Transport Committee on Dec. 4th, 2013

[Wai Young, Conservative, Vancouver South, BC]

I'm going to look at point number nine in your summary statement. You say in your audit that you concluded that Transport Canada needs to address the significant weaknesses you found in each aspect of the department's oversight of the safety management systems implemented by the federal railway companies. Otherwise, it may not have the assurance it needs that they are effectively managing safety risks on a day-to-day basis.

That's a pretty strong statement and it's quite comprehensive to my mind. What do you mean by it?

[Michael Ferguson]

We mean that the role of Transport Canada is to make sure it has enough information that it is confident the safety management systems in the federal railway companies are operating as they're supposed to. Based on what we saw we felt they have not yet put in place a system that is sufficiently robust to give them the level of assurance they need to know that those safety systems are operating safely.

It's back to the fact that they need to do more work given what their role and responsibility is in this area. They need to do more work to get their level of assurance up about the adequacy of these systems.

[Wai Young, Conservative, Vancouver South, BC]

In point number eight, just prior to this you say that “the audits it did complete were too narrowly focused.”

Is that one of the issues here?

[Michael Ferguson]

Yes, and I think in the report we specifically referred to things like the way they have done their risk assessments.

If risk assessments are not sufficiently broad, if they don't take into account the identifiable potential risks, then you can focus on some things that have gone wrong in the past but you're not necessarily thinking about things that could go wrong in the future. That is what's important and part of why we said their approach has been too narrowly focused. It needs to be a risk-based approach considering what risks the industry faces.

[Wai Young, Conservative, Vancouver South, BC]

Clearly, Transport Canada is responsible for its mandate, which is to look at safety but also at risk. Is that correct?

[Michael Ferguson]

Obviously they are responsible for their mandate. We feel that the best way to oversee safety management systems is to figure out where the biggest risks are, make sure those things are being audited, and make sure your resources are assigned based on those risks.

[The Chair, Conservative, Larry Miller]

Thank you. You're out of time.

Mr. Toet, for five minutes.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you , Mr. Chair.

Thank you, Mr. Ferguson, and your team for being here, because this is definitely something very important.

I did want to start with one item that causes a bit of confusion for me. In your opening statement and your answers to some of the questions regarding the number of audits being done, correct me if I'm wrong, but several times I heard that the number of audits had been determined by Transport Canada, the number they should be doing in their plan. Am I correct in that?

[Michael Ferguson]

Certainly Transport Canada has determined the level of coverage they want and therefore what they need to audit. So yes, that was Transport Canada's decision.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

So they determine the number?

[Michael Ferguson]

Yes.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

On page 23 you have a header that reads, “Too few audits were planned for assessing federal railways' safety management systems”. It seems to be a statement that their plan was inadequate, and yet you've said many times over the course of the testimony today that you weren't assessing whether their plan was adequate or not, that they had just not met their plan.

I'm wondering if you stand by this statement or whether you want to add some clarification to it, because it does seem contrary to the evidence I've been hearing today.

[Michael Ferguson]

The issue that we've raised here is that, of the planned audits they've done, they didn't complete what they had planned to do. That is the issue, the fact that they had planned a certain coverage over a three-year time period and hadn't met that minimum coverage.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

So essentially the header should have read, “Too few audits that were planned were completed”. It just struck me that it seemed to be different than all the testimony I heard, and I just wanted to make sure that I had that right.

I want to confirm the following. Was your audit aimed at determining if the SMS was working effectively?

[Michael Ferguson]

We didn't assess whether the SMS was working or not working; that wasn't what the audit was about. The audit was whether Transport Canada was collecting the information it needed to understand whether the systems were working.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

So your report is essentially, to a large degree, a judgment of the shortcomings of the actual audit process of Transport Canada, and not necessarily an analysis of the actual safety record of rail shipments. You looked very much at their oversight. You didn't really look at what is really happening as far as safety in rail shipments in Canada are concerned.

[Michael Ferguson]

We didn't look at the actual practices of the companies. We didn't look at their safety management systems. We can't comment on how well those systems are operating. What we were looking at was Transport Canada and their role and whether they were collecting enough information to know those things.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

I guess that's important in light of the chart you included on page 6 of your report showing the accidents from 2002 to 2012. It actually shows, in absolute numbers, a decline, and as was pointed out by several of my colleagues across, that was when rail traffic was greatly increasing—yet the accident rate has gone down.

To me, I think that would indicate, to a certain extent at least, that the SMS system has been working. Whether it's perfect or not is not the judgment, but it seems to be the case, based on those absolute numbers, that accidents are going down when volumes have increased dramatically over the same period of time, and thus that there is something to be said for the SMS system actually working.

[Michael Ferguson]

The numbers that we've put in the report are the numbers. They are, I guess, sort of the facts. But I would be careful about drawing conclusions from those numbers, because certainly when you look at some of the more recent accidents, I think you have to factor in the seriousness of these accidents as well as the number of accidents before drawing conclusions just from those numbers.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

We all would agree that we want to eliminate accidents completely if we could. That's the aim. That's also why we're going through the study process to see what we can do to improve the safety management systems, if there are improvements that can be made and how to bring them forward.

I think it's important for the fact to be on the record that this report made absolutely no assessment of the SMS practices or standards of any rail company in Canada. You've really looked at the oversight aspect of Transport Canada and whether they have been doing their job properly.

[Michael Ferguson]

That's right.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

I want to get a little bit into the weeds of the SMS audits. We've talked quite a bit today about the number of audits, that they haven't met what they had set out to do, what their plan was, etc. I wonder if you can give us some specifics on the shortcomings of the SMS audits outside of that, outside of the 26%, which we've talked about a lot today. It would be good to have some specifics that you believe really need to be looked at closely by Transport Canada going forward.

[Michael Ferguson]

I think in the chapter in the report we go through a number of different aspects of how they conduct audits. Again, when you're planning to do audits, the first things that need to be considered are the risks being faced by the organization that you are auditing. As we say, it's things like the routes that the dangerous goods are transported on, or a number of other risks. That will help to focus the audits on the most important things. That's one part of it. That's in the planning area.

We've identified other issues. The documentation of the work isn't always complete, so it's not always possible to know what was done and what was not done.

We identified that senior management is not always involved in the planning of the audit. So senior management, who might have a broader perspective, might be able to provide some input into how to plan the audits.

I think we have a list of weaknesses in their methodology later on in the chapter. We talk about the fact that not all of the auditors have had the training they need to have.

We also talk again about the fact that they haven't looked at what they need to do, how many resources they need, what types of skills they need—so all of those issues of resource planning.

So really in all aspects of the audit function they need to improve how they're conducting those audits.

[The Chair, Conservative, Larry Miller]

Thank you.

We've now completed the first round, and our time will allow us to have one round here with Mr. McGuinty, and two over here. That's going to take us pretty close to the end.

I understand, Mr. Sullivan, that you're splitting your time with Ms. Boutin-Sweet.

[Mike Sullivan, NDP, York South—Weston, ON]

Yes.