, there's a clear comment on that. We are managing risk. We've always managed risk. So the standards we've set for inspections are kind of a range. A certain inspection needs to be done between six months and 36 months, which is a huge difference, I grant you. But if you're in a region and you have two airlines—company A and company B—and company A has come up to the six-month required inspection and you know that company B offers more risk, why would you spend the next two weeks on company A when you know that company B should require more attention? So we do move to company B, which is why there is some latitude within a range.

Should we document that more clearly? I think we've acknowledged that we should, but there is some discretion as well.

[Marc Grégoire]

If I may, on the cost issue, the OAG is right to say that we have not assessed the exact cost of the transition. However, we told the deputy minister that it would be costly to make the transition period, and that for a while we would need more money. He has given us, for civil aviation, $9.8 million over the last years to help us in the transition.

Of course, now he wants us to drop this requirement. We're not quite ready to drop it because we're in a critical phase in the transition, but we have a plan to reduce this extra need of $9.8 million to zero over the next three years. That was very helpful, and that allowed us to use that money, for instance, to train people, to hire consultants to help us train, and to set up a lot of things within the SMS transition.

It has allowed us to continue the normal work. We have stats on the number of inspections we have been doing during the transition over the last few years, and we have introduced a number of inspections.

[The Chair, Liberal, Shawn Murphy]

Thank you.

I believe you have a comment, Ms. Fraser.

[Sheila Fraser]

Mr. Chair, I was just going to make the point that during the audit we were certainly concerned that there were no additional human resources put in to manage this, which we interpreted as meaning that there were resources taken from the traditional oversight to do the transition. We would have expected the department to have analyzed the effect of that.

Presumably there was a decrease in the number of inspections, and we were certainly not given any documentation to indicate that was not the case. There would have been an assessment of what risk was involved in that, and we did not see any documented business case or assessment of that being done.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Sweet, Mr. Ranger, and Ms. Fraser.

Mr. Julian, you have seven minutes.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

I'm very glad that you've started to look into SMS, Ms. Fraser, because of course we know the controversy around implementation of SMS in the railway system and escalating derailment rates. It has been a real problem.

Your report is very much a wake-up call to parliamentarians. You talk about the department not managing areas satisfactorily, no short- or medium-term indicators, no identification of human resource requirements, and the department did not document risks. Very clearly, there's a problem. It's a bit of a mess--the implementation of the first two phases--which certainly would mean I think that the government should be taking a step back from further implementation.

But I'm interested, now that you've had that first look into SMS.... You didn't look into delegation of licensing. You didn't look into the oversight by industry lobby groups, and we know there's a problem. We've had a very safe business aircraft industry up until recently. We've now had a very high-profile crash with three people dead from A.D. Williams. Now that people are starting to die, I think it's incumbent to look into this whole question of delegation of authority. Clearly we're starting to see the first signs of what we saw happen in the railway industry.

You did respond to my letter about why you didn't choose to look at delegation in the first stage, with the Canadian Business Aviation Association. Now that you've seen that there are some significant problems, I'm interested to know if your next step will be to look into delegation of authority, and to look into the CBAA, particularly, in light of the loss of life.

[Sheila Fraser]

Mr. Chair, that is not currently in our audit plans. We will certainly consider it, but I do believe that in fact there was an audit done by the department, if I read the newspaper article correctly. In fact, the newspaper article was actually reporting the results of this audit that the department itself had done.

Perhaps the member might wish to ask the department the steps that they themselves are taking, and for the results from that internal audit that was done.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I'll certainly be getting to them, but my question is very much in light of what has emerged over the past few months.

[Sheila Fraser]

We will certainly consider it in our planning process.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

What can we do to encourage you to move further?

[Sheila Fraser]

The committee can always suggest audits, and we will try to accommodate committee requests, but as you can understand, we also have to look at our planning and the issues that we are looking at, and we have a limited number of audits that we can do in each year.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I think there's a great need to expand funding to the Auditor General's department. There's no doubt about that.

[Sheila Fraser]

I'm not sure about that, but I don't want to get into that discussion today.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Let me come to the department officials. We have had problems with business aircraft, so I'm wondering if a safety audit has been performed on A.D. Williams in light of the recent accident and the recent loss of life.

[Merlin Preuss]

A specific audit on A.D. Williams? To my knowledge, not in the terms you're describing. We've gone back to the oversight requirements that were in place at the time, and we're still reviewing that particular part of the work.

We have to keep in mind that what we have in place in Canada doesn't exist anyplace else in the world. We have put additional requirements on our business aviation community and in the process have engaged the association as partners, and that particular delegation's scheme, if you like, continues to provide extraordinarily good safety performance, especially when you consider the fact that this organization has grown from somewhere around 120 operators to over 300.

So given that type of growth and the safety performance of that sector, although we are concerned with any loss of life, we will be managing those risks as we go forward.