Public Accounts Committee on April 30th, 2014

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

That didn't seem to me to be unduly slow. Am I wrong about that? That seemed like a reasonable time to come up with an action plan.

[Michael Ferguson]

I think as I've said, we're quite encouraged by the response we've gotten from the department to this report.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Right. And that to me just continues the arc of improvement that I've been observing.

I'm going to switch now to Monsieur Lévesque, if I may. Because as I understand it, then, to continue that arc of improvement, Monsieur Lévesque, Transport Canada has already pre-published two proposed regulations in Canada Gazette, one on grade-crossing regulations in February of this year, and one on railway operating certificate regulations in March. Is that correct?

[Louis Lévesque]

That is correct.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

And indeed, as I understand it, Transport Canada has a plan to pre-publish further proposed regulations of top priority before the end of June 2014. Is that correct?

[Louis Lévesque]

That is correct.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Can you tell me how these regulations that you are acting on will continue that arc of improvement in safety management systems that I've been observing in the evidence to this point?

[Louis Lévesque]

First, the grade-crossing regulations are an obvious longstanding issue that is finally moving to resolution, so that is obviously progress.

The regulations on the railway operating certificate are a complement to the coming into force of the new Railway Safety Act in the spring of 2013. In the same vein, they will basically give the minister the ability to revoke the operations of a railway, say, in the case of failure to meet safety standards.

We also have regulations regarding improvements to the SMS regulations, again aligned with the coming into force of the Railway Safety Act last spring. We have administrative monetary penalty regulations, which will finally give the department graduated enforcement tools in the railway safety area, as opposed basically to a system of fining.

We also have the regulations regarding our ability to mandate the collection of data from the railways to populate the data systems that are required to implement and to complete the risk assessments and the other elements that are underpinning some of the recommendations of the Auditor General.

[The Chair, NDP, David Christopherson]

Thank you both very much.

And moving along, Monsieur Giguère, you have the floor, sir.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

I thank the witnesses for being here, specifically Mr. Ferguson, who is going through some trying times. My condolences to you on the passing of your mother. I trust that all the members of the committee will join me in offering you our condolences.

In section 7.48 of your report, you describe the methodology used by Transport Canada to determine the number of inspections. This methodology has been in place since 1994, so for 20 years. The Department of Transport is always quick to accept all the recommendations. The fact is that, 20 years later, it has reduced its level of incompetence. However, with an inspection rate of 26%, its performance is still a long way from being acceptable.

Can you explain the methodology being used since 1994 and why it is not more up to date?

[Michael Ferguson]

Yes, Mr. Chair, and what we are describing in paragraph 7.48 is the fact that the department is still doing inspections, but when we did this audit we found that the methodology that was being used for the inspections was the same methodology that has been around since 1994.

As we described in the paragraph, a number of things have changed since then that have not been taken into account in the methodology. So our observation was that the methodology had not been updated since that last significant change in 1994.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Along the same lines, in section 7.52, you describe the method used by the inspectors. You noted the deficiencies identified by the inspectors in the eight files that your office reviewed. The eight reports that you audited did not comply with the application of the basic rules of doing a good job.

Federal railways omitted key elements from their safety management system. We have since learned that the department was not even able to determine the exact number of incidents caused by railway companies.

Could you describe to the committee the reaction of the department to these shortcomings? If that has happened in the past, how did the department deal with private railway companies? Will it finally rectify the situation after 20 years? Twenty years is a long time. If this keeps up, officials will have worked 35 years at the Department of Transport without ever correcting the deficiencies observed.

[Michael Ferguson]

Thank you, Mr. Chair.

Again, throughout this audit, we identified or found shortcomings in a number of the practices the department was undertaking in this area, whether how they were implementing the audit or of how they were doing the inspections.

I think our primary concern was that while they had identified these issues many years ago, it was taking quite a while to resolve them. That whole issue of the length of time was one of the things that concerned us very much about how the department was implementing this change.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

In sections 7.54, 7.55 and 7.56 of your report, you point out that inspection and audit documentation on the safety management system was missing elements, particularly in terms of follow-up on deficiencies. On that note, let me draw your attention to the fact that, if a company is responsible for the death of about 50 people, one can only conclude that it has never been inspected properly.

The deputy minister said that it is important to ensure that a safety culture is instilled in railway companies. However, in a case where there is no safety culture, the Department of Transport was not even able to review or rectify the situation.

Could you describe the deficiencies and the lack of follow-up observed? We were able to see the consequences for ourselves.

[Michael Ferguson]

I think that everybody understands the importance of this whole process. It's one thing to have good regulations and to identify the practices that need to be done. What's important is to make sure that all of the inspections that are necessary, the audits that are necessary, all of the monitoring to make sure that the regulations are complied with, are at least as important as having the regulations themselves in place.

Again, there's no question that this is an important area that deals with safety and security, so making sure that those inspections and audits are done and are done appropriately is very important.

[The Chair, NDP, David Christopherson]

Very good. The time has expired.

Merci Monsieur.

Over now to Mr. Albas. You have the floor, sir.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you, Chair.

I want to thank all of our witnesses here today for your testimony. Obviously, we do appreciate your expertise, particularly on this file.

I'd like to ask Mr. Lévesque a series of questions, if you wouldn't mind, Mr. Chair.

Could we start with your please explaining the difference between an inspection and an audit in respect to railways?

[Louis Lévesque]

I'll give you the general review, and I'll turn to Laureen or Luc to supplement because they're really the experts.

The fundamental concept of inspections are typically inspections of either tracks or specific operational procedures. They're inspections of activities or assets to note whether they're compliant with regulatory requirements, and in the rail case, regulatory requirements take the form of either regulations we impose or rules that the companies develop themselves and that have the same statutory status in terms of regulation.

This is a traditional method of surveillance of safety. SMS is about saying it's not good enough to just look at the activities and the assets, because we will never have enough people to look everywhere all the time. We need to ensure the operators take charge of security. It's not about removing the regulatory scheme and inspection, in addition to that; it's about building a new system of safety management systems, putting the responsibility on the operators, and then it becomes the role of the department to audit those systems to see whether the systems have been established as adequate and whether they're implemented adequately by the operators.

In the process of gathering data that's also helpful in directing the inspection program to areas of highest risk. We take in stride the basic message, not being fast enough in fully implementing this additional element of safety in our surveillance regime. We're obviously very committed to the timelines we've described, putting in place the framework that will ensure, or give us a level of quality assurance, that we are putting that in place on a systematic basis. The report notes a significant progress, a number of steps have been taken. You cannot say that you have on a nationally consistent basis, on a systematic basis, all the data and evidence that shows you have fully implemented that. That's what this action plan is about.

[Laureen Kinney, Associate Assistant Deputy Minister, Safety and Security Group, Department of Transport]

The focus on the inspections is on those very specific regulations that require a concrete activity, a concrete action, some kind of management check or provision of training, etc.

The categories of inspections break down into equipment, operations, engineering, and the very concrete activities that the railway company carries out every day. That is a form of cross-checking or guidance that can be aligned against the results of the audits, or some place that you can go additionally, as the deputy said, after you've looked across the company on a systemic level and an audit that will point you to some areas where you can look for regulatory compliance to either confirm or not confirm the initial assumptions you may be seeing. The two are very linked, but they are very different.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you, Mr. Chair.

I think Mr. Lévesque said earlier that safety is the number one priority, and I'm sure that's obviously the number one priority of the government but also for the railway companies themselves, and obviously we want to see that in every facet.

A key criticism that I believe is in the report is that too much effort has been spent on performing inspections and not enough on auditing the safety management systems that are in place.

One of the items that was pointed out was the lack of training for those auditors and managers. Would you agree with that? Is it fair to say that has been an issue highlighted in the Auditor General's report, and what progress specifically has been made in the area of training to make sure that safety as our number one priority can be executed?

[Louis Lévesque]

There's no question it's not acceptable to have performed only 26% of the planned audits, and it's not acceptable not to have trained a sufficient number of people to deliver on those audits. That's what the action plan is about. We're making steady progress.

[Laureen Kinney]

To continue with the deputy's point, we only have five remaining staff who have not yet been trained. I believe the majority of those are because of their availability, other things going on. They are scheduled, and they will be completed very quickly.

If I can just go back to the balance question between inspection and audits, that was a very interesting observation and it is something that we've taken on board. We accepted the recommendation to look at this more thoroughly and we obviously need to look at the areas of risk that you find, both with audits and inspections, and look at which areas you should do more of one versus more of the other in an analytical way.

We're in the process of doing that and we will come up with a new system of balancing the two. It isn't a matter of one or the other, it's a matter of picking the right proportion that addresses the risks and that provides the cross-checks this system allows us.

[The Chair, NDP, David Christopherson]

Thank you.

Your time has expired. I'm sorry.

Madam Jones, you have the floor.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you.

Thank you very much for your presentations today.

I'd like to start by saying that while we recognize there have been some investments, I think Canadians also recognize that there needs to be change. I'm pleased to hear you say today that the department has accepted the recommendations of the Auditor General, and I'm also pleased to hear you say that many of the things that were pointed out here are not acceptable and have to change.

I'd like to start with the inspection piece. When I look at the report, I'm not seeing too many inspections or too much emphasis on doing them. What I'm seeing is too little. The Auditor General's report, in paragraph 7.11, says there were 101 quality inspectors responsible for conducting inspections in audits on the rail lines in Canada.

Also in your report under paragraph 7.1, you said that Canada has about 44,000 kilometres of railway across the country. This works out to about one inspector for every 440 kilometres, the distance, for example, between Toronto and Ottawa.

Assuming that each one of those inspectors works alone and doesn't take any vacation, doesn't take any sick days, and doesn't have any delays due to weather, and that there are no delays due to heavy usage on the tracks and so on, I have to ask whether having one inspector to cover such a large section of track is adequate. So I would like to start there.

Secondly, while you've indicated in your report that you're going to update the inspection procedure by 2015 and that you're also going to look at your staffing requirements, does a gap exist right now, and is that gap being filled in the interim? Or are we going to wait until 2015, until we can have more study or analysis done on it?

[Louis Lévesque]

I'm assuming the question is directed to me.