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Opening Statement to the Standing Committee on Public Accounts

Oversight of Air Transportation Safety—Transport Canada

(Chapter 3 - May 2008 Report of the Auditor General)

5 June 2008

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chairman, thank you for this opportunity to present the results of Chapter 3 of our May 2008 Report—Oversight of Air Transportation Safety—Transport Canada. I am accompanied by Mark Watters, Assistant Auditor General, and Alain Boucher, Principal responsible for Transport Canada.

Transport Canada is responsible for promoting air transportation safety, developing regulations, and overseeing compliance. The Department is now adopting a new approach to oversight based on the implementation of safety management systems, or SMS. The International Civil Aviation Organization recommends that all member countries adopt this approach by 2009, noting that the rapidly expanding aviation industry and the limited resources for oversight make it difficult to sustain the existing approach. Transport Canada will shift its primary focus from traditional oversight, such as conducting inspections and audits, to assessing the safety systems that companies have in place.

This audit looked at how Transport Canada has managed the transition to the new approach to oversight to date, with respect to the first sectors implementing SMS: airline operators and associated aircraft maintenance companies. We did not examine the level of air transportation safety in Canada, but rather, the management of the initiative. It is important to note that oversight based on SMS (in other words, evaluation of a company’s SMS, as opposed to oversight based on traditional inspections) will not begin until companies in the first sectors have SMS fully in place. That will be this fall at the earliest. Once implementation is complete in those sectors, other sectors of the industry, including 2,000 small operators and related maintenance companies, will begin their transition. The transition process is thus still in its early stages.

Transport Canada is the first civil aviation authority to put in place regulations requiring companies to introduce SMS. The Department deserves credit for this, and for conducting pilot projects and developing a timetable for implementation.

However, in planning for the transition, Transport Canada did not forecast overall expected costs, and did not formally analyze risks associated with implementation, such as the impact of the transition on other oversight activities. Although resources have been shifted to activities related to SMS implementation, the Department did not measure the impact of this shift. It did not set objectives or a threshold for adjustments to be made to its traditional oversight activities during the period of transition. This means that Transport Canada could not demonstrate to us that it is carrying out a sufficient number of inspections during the transition.

Related to this is the need to develop an integrated human resources plan. With only regional plans and no overall human resources plan, Transport Canada has not identified how many inspectors and engineers it needs both during and after the transition, and what competencies they should have. A reorganization is under way to determine these needs, but it is not expected to be completed until December 2009. Delays in hiring pose the risk that the Department will not be able to recruit the people it needs in a timely manner.

Transport Canada has indicated that its development of a national human resources plan will depend on the Department’s revised Program Activity Architecture, scheduled to begin in 2009–10. We recommend more immediate action. For a transition of this scope, best practices call for planning for human resources needs well before implementation begins. But at Transport Canada, implementation is already under way.

Mr. Chairman, Transport Canada has agreed with our recommendations, but we are not aware of any action plan. Action is important to enable Transport Canada to successfully manage the transition in other sectors of the industry, including 2,000 smaller companies. The Committee may wish to ask Transport Canada for its action plan for addressing the issues we have raised in our report.

That concludes my opening statement. We would be pleased to answer the Committee’s questions.