Transport Committee on Dec. 4th, 2013

[The Chair, Conservative, Larry Miller]

Is there unanimous consent to extend the meeting?

[Some hon. members]

Agreed.

[The Chair, Conservative, Larry Miller]

Mr. Ferguson and your staff, do you—?

[Michael Ferguson]

We're here at the pleasure of the committee.

[The Chair, Conservative, Larry Miller]

Okay.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you very much, sir, appreciate it.

I guess we can start the clock now.

Thank you, Chair, and my thanks to the witnesses for being here.

There's just so much to talk to you about, Mr. Ferguson. It's hard to begin. Most of your chapter will be shocking for a lot of Canadians, when they read about the state of rail safety in the country. But one of the things that really stuck out was the question of the number of audits that have been completed.

I think you reported that 26% of the audits that were contemplated over a three-year fiscal period were actually completed. Is that in your chapter?

[Michael Ferguson]

Yes, over a three-year period, we found that they had completed 26% of the audits planned.

[David McGuinty, Liberal, Ottawa South, ON]

On that very front, in a previous meeting, I asked the assistant deputy minister of the department about that number.

I want to read it to you, for your consideration, and I'd like to have your response. I asked the following question to Mr. Gerard McDonald, the ADM responsible:

Why would you have set out to achieve so many more audits and do 25% of what you set out? If you set out to do way more than that, did you not do it based on evidence, based on technical projections, based on need, based on safety?

The answer from Mr. McDonald was,

Yes, and based on our estimation of the risk in the system and what was required to give us a degree of confidence on the safety—

I responded with “Absolutely.” He then said,

—we felt at the time that the original number of audits that had been planned for was probably in excess of what was needed.

I was struck by this. I responded by saying,

It's in excess of what's required for safety for Canadians and safety in the system. Is that what you're saying now?

Mr. McDonald replied,

What we're saying is we adjusted our level of audit based on what we felt was necessary on our part to ensure safety in the system.

I can't square this, nor can Canadians. On the one hand, your team has looked at their projections for audits over three years. I assume you must have concluded that the projection of the number of audits required was perfectly reasonable. Then the senior-most official from the department comes to the committee and says, “Well, in fact, the numbers we contemplated doing over three years are wrong.”

Therefore, as the Auditor General, your number, 26%, is wrong as well, because he is now saying, as a matter of testimony, that was the wrong number targeted.

Do you follow my question here? Can you help us to understand how that can be?

[Michael Ferguson]

What we identified was that in their plan they wanted to do an audit of each of the 31 federal railway companies over a three-year-period. Over that period, they were only able to do 26%. We didn't assess whether their plan was reasonable or not. We assessed what they did against what they had planned to do, Transport Canada being the organization that had to determine how much evidence it needed.

If they had made a decision to change how many audits they needed to do, we would have expected to find an analysis that said they don't need to do as many as originally thought. Then we wouldn't have made this conclusion. The reason we came to this conclusion was that they said they needed to do an audit of each of the 31 railway companies over a three-year-period. We looked to see how many were done, and they had done 26%. We certainly didn't have any evidence that they had changed that plan.

[David McGuinty, Liberal, Ottawa South, ON]

You solved the mystery for us.

All members are asking how it can be that a departmental official can come in and simply say, “We had the wrong estimation”. And your answer is, “Well, if that's the case, show us the analysis. Show us how you came to the conclusion that you set out with the wrong number in the first place, over the three years that were contemplated.”

There is no analysis, that you could find, that substantiated his claim that the department reduced the numbers because it had done so based on evidence, based on public safety. This is his testimony, not mine. Therefore, you could not find any substantiation that would backstop Mr. McDonald's testimony that they made a rational decision to reduce the number of audits based on evidence.

[Michael Ferguson]

Again, when we did the audit, we looked to see how many audits they planned to do and how many audits they did do. And remember that in our process of preparing an audit report, we share what we find back and forth with the departments. If they had an analysis that indicated they needed to do fewer, they had many opportunities to show that to us, and then we wouldn't have put the finding in the way it is there.

The reason why the finding is the way it is, is that’s where the evidence led us. That's what they had planned to do and that's what they had done.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Ferguson, can I ask you about capacity?

On rail safety now in the country, we're spending about $32 million a year. I know that's probably not a number that you're following closely. We've cut safety investments in marine safety, road safety, and airline safety quite significantly in the last three years.

It's been about steady on rail safety, but we're spending $32 million a year, which is $8 million less than the $40 million the government is spending on economic action plan advertising. That's another issue. I'll be coming to see you about that with my private member's bill to get that under control.

But I want to get a sense of the capacity conclusions you might have drawn here, because I can't square something else. We see a massive increase in the transportation of oil on rail, and no sign of this decelerating with the contemplated doubling of the exploitation of the oil sands and fixed capacity in pipelines, yet we're told by senior officials that they have all the capacity they need and all the inspectors they need. Nothing has changed. All has remained constant.

I'm trying to understand how that's possible. Can you help Canadians understand? Is there is a capacity problem when it comes to inspections and auditing on rail safety in Canada?

[Michael Ferguson]

Mr. Chair, we didn't conclude on whether there was a capacity problem as such. What we concluded was that Transport Canada hadn't done that analysis to determine how many inspectors they need, how many auditors they need, and how much training they need to get their people in place.

I can't say whether they have enough resources, enough dollars, and enough people. What I can say is that they haven't done the analysis themselves to know how many resources they need to complete the work.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you.

We'll now move to Mr. Watson for seven minutes.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Mr. Ferguson, thanks to you and your team for being here today.

Let me start by first thanking you for the important work you've done with chapter 7 of your report, and the recommendations as well. Transport Canada, as we've heard already today, has accepted all of the recommendations and has done so with some pretty specific timelines.

I didn't see it in the report explicitly, but I sense that if we were to read between the lines, not only did Canadians expect better from Transport Canada, I suspect you did as well, and I know the government expected better too.

For this committee, I'm not going to presuppose the recommendations that will come, because our study isn't complete right now. We've just begun to look at the implementation of SMS in all modes and the transportation of dangerous goods regime, but I sense already that there's a very strong appetite that this committee will want to recommend that it become an ongoing tool of accountability for Transport Canada in its public commitments and timelines, through to their completion.

Moving to the report, audit work obviously is about precision, so I will try to precisely understand what your audit is and what it is not.

Obviously you're aware of the tragic rail accident at Lac-Mégantic this past summer. Your report is not an investigation into the causal factors of Lac-Mégantic or, for that matter, any individual accident or several accidents. Is that correct?

[Michael Ferguson]

That's correct.

[Jeff Watson, Conservative, Essex, ON]

Accident investigation, of course, is the role of the Transportation Safety Board.

Your report makes no causal link between the Lac-Mégantic accident and the comprehensiveness of the regulatory framework for rail safety or, for that matter, any rail accident. Is that correct?

[Michael Ferguson]

That's correct. Certainly, again, we don't investigate accidents. It's not possible for us to draw a direct cause and effect.

[Jeff Watson, Conservative, Essex, ON]

Your report makes no causal link between the Lac-Mégantic accident and the safety management system of the MMA railway company. Is that correct?

[Michael Ferguson]

Again, that's correct. That wasn't the goal of the audit.

[Jeff Watson, Conservative, Essex, ON]

Your report in fact did not audit any safety management system for any rail company. Is that correct?

[Michael Ferguson]

That's correct. What the audit looked at was how Transport Canada assures itself whether the safety management systems of the companies are operating as they should be.

[Jeff Watson, Conservative, Essex, ON]

Your report makes no causal link between the Lac-Mégantic accident and Transport Canada's regulatory oversight. Is that correct?

[Michael Ferguson]

That's correct.