Transport Committee on Dec. 4th, 2013

[The Chair, Conservative, Larry Miller]

We'll call the meeting to order.

I'd like to welcome our witnesses here today: Mr. Laplante, Mr. Ferguson, and Mr. Chouinard.

With no further ado, I'll turn it over to you.

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

Thank you.

Mr. Chair, thank you for this opportunity to discuss chapter 7 of our 2013 fall report on the oversight of rail safety.

Joining me at the table are Maurice Laplante, assistant auditor general, and Régent Chouinard, principal, who were responsible for the audit.

The primary responsibility for the safety of day-to-day rail operations rests with federal railways. Transport Canada is responsible for the regulatory framework required for rail safety in Canada. It is also responsible for overseeing whether federal railways have complied with that framework, and for taking enforcement action when necessary.

We examined whether the department has adequately overseen the management of rail safety risks by federal railways. We focused on Transport Canada's regulatory framework, oversight activities, human resources and quality assurance program. We did not examine the safety of Canada's rail industry or the safety of the railways' operations. Our audit was not an investigation into the tragic accident at Lac-Mégantic, Quebec, or any other rail accidents.

Transport Canada has implemented a regulatory framework for rail transportation that includes a safety management system approach for identifying, analyzing, and responding to rail safety risks. It has made progress in working with federal railways to implement such systems. For example, it published guidance on safety management systems in 2010 and 2012. It has also made progress in addressing many recommendations from the 2007 Railway Safety Act review and those of the Standing Committee on Transport, Infrastructure and Communities.

However, despite discussions with the industry and progress over the past 20 years, a number of long-standing and important safety issues remain, including trespassing, grade crossings, and the implementation and oversight of safety management systems. It's taking too long to resolve them.

We found that Transport Canada has conducted many inspections and some audits to identify non-compliance with rail safety regulations, rules and engineering standards. However, the department is missing key performance and risk data to target higher-risk railways and the most significant safety risks.

Fourteen years ago, Transport Canada recognized the need to shift from an inspection-based oversight approach to one that integrates the oversight of safety management systems. This shift is still ongoing, much work remains to be done, and the transition is taking too long.

Transport Canada has done only 26% of its planned audits of federal railways over a three-year period, and the audits it did complete were too narrowly focused. At that rate, it will take many years to audit all the key components of safety management system regulations, including the key safety systems of each of the 31 federal railways.

We concluded that Transport Canada needs to address the significant weaknesses we found in each aspect of the department's oversight of the safety management systems implemented by 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.

Mr. Chair, we're pleased to report that Transport Canada agreed with our recommendations. The department expressed its commitment to implement all of them by early 2016. Transport Canada shared its action plan with us late last week, but we have not had the opportunity to review it yet.

Transport Canada needs to have robust reporting on its actions and be accountable for progress made against the plan. Your committee may wish to explore the progress made since we completed our audit work, including on the adequacy of Transport Canada's action plan and timelines to address the issues raised in this chapter.

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

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. Ferguson.

I'll now turn it over to Mr. Mai for seven minutes.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you, Mr. Chairman.

Thank you, Mr. Ferguson, and also the members of the

Office of the Auditor General of Canada.

You mentioned that just 26% of planned audits had been done. That means 74% were not done. What repercussions does that situation have? What happens if railways' activities are not audited?

[Michael Ferguson]

The department identified their need to audit each of the 31 federal railway companies over a three-year time period. What we identified was that in that time period they were able to do only 26%, and even of the 26% of audits they completed, we found there were weaknesses in how the audits were completed.

Their plan—and I think that's the important point, that it's their plan, that it's what they have said they need to do to have adequate assurance that the safety management systems of the railway companies are in place—is to be able to do the audits of all 31 of those companies over a three-year time period. They haven't been able to do that, so the end result is that they can't have enough information to make sure the safety management systems are in place as they're supposed to be.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Could you tell us how many inspectors would be needed to get all the audits and inspections done effectively and on time?

[Michael Ferguson]

They said they needed 20 inspectors and we've identified that they have 10. But they haven't actually done a complete analysis based on their audit methodology. They need to define their audit methodology better before they can actually know how many inspectors they will need.

Again, we identify in here that they said they need 20 but only have 10. But they need to do that analysis.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

In 2011, the Office of the Auditor General of Canada reported that “Transport Canada lacks a consistent approach to planning and implementing compliance activities.” I believe you're pointing to the same problem today.

[Michael Ferguson]

I'll ask Monsieur Chouinard to respond.

[Régent Chouinard, Principal, Office of the Auditor General of Canada]

I would just need a clarification. I believe you are referring to a chapter in the 2011 report on safety. Was it the chapter on aviation safety or the one on the transportation of dangerous products?

[Hoang Mai, NDP, Brossard—La Prairie, QC]

It was in chapter 1, on the transportation of dangerous products.

[Régent Chouinard]

That's a separate sector at Transport Canada. Today, we are presenting our report on the sector responsible for railway safety. Therefore, we cannot answer that question.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Turning back to the safety management systems, I would like to know this. If there aren't enough inspectors to check the systems in place and ensure everything is satisfactory, how can we sanction the offending railway companies? Is it possible to do that?

[Michael Ferguson]

In terms of putting in place sanctions, that's really a question the department would have to respond to, on how they can manage that.

Again, though, what we identified was that they have about 110 inspectors in total, and only 10 of those inspectors are at the level they need to be at in order to conduct audits rather than inspections. How many actual auditors they need, I don't know. It's a whole issue about their human resource management.

They have a certain number of people, and those people are trained to do inspections. They need a certain number of people who can do audits. There's a distinct difference between inspections and audits. Again, they need those trained people to be able to conduct audits so they can get the assurance they need, and then follow up with the rail companies to make sure they're putting in place the improvements they need to do.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

You also mentioned problems as far as inspector training was concerned. Could you please elaborate on that?

[Michael Ferguson]

I'll start, and Mr. Chouinard will follow up.

Essentially, we identified the need to train the inspectors to move into the new process of auditing the safety management systems, and we found that not all of the inspectors and not all of the managers had received that training.

I'll ask Mr. Chouinard for more detail.

[Régent Chouinard]

Transport Canada identified that, to be able to do audits, they would have to go through risk management and SMS training. We found some gaps in the training of managers, and also in the training of inspectors, some of whom lacked the ability to do audits in addition to inspections. At the time we reported, about 40% of inspectors needed to take the training necessary to conduct audits.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Did you check whether the Transportation Safety Board of Canada had looked into that?

[Michael Ferguson]

That's not something we dealt with in the audit.

[Régent Chouinard]

We did not audit the Transportation Safety Board as such, but as part of our audit we looked at how Transport Canada responded to the recommendations. The Transportation Safety Board reported publicly how they feel Transport Canada responded to the previous recommendations. We reported that 90% of the recommendations had been fully addressed by Transport Canada—that was an assessment made by the TSB. But that left 10% of the recommendations that had not been fully addressed, according to the TSB. That's what we reported.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Would you kindly give me a quick answer, as I don't think I have much time left.

[The Chair, Conservative, Larry Miller]

Sorry, you are out of time. We may get back to you.

We now move to Mr. McGuinty.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Chair, just before starting the clock, can I raise a quick point of order?

Given that we're all here with the Auditor General and his team, would it be possible to extend this meeting for a full two hours? I was under the impression, even from our calendar grid that was distributed during our last working meeting, that this was going to be a two-hour meeting. I'm just wondering whether the witnesses would be able to stay for the full two hours today. We have the meeting room, we have the interpretation, we have the members. Just as a point of order, I wonder if we could do that.

[The Chair, Conservative, Larry Miller]

First of all, that would be up to the committee as a whole, and my understanding was that the AG and staff agreed to be here for an hour.

[David McGuinty, Liberal, Ottawa South, ON]

Can we ask the witnesses whether they're prepared to stay a little longer, and then canvass the committee very quickly? I think we would all benefit from the richness of the testimony. I'm sure all members from all sides have a lot of questions for the Auditor General.