Public Accounts Committee on May 6th, 2021

[The Chair, Conservative, Kelly Block]

I call the meeting to order. Good morning, colleagues.

I want to specifically welcome Mr. Bachrach and Ms. Kusie to our committee. We look forward to having them participate this morning.

Welcome to meeting number 30 of the Standing Committee on Public Accounts. The committee is meeting in public today and is being televised.

Pursuant to Standing Order 108(3)(g), the committee is meeting today to study report 5, “Follow-up Audit on Rail Safety—Transport Canada”, of the 2021 reports 1 to 5 of the Auditor General of Canada.

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. Therefore, members may be attending in person in the room or remotely by using the Zoom application. It is my understanding that everybody is attending remotely today.

Interpretation services are available for this meeting. You have the choice, at the bottom of your screen, of either “Floor”, “English” or “French”. Before speaking, click on the microphone icon to activate your own mike. When you are done speaking, please put your mike on mute to minimize any interference. When speaking, please speak slowly and clearly. Unless there are exceptional circumstances, the use of headsets with a boom microphone is mandatory for everyone participating remotely.

Should any technical challenges arise, please advise the chair. Also note that we may need to suspend for a few minutes, as we want to ensure that all members are able to participate fully.

I'd now like to welcome the witnesses who are joining us today. From the Office of the Auditor General, we have Karen Hogan, Auditor General of Canada; Dawn Campbell, principal; and Isabelle Marsolais, director. From the Department of Transport, we have Michael Keenan, deputy minister; Aaron McCrorie, associate assistant deputy minister, safety and security; and Michael DeJong, director general of rail safety.

With that, I would like to turn the floor over to Ms. Hogan for five minutes.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Madam Chair, thank you for this opportunity to discuss the results of our recent follow-up audit of Transport Canada's oversight of rail safety. Joining me today are Dawn Campbell, the principal responsible for the audit, and Isabelle Marsolais, who was part of the audit team.

In this audit, we examined whether Transport Canada implemented selected recommendations from our 2013 audit on the oversight of rail safety. Overall, we found that eight years later, the department had yet to fully address our recommendations, and that in fact there was still much to do to improve the oversight of rail safety in Canada.

Rail accidents can have serious consequences, including devastating loss of life and environmental damage. To mitigate safety threats, Transport Canada undertakes oversight activities that include inspections, audits of safety management systems and data analysis. We want to focus today on two fundamental gaps in the department's oversight activities that require immediate attention.

Our first concern is that Transport Canada was not assessing the effectiveness of railway companies' safety management systems. These systems are formal frameworks to proactively integrate safety into day-to-day railway operations. In-depth, systematic assessments of these systems are called audits. They are meant to verify whether the systems meet regulatory requirements and integrate safety into daily railway operations. Over the past 14 years, several reports have recommended that Transport Canada undertake such assessments. I am referring here to three reports from the Standing Committee on Transport, Infrastructure and Communities, a number of other reports from experts in the field, and my office's 2013 audit.

We found that although the scope of Transport Canada's audits of safety management systems had included assessing regulatory compliance, the department had not considered whether the systems were effective in improving safety in daily operations. Unless the department makes these assessments and follows up in a timely way, it cannot know whether these systems are having an impact on rail safety.

Our second concern is that Transport Canada was unable to show whether its oversight activities have improved rail safety overall. The department has made important improvements to the way it plans and prioritizes its activities and follows up on railway companies’ plans and actions to address deficiencies. However, it did not measure the overall effectiveness of its rail safety oversight activities. When people and time are dedicated to overseeing rail safety, I believe it is reasonable to expect that the department measure if the time and effort invested are making a difference and to adjust its oversight approach as needed.

I encourage Transport Canada to consider what other programs and jurisdictions are doing on this front, both in Canada and in other countries. The Canada Energy Regulator, for example, has established indicators that measure components of effectiveness. In the United Kingdom, the Office of Rail and Road has developed tools to assess railway companies’ ability to manage health and safety risks. The resulting information is used to make year-over-year progress comparisons. Furthermore, in the United States, the Office of Transit Safety and Oversight has committed to monitoring the effectiveness of state safety agencies.

We made 6 recommendations to Transport Canada, and the department has agreed with all of them. I can’t underscore enough the importance of taking action on these long-standing issues.

Madam Chair, this concludes my opening remarks. We would be pleased to answer the committee’s questions.

Thank you.

[The Chair, Conservative, Kelly Block]

Thank you very much, Ms. Hogan.

We will now go to Mr. Keenan for five minutes.

[Michael Keenan, Deputy Minister, Department of Transport]

Thank you, Madam Chair, and thank you for the invitation to appear before the Standing Committee on Public Accounts. It's good to see you, again, Madam Chair, and it's good to see some familiar faces from the Standing Committee on Transport, Infrastructure and Communities here today.

Aaron, Michael and I are looking forward to the questions and the discussion.

Transport Canada is responsible for promoting safe, secure, efficient and environmentally responsible transportation. Among these activities, safety is our top priority.

In this context, I would like to thank the Auditor General for the incredibly important work done on rail safety, from the original audit in 2013 to the follow-up audit in 2021. Both audits challenged us, and guided us, to do better in our commitment to being a world-class regulator, and to improve the safety of Canada’s railway network.

The Auditor General’s initial audit in 2013 was carried out in the context of a terrible tragedy. The June 2013 train derailment at Lac-Mégantic devastated a community, and cost 47 lives. It exposed major gaps in rail safety, and led to a fundamental transformation of our oversight regime.

As part of this transformation, Transport Canada introduced a whole suite of stronger rules and regulations. Some examples would be the requirement for emergency response assistance plans when railways carry dangerous goods; new requirements for thicker steel and better crash protection on tank cars carrying flammable liquids; a new requirement for administrative monetary penalties to help immediately discipline small contraventions of safety practices before they lead to larger problems; and the “Rules Respecting Key Trains and Key Routes”, which set out strict requirements for the transportation of dangerous goods by rail.

In addition to these rules and many others, the department dramatically increased surveillance. We went from 107 rail safety inspectors across Canada in 2013 to 155 today.

Equipped with more results from more inspections, Transport Canada has systemically developed a risk-based approach to its oversight rule. As noted in the Auditor General's follow-up audit, our inspections for oversight activities—which used to be done, essentially, randomly—are now specifically targeting areas of greater risk based on the information that we're collecting and the data that we're collecting on risk.

This new risk-based approach to oversight is driving a better approach to identifying problems and taking action, including SMS audits, inspections, and new regulations and rules to identify problems. One example would be that last November we approved the new “Duty and Rest Period Rules for Railway Operating Employees”, which gets at some of the human factors behind accidents and aligns the rules to modern fatigue science.

In the last year, based on audits and analyses from inspections, we put in new rules for trains carrying dangerous goods to reduce the risk of derailments.

As you look across all of these, you will see that we have a pattern of stronger rules, more oversight, and better risk-based oversight systems, and these are leading to better safety outcomes.

However, we have a lot more to do. The Auditor General has been very helpful in the challenges and with guidance in taking further steps. For example, in this follow-up audit, the Auditor General found that we need to measure the effectiveness of our oversight activities, including the effectiveness of our safety management systems. Therefore, we built stronger systems. We've been targeting risk, and now we're drilling down to track the effectiveness of individual measures.

Transport Canada is working on this recommendation and the other recommendations in the audit, and has put in place a plan of action to address these. In the course of this year, we will begin to establish the indicators of effectiveness and we will be tracking those based on the emerging practices that we're beginning to see in other jurisdictions, which were well-noted by the Auditor General.

Madam Chair and members of the committee, I will stop here because I don't want to take up too much time. I will allow us to get on to questions and discussion.

Thank you very much.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Keenan.

We will now go to our rounds of questioning from members. We will start with a six-minute round.

Ms. Kusie, you have six minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Madam Chair.

I thank the entire team. It's always a pleasure to be among my friends here at the Standing Committee on Transport, Infrastructure and Communities. It's always nice to see representatives from Transport Canada as well. So thank you very much for the invitation.

Madam Auditor General, I will start with you, please.

We had the pleasure of having a bit of a conversation during the transport committee meeting. I wanted to highlight two things today. The first is on the main theme of our conversation last time, which was safety.

At the transport committee, Madam Auditor General, I asked you, “ From your findings, Auditor General, are you concerned for the safety of Canadians based upon the actions that have not been taken by Transport Canada?”

From the transcripts in front of me, Madam Auditor General, I can see that you responded:

Every mode of transportation has its inherent issues, so I guess, overall, I would highlight that, yes, I am concerned. Until we can demonstrate that the activities that Transport Canada is doing in coordination with railway companies and other important parties are actually having a difference, we should be concerned.

I wanted to start off by highlighting that your concern for the safety of Canadians remains, based upon the testimony you gave at the transport committee, but upon further discussion and testimony at the transport committee, it came out that you were happy to see progress within the department, and I heard you talk about progress prior to the committee, which is always a good thing.

Of course, in business school we learn about this concept of kaizen, the Japanese concept of constant improvement, and we hope for this as well, but the truth of the matter is that it's the government that has the authority to place upon industry the requirements to produce the data and to take the steps to ensure that Canadians are safe.

Now I will move on to that area of responsibility for which industry must be held accountable by Transport Canada.

In your report you mentioned that Transport Canada collected more information from railway companies but that the information was sometimes late, incomplete, or of varying quality. Madam Auditor General, in your audit you also mention that Transport Canada doesn't set time frames for companies to correct safety deficiencies.

If that is the case, how does Transport Canada ensure that railways are compliant and eventually correct these safety deficiencies?

[Karen Hogan]

Thank you for the very comprehensive question. I'll try to summarize it all well.

We did see progress since our last audit, as you correctly noted. There was an increase in inspections, better follow-up on corrective measures, and a risk-based approach to determining the audits of safety management systems. As I mentioned in my opening remarks, the department just needs to continue going further. Increasing all of that activity is great; however, you need to now decide whether or not those activities were inspecting the right things, whether they are the right things, and whether or not all of the increase is actually having an impact on improving rail safety.

I do believe—and I stand by my statements—that we should be concerned about the safety of Canadians until we know that the safety management systems that are creating that culture of safety are effective and that the oversight activities of Transport Canada are also contributing to that effective increase in safety.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Madam Auditor General.

I'm hearing you say there are still some safety deficiencies that are outlying. Can you address what those might be, please?

[Karen Hogan]

I think that's probably a question better asked to the department about where they're seeing deficiencies, but one of the items you mentioned earlier was setting standards on follow-ups. While they are doing follow-up and making sure corrective actions are taken, they're not really setting a timeline. It is left to the inspector to go back at some point in time. More regular, focused review or follow-up would keep the pressure on railway companies to increase and enhance safety.

Most of the activities about oversight are making sure that railway companies are complying with the requirements, but compliance isn't enough. You have to make sure there's actually an improvement in safety. It's hard to pinpoint, because I think every area might have a different deficiency, depending on things identified in inspections and so on.

It's hard for me to give you a list, but it's about making a more timely follow-up on deficiencies that have been identified.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Following on that, in the audit you did find that Transport Canada did not assess the effectiveness of the railway safety management system, only compliance. This goes back to my second theme, which is the authority of government to ensure that industry is complying, and for the better.

In your opinion, how would that impact measuring rail safety deficiencies?

[Karen Hogan]

I want to make sure I understand the question.

What kind of measures could they look at to measure an increase in safety?

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

That's correct.

[Karen Hogan]

I think the department has put some measures in place, but they're not reporting against certain measures, so actually doing that reporting would be one thing. There could also be correlations between the results of compliance trends that they would see in their inspections against fatality or accident trends, so they could see if there is a correlation between those two. There are many ways that effectiveness of oversight could be measured. It's a matter of defining them, though, that Transport Canada needs to figure out, and then measure them consistently year over year to be able to see trends.

[The Chair, Conservative, Kelly Block]

Thank you very much, Ms. Kusie and Ms. Hogan.

We will now go to Mr. Blois for six minutes.

[Kody Blois, Liberal, Kings—Hants, NS]

Thank you, Madam Chair.

I would like to thank all the witnesses for their testimony and their work here today.

Mr. Keenan, in the Auditor General's report at 5.22, a point is made around guidance to railway companies in terms of the information you're seeking. I think one of the positives from the report and the work that the AG has done is that the department has done a better job of working with railway companies to get relevant information, but it does appear there needs to be some work in giving some guidance about what that information pertains to.

How did Transport Canada go about finding that information? Was it simply some type of correspondence saying we're looking for the following points?

[Michael Keenan]

Madam Chair, the member puts out a really key question that's at the heart of the continuous improvement, the Japanese management system that the previous member described.

Back in 2015, we started establishing a regulation requiring information. The Auditor General has properly noted some inconsistencies in the quality, the format and the timeliness of that information. We need to tighten up on that. We're doing that as a follow-up to the Auditor General's recommendations.

In terms of the specifics we're requiring, I'm going to turn that over to Mr. DeJong in a second to get into it. Before that, I want to make an observation. In essence, in the last few years we've gone through several rounds of digging deeper and getting better information and data and using that to target our inspections, our SMS requirements and audits—

[Kody Blois, Liberal, Kings—Hants, NS]

Mr. Keenan, my apologies. I only have six minutes and I have lots I would like to ask.

[Michael Keenan]

Certainly. I apologize. I'm going on too long.

[Kody Blois, Liberal, Kings—Hants, NS]

Detail is great, but we only have so much time on this committee.

What I'm hearing is that there was an enhanced request for information. I see in the report that the department has committed to standardizing the request for different companies to try to have it in a more standardized way, so I appreciate that.

I want to go to paragraph 5.23. You were starting to segue into this, which is you are collecting the data. The Auditor General's report seems to suggest that the data that was being collected is not correlating into how the department is choosing to go about its inspections on various different railway areas. How does the department determine where it does its inspections?

I heard you mention something about high travel areas and the amount of traffic on the rails, or perhaps riskier areas where there is hazardous material.

How does Transport Canada go about assessing where they inspect?

[Michael Keenan]

There are two things, and I'll be quick.

I think the Auditor General has been balanced in her assessment. She has made the point that we've made progress and improved our risk-based planning for oversight in particular, which is in paragraph 5.20, while pointing out the areas where we have gaps and need to make improvements.

We collect a lot of information through the inspection activities and through the SMS. There is a data-driven risk assessment process that then guides two things.

One is where we target further oversight or where we target regulations. I'll give you an example. In our SMS audits, we've seen some issues around employee training. As we've investigated some incidents, we've discovered problems resulting from inconsistent employee training. We've had multiple points of evidence from our inspections, our audits and even our incidents that say there's an issue with employee training. We've taken that to do two things.

In the follow-up to this report, I look at indicators on employee training on our SMS audits, but we're also in the process of revising and updating our regulations and standards on employee training, because we think we've identified an area where we can—

[Kody Blois, Liberal, Kings—Hants, NS]

Mr. Keenan, I apologize, but I have to keep moving on, so I'd ask you to be more brisk if you could.

[Michael Keenan]

I will. I apologize again.

[Kody Blois, Liberal, Kings—Hants, NS]

Quickly, because I have about a minute and a half, I want to go to the Auditor General.

Is it fair to say that the department is looking at standardization in terms of the time for corrective action but that not all railway companies are created equal, so we should probably create a standard but have some flexibility because each situation is going to be different? Is it easy to create just one standard, or should we try to create an average standard and then have some flexibility depending on the circumstances?

[Karen Hogan]

I don't believe that safety is one size fits all, especially when it comes to railways. You need to consider the terrain, the rail traffic, whether it's in a residential area or not. There are so many factors. You do need to have certain standards, but I think you've described it well. You need flexibility or a recognition of the different risks and different considerations in different areas.

Having at least a minimum standard with follow-up done on a systematic and regular basis is better than having no standard.

[Kody Blois, Liberal, Kings—Hants, NS]

I have about 15 seconds, so I'm going to table this question for you.

You mention in paragraphs 5.21 and 5.48 the idea of trying to measure whether or not Transport Canada's regulations are effective in leading to better safety. You mention that it's complex. If you get the chance in future questions, I'd like you to dig deeper. You do mention that it's difficult, but don't we need to look at it over time to understand whether or not this is actually meeting the outcomes?

I know I'm running out of time. I wish I had more than six minutes. Thanks.