Public Accounts Committee on Nov. 27th, 2012

[The Chair, NDP, David Christopherson]

I now call this 67th meeting of the Standing Committee on Public Accounts to order.

Welcome, colleagues, to our hearing, and also welcome to our guests today.

First of all, welcome back to Mr. Byrne. You've been off on some personal matters. It's good to have you back, sir. Mr. Allison is joining us today, subbing in. We hope you have an enjoyable time with us today.

With that, we'll get under way. We're holding a public hearing on chapter 5, Oversight of Civil Aviation—Transport Canada, of the Spring 2012 Report of the Auditor General of Canada.

Of course, Mr. Ferguson is here today. I will welcome him and invite him to introduce his delegation. Then we'll go to Madam Biguzs, who is the associate deputy minister. I would ask her, when Mr. Ferguson has concluded, to introduce her delegation and then give us her opening remarks.

Colleagues, if there are no interventions, I will proceed with the hearing.

Seeing none, I pass the floor to you, Mr. Ferguson.

[Michael Ferguson, Auditor General of Canada, Office of the Auditor General of Canada]

Mr. Chair, thank you for this opportunity to discuss chapter 5 of our spring 2012 report, “Oversight of Civil Aviation-Transport Canada”.

Joining me at the table are Maurice Laplante, Assistant Auditor General, and Lucie Talbot, Director, who were responsible for the audit.

The overall responsibility for aviation safety rests with the aviation industry. Transport Canada is responsible for developing and administering the policies, regulations and standards required for the safe conduct of civil aviation within Canada's borders. It is also responsible for overseeing whether aviation companies have complied with this safety framework.

We examined whether the department had risks associated with overseeing its civil aviation safety program. We focused on Transport Canada's surveillance of air carriers, aircraft maintenance organizations, and airports in the national airports system.

Transport Canada has made progress in adapting its regulatory framework to one based on safety management systems. It has moved to an approach that puts the onus on aviation companies to develop safety management systems in accordance with regulations. The goal of this approach is to allow for more consistent and rigorous surveillance of aviation companies' compliance with safety regulations.

While Transport Canada has implemented a regulatory framework that is consistent with international requirements, we found that in some cases it was taking a long time to address some emerging safety issues.

We found that some aspects of surveillance are working well. For example, the department has developed a standardized methodology to enable consistent inspections of companies' compliance with regulations across Canada.

This surveillance approach is consistent with the safety management system-based approach in the aviation industry, and inspections are carried out under the department's instructions. However, we found weaknesses in critical areas in how Transport Canada plans and conducts its surveillance activities.

We found that risk-based planning lacks rigour. The information for assessing risks used by Transport Canada to identify the high-risk aviation companies that should be inspected is not always available or kept up to date.

In addition, a minimum acceptable level of surveillance has not been clearly established to provide the necessary coverage of civil aviation companies.

In 2010-11, only about two-thirds of planned inspections were completed. That is significant, considering that only the companies and the operational areas with higher risks are to be selected for inspection in any given year.

Most inspections did not fully comply with the established methodology and were subject to little management oversight.

We found that inspection plans were prepared for 35% of the files we reviewed. In these plans, we found little information on the key tests necessary to ensure that the inspection would focus on the greatest risks. We also found that sampling plans were rarely prepared. Because there are no minimum requirements for documentation of work done and reporting of inspection results, the quality of the documentation varied significantly among inspectors and across regions.

We found that many inspections were carried out in 2010-11 by inspectors who had not received training on the new surveillance methodology. Completing training on time is important to help inspectors understand and apply the new surveillance methods. Otherwise, the department will not have the assurance it needs that aviation companies are complying with air safety regulations.

At the end of our audit, we found that about 65% of inspectors had completed the training on surveillance procedures.

Transport Canada has developed a national human resources plan for the oversight of civil aviation. However, the plan does not specify the number of inspectors and engineers that are needed, although the department agreed to provide these figures in its response to the recommendation in our 2008 report.

We found, as well, that Transport Canada lacks a quality assurance program to continuously improve its surveillance program. An effective quality assurance program for evaluating Transport Canada's surveillance activities would help management determine whether established methodologies are being followed.

Transport Canada plays a key role in helping to ensure that Canada's civil aviation safety framework meets minimum international safety standards. While Canada's safety record compares favourably with many other countries, any deterioration would have a significant impact on public confidence. This makes it critical that Transport Canada maintain a solid and effective regulatory framework for civil aviation safety, especially since the International Civil Aviation Organization has projected a significant growth in aviation until 2025.

The department's senior management needs to concentrate its efforts on ensuring that staff apply the approved methodology consistently and rigorously, that managers provide the necessary reviews and supervision, and that an effective continuous improvement program is put in place. Otherwise, Transport Canada will not have the assurance that the industry is operating in compliance with the regulatory framework for civil aviation in Canada.

Mr. Chair, we are pleased to report that Transport Canada agreed with our recommendations and expressed its commitment to implement them no later than April 2013.

In April 2012, Transport Canada shared its detailed action plan with us, and it appears to be sufficient if implemented. The committee may wish to review the department's action plan and explore the progress made to date to address the issues raised in this chapter.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions that the committee may have.

Thank you.

[The Chair, NDP, David Christopherson]

Thank you, Mr. Ferguson.

Now we're over to Madam Biguzs. You have the floor.

[Anita Biguzs, Associate Deputy Minister, Department of Transport]

Thank you, Mr. Chair.

Thank you for the opportunity to speak with you on the Auditor General's 2012 review of the civil aviation program. With me today are two of my colleagues: Gerard McDonald, assistant deputy minister of safety and security, and Martin Eley, director general of civil aviation.

We take the Auditor General's report very seriously, as we did the 2008 report on the civil aviation safety program. Changing a surveillance program as significant as the civil aviation program is neither a quick nor an easy fix, and we've had to be strategic in how we prioritize our activities.

Following the 2008 report, we initiated measures to strengthen the civil aviation safety program, and we are continuing to build on those actions. Our efforts to strengthen the program led to producing “Improving Canada's Civil Aviation Safety Program: An Action Plan to April 2013”, which positions us to implement the Auditor General's recommendations by the end of 2013, in addition to other priority areas we had identified.

The plan was provided to the Auditor General's Office, and a copy has been provided to committee members. In two weeks, the department will provide the committee with an update on the implementation of the action plan.

Putting the action plan to work has been a departmental priority this year, with focused attention from me and the deputy minister at the most senior levels of the department as well as from the departmental audit committee. I am confident that the progress we have made has strengthened the civil aviation safety program.

Mr. McDonald will now explain the status and the direction of the program.

[Gerard McDonald, Assistant Deputy Minister, Safety and Security, Department of Transport]

Thank you, Ms. Biguzs and members of the committee.

The civil aviation safety program has always focused on addressing the highest-risk areas of the sector, and we feel it has succeeded in improving aviation safety. In fact, in 2011 Canada recorded the lowest number of accidents for Canadian-registered aircraft since 1976. Statistics such as these reinforce the fact that Canada has one of the safest aviation systems in the world.

That said, there is always room for improvement, and the Auditor General's report provides us with valuable recommendations on how to strengthen the risk-based approach that we use.

Transport Canada is working to move away from a “one size fits all” approach, and to make its rulemaking process more responsive to safety priorities, while engaging the right people at the right time on the right issues.

By March 2013, the department will have a new process in place that will accelerate follow-up on significant safety issues raised by stakeholders.

The Auditor General recommended that Transport Canada conduct inspections according to established methodology and that staff receive all necessary training. I'm happy to report that we have reviewed and updated our surveillance procedure documentation, and we are now in the process of focus-testing these changes with our inspectorate to ensure it meets their needs.

A centralized surveillance information management system will be ready in December, along with associated user training to be completed by March 2013.

All inspectors have been trained to exercise their delegated authority as set out in the department's civil aviation training policy, and they have all completed updated training on new surveillance procedures. A needs analysis is taking place to determine if additional speciality training is required.

The Auditor General also recommended that Transport Canada clarify the information on aviation organizations used in developing risk profiles and surveillance plans. Civil aviation has introduced new tools, such as a risk indicator tool and accompanying employee training, which was launched in April 2012 and now provides a standardized approach to developing risk profiles.

We also have a surveillance planning tool that reflects a move from fixed surveillance frequencies to new risk-based surveillance intervals. Under the new approach, the frequency of planned inspections increases as risk increases. Combined with a five-year planning horizon, this allows resources to be allocated to the highest-priority enterprises while ensuring that all enterprises have a planned inspection schedule. The new planning tool is being piloted now, and the first full year it will be used is 2013-14.

Subsequent to the release of our action plan, civil aviation has focused in more depth on enforcement activities and has identified additional actions to strengthen this aspect of the program.

There is regular monitoring of overall surveillance activity at the national level. The national management team of the Civil Aviation Program reviews activity monthly to determine whether planned activities are being carried out and whether adjustments need to be made.

In his report, the Auditor General called for an internal quality assurance program. Now that work has advanced on key program areas, Transport Canada has developed quality assurance procedures and has prepared a comprehensive quality assurance plan, and implementation of the plan has started. This will ensure that our procedures are consistently followed and continuously improved.

Transport Canada has always ensured that civil aviation has an appropriate number of inspectors. Even during a time of overall public service downsizing, we are continuing to recruit inspectors to maintain the strength of our workforce. The Auditor General recommended that we identify the resources we will need to plan and conduct inspections under our new surveillance approach and develop a strategy to obtain them.

All this presents the obvious question: do we have an appropriate number of inspectors to fulfill our mandate? Knowing whether we have the right number of resources means knowing whether our resources are being allocated effectively and our surveillance activities are being carried out efficiently.

Given our understanding of the risk in the system, I believe we do have an adequate number of resources. To confirm this, we're using a more robust method to determine how to best apply resources in conducting surveillance activities. We're improving our understanding of whether the time we spend conducting individual inspections is appropriate and we are assessing whether we are assuming acceptable levels of risk.extra text box

In particular, the new approach to surveillance planning allows us to forecast the resources needed to meet unplanned surveillance activities, as well as to allow for planned surveillance needs, up to five years into the future.

We recognize that we need to continue to improve our program, which is why Transport Canada's civil aviation action plan to 2013 was developed and is now being implemented. The Auditor General's report confirmed that the issues we had identified and the actions we had begun taking were the right ones. We are confident that in the coming years our actions can fully respond to the Auditor General's recommendation and contribute to Transport Canada's strong risk-based aviation safety program. This will ensure that our aviation safety record continues to be one that Canadians can be proud of and have confidence in.

Thank you very much, Mr. Chairman, and members of the committee. We would be happy to answer any questions that you might have in this regard.

[The Chair, NDP, David Christopherson]

Very good. Thank you all so much.

We will now begin our regular rotation of five-minute speaking slots, and we will begin with Mr. Saxton.

You have the floor, sir.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Chair.

Thanks to our witnesses for being here today.

My first question is for the Auditor General.

Can you explain to us what Transport Canada has done since your audit to address issues regarding surveillance, and what is particularly working well in this regard?

[Michael Ferguson]

Mr. Chairman, we presented the audit in the spring; since then, we have received the plan that the department has put together, which, as I said in my opening remarks, seems sufficient if it is put in place.

However, we haven't done any audit work in terms of that plan, so I can't really provide you with any more details, other than the fact that we have received that plan. We have looked at it. It seems it would be sufficient if it's been put in place, but we haven't put it through any audit rigour.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

My next question is for Transport Canada. Can you take us through the action plan? What are the precise deliverables you've proposed and implemented to respond to the Auditor General's report?

[Anita Biguzs]

I'm going to open and then turn the floor over to my colleagues.

Just to give you a sense of how seriously we have taken this, we have a very rigorous process. We have a steering committee that meets virtually every two weeks, which I chair. We go through the action plan, which has identified a whole series of measures.

For example, in the surveillance area, we are moving to a risk-based approach. We've put in place minimum surveillance plans. We're improving our documentation, our guidance documents for inspectors. We've been on a cross-country regional outreach with our inspectors to make sure we get feedback from them in terms of being able to ensure that the guidance we prepare reflects their needs as we move to new approaches in how we do things.

As I say, we have a very rigorous process and are tracking timelines very carefully to make sure we're delivering.

I'll turn to my colleagues to walk you through the various initiatives we have identified in the plan.

[Gerard McDonald]

As Ms. Biguzs indicated, the plan is fairly comprehensive and comprises some 61 different management commitments we've made to improve the program.

Just briefly, here are some of the things we've done. We developed a new risk indicator tool to allow us to assess companies and the risk they pose to the system. We've refined and developed a national surveillance program that we're regularly monitoring to make sure our surveillance plans are keeping up to date and that we're not falling behind at all.

We've done renewed training for our inspectorate on the new surveillance procedures, so now they have all received that training. It's very important that we engage our employees, so we have a communication and engagement strategy with our employees to make sure they understand the program, how it works, and what we're trying to develop. We've updated the documentation for surveillance.

We've looked at our consultation model. We've been criticized for taking too long to implement regulations, so we're looking at the consultation model we use and how we can fast-track regulations when there are true safety issues. We've completed assessments of airports that had been lagging behind. We've provided additional guidance on surveillance and enforcement.

Also, one of the bigger issues is the reorganization of the entire directorate, which had been going on for quite a number of years. We are fast approaching completion of what turned out to be probably the biggest reorganization our department has ever had to face.

[Anita Biguzs]

Can I just add one final point?

The Auditor General also pointed out the issue of management oversight on our surveillance plans, and we have put in measures to enhance management oversight. In fact, senior management has to approve the surveillance plans. Senior management meets monthly and reviews the plans against what we're achieving in terms of actual inspections. Any deviations have to be signed off by supervisors.

In sum, we have ratcheted up the amount of oversight on inspection plans, the oversight on what we're actually doing and whether we're actually tracking against plans.

[Andrew Saxton, Conservative, North Vancouver, BC]

Can you tell us how you are progressing with that plan? What percentage of the plan is complete at this stage?

[Anita Biguzs]

At this point, I'd say we're roughly at 75% or 77%. We are confident that by the end of March we will be at 99% complete. A lot of this is also continuous work. Now that we've been working on our quality assurance plan, we will be revisiting how we're doing to make sure we're actually achieving the results we say we're achieving. It will be an ongoing process.

Regarding the reorganization that Mr. McDonald referred to, we're confident we will have completed all of the job descriptions and have people in positions and whatever by the end of March. That should be about 99% completed, again. We're confident that we are tracking this. We're meeting regularly on it to make sure we are delivering and meeting our commitments.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

[The Chair, NDP, David Christopherson]

Very good. Thank you so much.

Now we will go to Madame Blanchette-Lamothe. You have the floor.

[Lysane Blanchette-Lamothe, NDP, Pierrefonds—Dollard, QC]

Thank you, Mr. Chair.

I would like to thank all our guests for being here and providing us with so much recent information and documents that help us with our study on this subject.

Mr. Ferguson, I would like you to tell us again why you think it is essential to act quickly to deal with threats to civil aviation safety, as you wrote in your report. Why is it essential to respond quickly?

[Michael Ferguson]

Certainly it's important for the department to act quickly on these types of issues, Mr. Chair, to maintain public confidence in the whole aviation system. That is fundamentally the reason that it's important to act quickly.

[Lysane Blanchette-Lamothe, NDP, Pierrefonds—Dollard, QC]

Thank you.

I do not know whether Mr. Ferguson or Ms. Talbot could tell me what similarities there are between the 2008 recommendations and the 2012 recommendations, or between the concerns identified in the 2008 report and the 2012 report.

[Michael Ferguson]

I will ask Ms. Talbot to deal with the similarities between the two reports.

[Lucie Talbot, Director, Office of the Auditor General of Canada]

In 2008, our office studied the transition to the safety management system. That was not what was done this year. In 2012, we did a report on how Transport Canada was overseeing civil aviation in Canada.

Our 2008 recommendation was reiterated in 2012. In 2008, we had recommended that the department identify how many inspectors and engineers it needed during and after the transition, and the skills they should have. This recommendation was also made in 2012.

[Lysane Blanchette-Lamothe, NDP, Pierrefonds—Dollard, QC]

So that was because the recommendation made in 2008 had not been....

[Lucie Talbot]

...acted on.

[Lysane Blanchette-Lamothe, NDP, Pierrefonds—Dollard, QC]

Thank you.

Mr. Ferguson, you say that the action plan appears to be sufficient if implemented. I would like to make one thing clear. Are you saying that the Standing Committee on Public Accounts cannot say at this time that the action plan is a complete response to the recommendations in your report, or that everything has been done and the problem has been solved? Can you confirm that, for now, there is a worthwhile plan, but the committee cannot say that this plan is a complete response, until proved—

[Michael Ferguson]

Mr. Chair, at this point we've received the action plan and, as I said, it appears to be sufficient, but we haven't done an audit on the action plan. We haven't done an audit on the work that was done, so I can't say for myself whether the action plan has solved all of the issues. That would require us to do another audit and then report that audit back to this committee.