This Web page has been archived on the Web.

1983 Report of the Auditor General of Canada

Synopsis

13.1 The Department of Transport's Marine Transportation Program involves annual appropriations of over $640 million. The comprehensive audit of the Program focused on the Canadian Coast Guard, the major organizational unit within the Marine Administration. Activities involving the Crown corporations, such as Canada Ports Corporation, St. Lawrence Seaway Authority and the Pilotage authorities were outside the scope of this examination.

13.2 The Canadian Coast Guard's primary responsibility is to promote the safety and efficiency of marine transportation in Canadian waters. In fulfilling this responsibility, it carries out regulatory duties, operates marine navigation aids, provides icebreaking services and conducts marine search and rescue operations. The Canadian Coast Guard is also involved in other activities, such as pollution containment and clean-up and the annual Eastern Arctic supply operations. To carry out these activities, the Coast Guard employs a fleet of 49 icebreaking and aids vessels, 42 search and rescue vessels and auxiliary support craft.

13.3 The services provided by the Coast Guard to minimize loss of life at sea have evolved over time in response to demands from mariners and the public. Determining the appropriate level of service is complicated by the many different geographic, environmental and climatic conditions involved. Furthermore, the needs of commercial shippers, pleasure boaters and fishermen vary according to the sophistication of on-board navigation equipment and the competence of mariners.

13.4 Progress in responding to areas of concern. Over the last decade, many areas requiring improvement have been identified by the Department, central agencies or by public enquiries into marine safety. Our audit highlights areas in which the departmental response has not yet resulted in significant change. In particular we refer to:

- analysing the needs of mariners for services provided by the Coast Guard and defining the appropriate service levels as a prerequisite to justifying requirements for vessels and navigational aids;

- remote monitoring of automated lighthouses and further reduction of personnel levels through unmanning;

- assessing needs and cost-benefits for Vessel Traffic Services; and

- training and development of personnel employed in the Coast Guard fleet.

13.6 Cost recovery. Cost recovery is an important requirement of the Department's strategic plan. In 1981, the Department examined the broad implications of adopting a cost-recovery policy for many Coast Guard activities. Cost recovery could have an important influence on demand for marine services and, as a result, on the levels of service. However, we were informed by the Department that the Government has not yet agreed to the implementation of such a policy.

13.7 Fleet Capital Investment Plan. The Department's Fleet Capital Investment Plan outlines a scheduled approach to replacing the fleet. It indicates that approximately $2.5 billion will be required over 30 years to replace 49 major vessels. Annual funding requirements are based on a target of 4 per cent of the fleet's replacement value. The plan does not include funds for Search and Rescue vessel requirements, which are covered in a separate plan.

13.8 The Department describes the plan as "using a zero-based approach to determine the minimum number of vessels and vessel types necessary to meet requirements." Our concern is that this implies that all fleet-related activities were systematically reviewed to justify vessel requirements, including alternatives for program delivery and definition of levels of service. In fact, the process adopted by the Department assumed that it was appropriate to base its projections on the existing activities of the fleet, reduced by 10 per cent to reflect potential productivity improvements. In our opinion, without defined levels of service, the size and composition of the fleet required by the Coast Guard cannot be adequately related to need.

13.9 We believe that specifying levels of service is a critical step in planning the acquisition of vessels. In addition to incurring a substantial initial capital cost, the Department must continue to spend money on salaries, fuel and maintenance for as long as the ship is in service. We noted that savings are possible in fleet-serviced areas such as lighthouses, buoy checking and maintenance and through improved vessel utilization. If, by defining a level of service and improving efficiency in these areas, the Department found that it could do without certain vessels, it might be appropriate to decommission and not replace them. For each vessel not replaced, the Department would save $3 million to $75 million for the capital cost plus annual operating costs which, over the life of the vessel, usually exceed the capital cost.

13.10 Marine navigation. The Coast Guard has made substantial efforts to provide Canadian mariners with an extensive, reliable and safe system of marine navigation. In the last decade, it has extended VHF communications, increased the number of traditional fixed and floating navigation aids, and added improved aids such as Loran-C, racons and Vessel Traffic Services (VTS). Marine navigation services are provided free to commercial, fishing and recreational vessels. The cost of providing them was $250 million in 1982-83 and will increase to over $300 million in 1983-84.

13.11 We found weaknesses in the Coast Guard's planning, operations and the information used to manage its marine navigation activities. The following paragraphs illustrate where improvements in these areas would permit the Coast Guard to provide either a higher level of service without additional resources or the same level of service for fewer resources.

13.12 The Coast Guard has spent over $100 million on 12 VTS systems. These were established in response to major marine accidents; there was not a sufficient overall analysis of need or assessment of which ports would benefit most. The Coast Guard has not adequately reviewed the continuing need for each of its 272 lighthouses although, at an average annual operating cost of $125,000 each, they are the most expensive aids it operates. It has not assessed the impact of adopting improved electronic aids such as radar, Loran-C and racons on the more traditional aids such as lighthouses or radio beacons.

13.13 Cost savings in the range of $10 million to $20 million annually are possible if the Coast Guard implements the following improvements in its activities:

- completes the Lighthouse Automation Program started in 1970 but which has, in essence, been put on hold;

- revises its standards for checking and maintaining buoys;

- reassesses the continuing need and specific equipment requirements for some of its VTS systems; and

- increases the automation and consolidation of the Coast Guard radio stations.

13.15 Marine safety. Marine safety is best achieved by following a comprehensive and co-ordinated program based on a systematic assessment of risk, and by carrying out an appropriate mix of activities, within resource limits, to minimize the risk.

13.16 Although the Department collects data on the marine accidents it investigates, it does not systematically analyse all these data to monitor relative levels of marine safety by type of traffic and degree of risk. Such analysis could assist the Department in recognizing accident patterns and in planning appropriate and timely action.

13.17 For example, data we obtained from the Coast Guard and the Department of Fisheries and Oceans indicate that the number of accidents involving fishing vessels is increasing at a rate greater than the increase in fishing activity. The Department has not analysed the causes of this trend or determined whether any redirection of effort is required to arrest it.

13.18 Another area requiring improvement is training for marine emergency duties. The Department needs to increase its efforts to assess the preparedness of marine personnel in simulated emergency situations. We noted instances where departmental inspectors concluded that the performance of on-board personnel was less than satisfactory.

13.19 Fleet human resource management. A major departmental study in 1975 identified a number of deficiencies in managing human resources in the Coast Guard fleet. Although initiatives were taken and some improvements resulted, many problems remain. For instance, we noted that although priorities for training and development of ships officers have been identified, current progress in these areas is slow.

13.20 If the Coast Guard is to have enough qualified officers and crew, it must accelerate its plans to attract, select and train personnel. If it does not, it runs the risk of staff shortages as demand for trained marine personnel in the private sector increases with economic recovery.

Audit Scope

13.22 The comprehensive audit of the Marine Transportation Program focused on the Canadian Coast Guard, the major organizational unit within the Marine Administration, accounting for $525 million of the Program expenditures. Activities involving Crown corporations, such as Canada Ports Corporation, St. Lawrence Seaway Authority and the Pilotage authorities were outside the audit scope.

13.23 Our examination covered:

- Marine Navigation and Marine Safety, including how activities are planned and programs are delivered;

- the Fleet Capital Investment Plan, which outlines the Program's long-term fleet requirements;

- the Department's progress in responding to known concerns such as unmanning lighthouses, fleet human resource planning, and the necessity for determining appropriate levels of service for the Coast Guard;

- other program activities in the areas of Icebreaking and the Eastern Arctic Sea Lift; and

- Department-wide services provided to the Program, particularly those provided by the Senior Financial Officer, Internal Audit and Program Evaluation.

Observations and Recommendations

Level of Service

13.26 In our opinion, defining a level of service is one of the critical steps in determining the tools (in the Coast Guard's case, the number of ships, personnel, aids, equipment and other materiel and resources) needed to promote a safe, efficient marine transportation system. Because the Department has not defined a level of service for many of its Coast Guard activities, its ability to plan and control these activities is weakened. This chapter highlights examples of the impact of this significant deficiency.

13.27 In 1974, the Treasury Board first asked the Coast Guard to submit a fleet plan which would identify the kinds and scope of services to be provided and the types, numbers and deployment of vessels required to provide those services. Over the years, this request evolved into a requirement that all plans to invest in capital assets beyond 1981-82 would have to be based on clearly defined service levels. Nine years and two extended deadlines have passed, but the Department has yet to meet the requirement of defined levels of service.

13.28 The Department has to some extent tried to define levels of service for its marine activities. However, attempting to meet a variety of needs simultaneously may make the task unnecessarily complex. We believe the Department should concentrate initially on developing standards that will be useful to operating managers in key activities such as icebreaking and aids to navigation. Work conducted in these areas on one activity at a time could produce benefits within a relatively short time. Statements of levels of service that are useful to operating managers will ultimately provide the basis to meet the information needs of the Treasury Board.

13.29 Cost recovery. Cost recovery is an important requirement of the Department's strategic plan. For many of the services rendered, the Coast Guard could recover part or all of its costs from users. Such provisions would provide some built-in assurance that those using the service place a value on it that is at least as high as its cost. In 1981, the Department examined the broad implications of adopting a cost recovery policy for Coast Guard activities such as icebreaking, dredging, aids to navigation and Vessel Traffic Services. We were informed by the Department that the Government has not yet agreed to implement such a policy.

13.30 When determining an appropriate level of service for an activity, the Department will need to assess the impact of cost recovery on demand for the service.

Fleet Capital Investment Plan

13.32 The FCIP submission noted that it had been "developed using a zero-based approach in determining the minimum number of vessels and vessel types necessary to meet requirements." Our concern is that the Department did not use the normal zero-based approach; it requires two steps that the Department did not take. First, the Department would have had to review the need for all activities involving the fleet and consider alternative methods for program delivery. Second, to determine the number and type of vessels needed it would have had to both specify and justify the level of service it would provide. Instead, the Department based its submission on existing ship-day requirements by type of vessel plus projected increases in demand for certain types of services, such as those generated by growing activity in off-shore oil exploration. Total existing ship-day requirements were then reduced by 10 per cent to reflect potential productivity improvements related to the design of new vessels. Thus the Department has not adequately related the size and composition of its fleet to the need for its services.

13.33 We noted that when Cabinet approved the FCIP in principle late in 1979, it did so subject to the Coast Guard specifying levels of service "before the end of 1981". The Department did not meet the deadline. Nevertheless, it has received Treasury Board approval of $150 million to build two Navaid/Light Icebreakers. Furthermore, under the Special Recovery Capital Projects Program announced in the April 1983 Budget, the Coast Guard received approval for an early start on construction of these and nine other vessels. The total estimated cost of these 11 vessels is $780 million.

13.34 We believe that specifying levels of service is a critical step in planning the acquisition of any major capital asset. For an asset such as a ship, this step is particularly important because of the downstream costs that occur over the life of the asset. For example, in addition to the substantial initial capital cost, the Department must continue to spend money on salaries, fuel and maintenance for as long as the ship is in service. In our opinion, an asset should normally be acquired to provide a specified level of service to satisfy a defined need cost-effectively. Otherwise, the asset may be used just because it is there, and substantial operating costs will be incurred unnecessarily.

13.35 In the current FCIP update, the Department states that the lack of defined levels of service does not affect its current priorities for replacing vessels because every vessel to be acquired over the next five years is an essential part of the "core" fleet. The Department proposes to decommission any vessels then deemed non-essential. The Department told us that it recognizes the importance of identifying non-essential vessels as early as possible and minimizing the risk that the wrong kinds of vessels may be acquired. This risk will be carefully re-examined in the next update to the FCIP.

13.36 In later sections of this chapter, relating to lighthouses and buoy checking and maintenance, we suggest that reduction in the size of the fleet may be possible. In addition, vessel utilization (particularly on weekends) could be improved through alternative scheduling systems to the point of requiring fewer vessels. If, by defining the levels of service and reducing its vessel needs through the efficiency improvements mentioned, the Department found that it could do without certain vessels, it might be appropriate to decommission them immediately and not replace them. For each ship not replaced, the Department would save the capital cost of $3 million to $75 million and also annual operating costs which, over a 30-year life of a vessel, usually exceed the capital cost.

Marine Navigation

Exhibit not available

13.38 The Coast Guard has increased the number and diversity of the aids it offers to navigation. Although it has continued to improve electronic aids, it spends $150 million of the $250 million total on more traditional aids like buoys and lighthouses. This has come at a time when the availability, cost and accuracy of on-board electronic aids have made it increasingly possible for mariners themselves to acquire such equipment and thus increase their safety.

13.39 There are a number of serious weaknesses in planning, operations and management information. If the Coast Guard were to resolve these weaknesses, it could provide either a higher level of safety without additional resources or the same level for substantially fewer resources.

General Findings

13.41 The Coast Guard has not determined levels of service either for its activities as a whole or for individual systems such as buoys. For example, it has not specified how reliable a buoy should be (whether it is in position and functioning), or what mixture of aids overall would provide the defined level of service. The answers to these questions are critical if the Coast Guard is to determine the appropriate number and type of aids, the operating standards and the number of persons and vessels needed to operate the system.

13.42 The Coast Guard has done little analysis of what is an appropriate mix of aids. As a new type of aid is introduced, or improvements are made to existing types, there is a need to assess the impact on the aids already in place to avoid the risk of duplication or overlap. At present, districts and regions which are adding new types of aids and, at times, increasing the number of more traditional aids are doing so without defined standards. Coupled with local public pressures that discourage removal of any existing aids, the result is that new types are layered on existing ones.

13.43 A number of improvements in the operation of marine aids could produce annual savings in the range of $10 million to $20 million. For example, the unmanning of lighthouses could save more than $10 million a year. Changes in the standards and approach to checking and maintaining buoys could generate considerable savings without affecting the level of service. Reassessing need for and extent of existing Vessel Traffic Services systems and automating and consolidating radio stations could also generate sizeable savings.

13.44 The Coast Guard lacks adequate information on the cost of many of its operations. For example, its present cost accounting system does not identify costs separately for fixed and floating aids. It has inadequate data on buoy checking and maintenance costs and no breakdown of costs for manned and unmanned lighthouses. Without this information, the Coast Guard cannot assess the cost effectiveness of either a given type of aid or the operations of a given district. This weakness, coupled with a lack of analysis of user needs, increases the difficulty of detecting, on an ongoing basis, aids that are no longer cost-effective.

13.45 The following sections cover specific findings for each of the major marine navigation systems.

Fixed Aids

13.47 In 1970, the Coast Guard set out on the first phase of a program to automate, unman and remotely monitor its manned lighthouses. In 1978, our annual Report noted that equipment acceptance and organization problems had led to a six-year delay in completing the automation stage and that some lighthouses had still not been automated. In a departmental review of the program in 1981, one major shortcoming cited was the lack of analysis of the continuing need for lighthouses. For example, as more vessels turn to electronic position fixing, the purpose of lighthouses must be re-examined. If a lighthouse is simply being used as a backup at an average operating cost of $125,000 a year, this raises the question of its cost-effectiveness.

13.48 In 1982, the Coast Guard again attempted to determine how to reduce the number of people manning lighthouses. Each of the 272 lighthouses is now automated and can function unattended; however, 234 of them are still manned. To assess the need for manned locations, Headquarters asked each region to justify the continued manning. Directives issued to the regions noted that: "Based on fault reports submitted thus far, the present automatic operation of the lightstations is giving an adequate level of service to the mariner (frequency of outages, lengths of outages, etc.)". The regions have identified 118 stations that could be unmanned. Headquarters is reviewing the results and has indicated that the number to be unmanned should be higher.

13.49 Despite the fact that the unmanning program has been under way for 13 years, we had difficulty obtaining satisfactory cost information. A breakdown of direct and indirect costs for manned versus unmanned lighthouses is not available. Nevertheless, the Coast Guard has indicated that an estimate of annual cost savings of $50,000 per station would be reasonable. Thus, unmanning lightstations would result in annual savings of from $6 million (based on the 118 lighthouses identified in the survey) to $12 million (if all 234 manned locations were included). Offsetting these annual reductions in costs is a one-time cost for new monitoring equipment, which the Coast Guard estimates would range from $8 million to $15 million.

13.50 These savings do not reflect possible reductions in the ship and helicopter fleet. Manned lighthouses now generate 10 to 15 per cent of the need for ship-days and an even larger percentage of the need for helicopters. Thus, unmanning them could generate substantial additional savings through the reduction in the fleet itself.

13.51 The Coast Guard should determine which lighthouses are to be unmanned and develop a timetable to accomplish this.

Department's response: The Department responds that it agrees, and the Coast Guard will continue with this program and determine the lighthouses which can be unmanned. A program for implementation will then be undertaken, including prerequisite financial resources for inclusion in departmental Main Estimates.

Floating Aids

13.53 The Coast Guard Headquarters has not developed any guidelines on where to install buoys and what type to install. Regions and districts make the decision based on their own judgement, local practices and the resources available. As a result, amounts and types of buoys vary considerably from one district or region to another - a variation over and above what environmental conditions dictate.

13.54 We found the same wide variations in the frequency of checking and maintaining buoys. The Coast Guard schedule for checking these aids indicates that they are to be checked for reliability every four months, except in confined waterways, where they are to be checked every two months. However, we could find no analysis of risk on which the checking schedule had been established. There was also no reliability standard.

13.55 We found that more frequent checking appears to have only a limited effect on reliability. In one district that checked buoys every four months, buoys were on position and functioning 96 per cent of the time. In another district, with buoys checked every two months because they were in confined waterways, we noted that the reliability was 99 per cent. In districts which did not meet the schedule, where checking took place at intervals of anywhere from 4 to 12 months, the reliability of the buoys was comparable to those being checked more often. Since the cost of operating a large aids tender can be in excess of $10,000 a day (excluding the capital cost of the vessel), reducing the frequency of checking could result in saving millions of dollars and would not appear to affect the overall level of safety. By way of comparison, the United States checks buoys once every 12 months; a period of up to 8 months between checks is allowed in the United Kingdom. We understand that the Coast Guard has begun a study to review the checking schedule.

13.56 Large aids tenders are expensive to build and operate. We noted situations where the Coast Guard was using small craft to check aids in some districts. For example, in one district, a 20-metre vessel with a five man crew and an average operating cost of $1,000 a day has replaced a larger aid vessel.

13.57 Similarly, some districts have made extensive use of Search and Rescue vessels and hovercraft to check floating aids. This work, if properly scheduled, does not interfere with the primary role of responding to distress calls. Since these vessels are already on station, the only additional cost is the fuel consumed. We noted variations in the extent to which regions used SAR vessels to carry out this secondary role. In 1982-83, SAR vessels logged more than 1,800 hours on aids checking, over half of which was done by one of the five Coast Guard regions. Using the average cost of the aids tender versus an SAR vessel, we estimated the Coast Guard has reduced its operating costs by $1 million annually. We believe that further emphasis could be placed on using SAR vessels, where appropriate, to carry out tasks related to floating aids.

13.58 Coast Guard instructions for painting buoys specify how a buoy is to be painted, but do not specify how often. Different districts follow different procedures. These range from returning every buoy to shore for sandblasting and painting annually, to annual touch-up coats on board vessels with a return to land every six years. In comparison, the United States paints buoys every six years, and the United Kingdom paints them every four years. We also found a wide variation in the replacement of chains used to anchor buoys. Some districts change all moorings every year, some every second year and others only after four years, and then only if required. By comparison, the United Kingdom changes moorings every four years. Because the Coast Guard does not have adequate information on the maintenance costs of buoys, we could not estimate potential savings. Nevertheless, any change in painting and mooring practices that would result in a reduction in ship operation could save millions of dollars annually.

13.59 As indicated earlier for fixed aids, the Coast Guard also has inadequate cost information for managing floating aids. Another weakness that applies to all types of aids is the lack of a systematic review of the continuing need for each type of aid. Although some districts have instituted a cyclical review process, it is mainly directed at conventional aids - the aids that are installed and operated at district levels. There are no guidelines on what an appropriate mixture of aids should be. Such a review needs to cover all types of aids and their effect on the whole marine navigation system.

13.60 The Coast Guard should:

- develop comprehensive guidelines for the installation of buoys;

Electronic Aids

13.62 Loran-C is a highly accurate long-range position fixing system. It offers a wider coverage on both coasts than the systems it replaced and has a reliability of over 99 per cent. Accuracy is limited to one-quarter mile because of the limitations of charting, but the system itself can return a fisherman to within 100 feet of where he set his nets. Loran-C was established in Canada after a detailed review of alternatives. Coverage is currently being expanded. To help mariners convert to the new system, the Coast Guard developed an appropriate information program, held public seminars and conducted demonstrations.

13.63 Racons are devices which, when activated by a ship's radar, send back a return signal that is visible on the radar receiver. The racon, which can be located on a buoy or on land, has a range of about 20 nautical miles. It is very reliable and is an excellent all-weather aid, marking hazards for radar-equipped vessels navigating in confined and open water.

13.64 Radio beacons, which have been in operation for 50 years, enable vessels to fix their position. Although commercial vessels do not use them because more accurate systems are available, recreational boaters do because of the low cost of the receiver.

13.65 We found that the Coast Guard has not determined the extent to which fishing and recreational vessels are using electronic aids. Nor has it determined how the use of electronic navigation equipment might affect the need for more traditional aids such as lighthouses. Increased use of aids such as Loran-C and radar will influence mariners' needs for conventional aids.

13.66 The Coast Guard should assess the impact of electronic aids on the need for traditional aids such as lighthouses.

Department's response: The Department agrees with this recommendation and will establish this process as part of the cyclical review policy of all aids.

Vessel Traffic Services

13.68 The Coast Guard has consistently failed to develop an analytical framework for VTS systems including:

- assessing the need;

- identifying costs and benefits;

- determining the most suitable equipment configuration - radar or just radio; and

- setting priorities for determining where they might be installed.

13.69 There have been a number of significant inconsistencies in approach. For example, we noted that radar-equipped systems are in operation in Placentia Bay, Newfoundland, and Eddy Point, Nova Scotia, where traffic levels are very low and high-risk tanker traffic has either not materialized or has diminished from original projections. On the other hand, the St. Clair and Detroit Rivers, which handle many times the traffic of Eddy Point and as much as the radar-equipped Montreal VTS, have only radio capability.

13.70 The Coast Guard should review the continuing needs for VTS systems and specific equipment requirements of existing VTS systems.

Department's response: The Department responds that this will be undertaken following receipt and assessment of the Bureau of Management Consulting report on VTS services in Canada which is scheduled for completion in 1983.

Coast Guard Radio Stations

- continuous weather broadcasts;

- ice information;

- command and control communications for the Coast Guard fleet; and

- cost recoverable public communications services (ship-to-shore connections to the public telephone system, etc.).

13.72 Although our review did not indicate any inadequacies in the service provided, CGRS has been slow to use available technology that would lead to significant improvements in efficiency. It has recognized this problem and has just completed a major study that assesses significant trends in communication technology and their impact on the Coast Guard.

Marine Safety

Ship Safety Branch: This Branch's responsibilities include developing regulations and standards, inspecting ships, ships' equipment and cargoes, and certifying officers and crews, to ensure compliance with Canadian legislation and with international conventions to which Canada is a party.

Casualty Investigations Division: This Division investigates accidents involving commercial and fishing vessels and their crews.

Emergencies Branch: This Branch is involved in preparation for handling marine pollution and other emergencies.

Search and Rescue Branch: The Branch carries out marine search and rescue work in conjunction with the Department of National Defence and is also involved in educational activities to promote safe practices for recreational boating. Because SAR has been the subject of a number of recent studies, we did not look at its operations in detail.

13.75 Larger and more complex vessels and expanding oil exploration activity off Canada's shores have also posed new challenges for the Department. Moreover, the extension of the fishing limits to 200 miles in 1977 and the growing popularity of recreational boating have added to the demand for services.

13.76 Marine safety is best achieved by following a comprehensive and co-ordinated program based on a systematic and objective assessment of risk, and by carrying out an appropriate mix of activities, within resource limits, to minimize the risk. These include developing legislation and regulations, inspecting vessels, licensing and certification, training, safety promotion and education, providing navigational aids and search and rescue operations. Objective risk assessments, coupled with managerial judgement and experience, assist in evaluating alternatives to achieve improved levels of safety. An analytical approach to risk assessment is well established in other modes of transportation and has been endorsed by the marine community.

Analytical Capability

13.78 The Department has not identified accident patterns which could suggest a redirection of efforts to reduce the likelihood of future accidents. It should be noted that, from time to time, accident data have been analysed for specific studies, such as the 1975 West Coast Fishing Vessels Casualties Inquiry and the recent Cross Report on Search and Rescue. The Department has also done specific risk analysis on new areas such as Arctic development.

13.79 We obtained data from the Department and external sources to illustrate how such data could be useful in managing marine safety. We noted, from data gathered by the Coast Guard, that although the number of deaths related to Canadian fishing vessels has been declining generally, both the number of accidents and total vessel losses increased significantly from 1977 to 1981. The Coast Guard pointed out that increased activity as a result of extending the fishing limit to 200 miles in 1977 should be taken into account when interpreting the data. We therefore used the Department of Fisheries and Oceans annual statistics on the number of fishing vessels registered in Canada.

13.80 Using these data, we developed a number of potential indicators for the relative safety of fishing vessel traffic. Exhibit 13.2 shows that the number of deaths per 1,000 registered fishing vessels declined during the 1977-1981 period, while the number of accidents and number of total losses per 1,000 registered vessels have more than doubled. We believe there is a need for the Department to collect and analyse such data on an ongoing basis to determine areas where corrective measures may be required.

Exhibit not available

13.81 The Department should develop analytical procedures for monitoring the level of safety in all major areas of risk, identifying situations requiring redirection of effort, and improving its information base for responding to external pressures.

Department's response: The Department agrees with this recommendation and notes that full implementation of this recommendation must be considered long term. However, a study will be started late 1983 with the objective of developing the necessary information systems and analytical capability.

Coast Guard - Ship Safety Operations

13.83 The Canada Shipping Act allows the Department to charge ship owners for carrying out these inspections. Also, one of the Department's objectives is "to recover the costs of departmental facilities and services that are provided in support of Marine Transportation requirements." We found that, in spite of this, the Department did not regularly update its fee schedules to reflect cost increases, with the result that its cost recovery rate for ship inspections has declined over the last decade from 20 per cent to only 7 per cent. Had the Department maintained even its 20 per cent cost recovery rate, it would have collected more than $10 million in additional revenues over the past 10 years.

13.84 In 1979, the Department proposed a plan to increase fees for ship inspections. The plan called for a series of increases over a five-year period to achieve full cost recovery for its services. However, the Department told us that, because of adverse public reaction, the plan had to be withdrawn. In 1982, the Department virtually doubled all major fees. A regular review of fees would prevent the need for such large increases. However, further increases over the next two years are limited under the Government's 6 and 5 program.

13.85 The Department should regularly review fees for all ship inspection services for which charges are levied, to ensure that planned levels of cost recovery are maintained.

Department's response: The Department responds that this review will be done commencing in 1984.

Marine Personnel Training

13.87 The public inquiry following the 1979 fire on the Cartiercliffe Hall indicated that inadequate emergency training for crew members was a critical factor in the loss of life. The Commissioner of inquiry recommended that "marine emergency duties courses be set up under the aegis of the Coast Guard." Following this, the NACMT increased its emphasis on marine emergency duties training.

13.88 The Department is seeking more funding for its marine training program and points out that, to improve the performance of personnel in emergencies, the efforts of federal and provincial governments, vessel owners and operators, ships officers and crew and unions must be co-ordinated.

13.89 Recently the Department has, in certain areas such as the Great Lakes, increased its emphasis on drills to assess the preparedness of marine personnel in simulated emergency situations. During our audit, we asked the Department's inspectors to call for emergency drills on board Canadian ships. In certain instances, the inspectors concluded that the performance of the personnel was less than satisfactory.

13.90 The Department should increase its efforts to assess the preparedness of marine personnel in simulated emergency situations to ensure that marine training programs are achieving their objectives.

Department's response: The Department answers that it is in agreement with this recommendation. The Coast Guard has implemented a program of witnessing additional fire and boat drills on classes of ships which have been adjudged on a risk analysis to constitute a relatively higher risk to lives in these contingencies.

Foreign Flag Vessel Compliance with Canadian Regulations

13.92 The Department should review the level of foreign flag vessel compliance with Canadian regulations and take action, if necessary, to improve compliance.

Department's response: The Department agrees and will undertake a review commencing early 1984.

Foreign Flag Oil Rigs

Search and Rescue

13.95 Search and rescue has been the subject of a number of major studies in recent years. The latest was a Cabinet-directed study that resulted in a report tabled in the House of Commons in December 1982. The report dealt with the significant areas related to search and rescue. It made more than 50 recommendations for improving management, for planning operations and for reducing the number of search and rescue incidents. Certain recommendations are specifically directed at pleasure craft and fishing vessels, which account for most marine search and rescue incidents. The importance of safety education and promotion is emphasized.

13.96 The Government has stated that it has accepted virtually all the recommendations and has already begun to implement them.

Icebreaking

13.98 The need to provide icebreaking services has not been analysed in terms of either economic benefits or meeting other objectives, such as flood prevention. The Coast Guard has also not defined levels of service to be provided. Accordingly, the Coast Guard has no objective basis for deciding how many icebreaking vessels it needs, and how best to deploy them to make optimum use of resources.

Eastern Arctic Sea Lift

13.100 Over the last five years, expenditures for non-government shipments totalled $6 million. The Department extends credit to shippers from funds appropriated by Parliament for operating expenditures. We noted that, as of 31 March 1983, there were outstanding receivables of $3.2 million related to the Arctic resupply operation. Of this amount, $2.1 million was due from a carrier on behalf of which the Government incurred expenses for alternative delivery of cargo because of ice conditions. This amount is currently under litigation. A further $500,000 related to years prior to 1981, and it is doubtful that it will be collected. The Department has told us that in future it will not provide services unless it receives payment in full for all past services. It has also stated that it is negotiating with major shippers for an advance payment of 50 per cent at the time of loading.

Fleet Human Resource Management

- fewer young officers aspiring to senior positions at sea;

- heavy demands for both deck and engine disciplines generated by off-shore energy projects;

- the need to subordinate personal human needs and wants to the operational needs of keeping the ships at sea; and

- changing lifestyle demands, which have lowered the average expected length of careers at sea from about 14 years in the 1950s to 8 years in the 1980s.

13.103 We reviewed the progress since 1975 in responding to the problems identified in the areas of training and development of ships' officers, recruitment, selection, training and retention of ships' crews, and also reviewed certain vessel scheduling and utilization problems.

Training and Development of Ships' Officers

13.105 Priorities for training and development of Coast Guard ships' officers were identified in the 1975 study, and the Fleet Integrated Management Concept was adopted as the solution. However, we noted that recent activities in training and development have not been at the rate established by the Department as necessary to ensure the required technical competence of officers. For example, the study indicated that a desirable level of training would be 23 days a year for officers. We noted, however, that actual training level in 1982-83 was only 7.1 days.

13.106 Insufficient commitment to training has resulted in these low training levels, undermining the intent of the fleet integrated management concept. As a consequence, there is a continued shortage of qualified senior ships' officers. If these conditions are permitted to prevail over the five years projected for the concept's implementation, the Coast Guard will find it difficult to ensure an adequate number of qualified ships' officers for its fleet.

Recruitment, Selection, Training and Retention of Ships' Crews

- the Coast Guard has found the qualifications and suitability of candidates of ships' crew, in many cases, to be less than required;

- many of these candidates regard their employment as short-term rather than as a possible career, and their motivation and morale were described as low; and

- attrition rates are high.

13.109 At the time of our audit, management had formed a task group to further study and devise an implementation plan to improve the quality of the ships' crews so as to upgrade qualifications, improve retention and provide a higher number of officers from this source. However, initial plans include a projected timeframe of three to five years for this initiative. The training level for crews in 1982-83 was 3.8 days - a level of 10 days is identified as desirable by the Department. Comments made earlier about the protracted implementation period for training and development of ships' officers apply equally to the issue of providing adequate ships' crews. If means are not found to accelerate initiatives in both these areas, the Coast Guard may find itself hard-pressed to realize its stated intent of achieving adequately manned vessels throughout the fleet.

Vessel Scheduling and Utilization

13.111 The Coast Guard is carrying out two pilot projects to address these problems. It is testing different scheduling systems to determine how best to provide officers and crew with regularly scheduled time off and training. This could also improve vessel utilization. At present, certain vessels are worked on a five-day week (Monday to Friday). Thus, approximately 25 per cent of available vessel time is unused, unless overtime is incurred. If these pilot projects produce an improved scheduling system, the Department could realize long-term benefits through improved morale, better training and lower attrition of officers and crew. In addition, significant savings could result from increased vessel utilization, thereby reducing the number of vessels needed to deliver the Coast Guard's programs.

Departmental Common Services

Role of the Senior Financial Officer

13.113 We found that, although the SFO scrutinizes the financial implications of all major program initiatives, this review was not always effective. Deficiencies we noted relating to the Fleet Capital Investment Plan and the introduction of Vessel Traffic Services were not brought to the attention of the Deputy Minister.

13.114 We also noted an instance in which certain central agencies authorized terms for a payment of $20 million to a Crown corporation from a departmental appropriation. This payment was knowingly made in advance of proven need. The SFO was not made aware of this unusual transaction. Therefore, he did not have the opportunity to examine the propriety or other implications of the payment.

13.115 The SFO has been involved in a number of projects to develop financial and management information systems. The Department has told us that it will be looking into the many instances in which adequate cost information is lacking. Recently, it has also taken steps to reinforce the SFO's role in reviewing and controlling the financial aspects of the Marine Transportation Program.

Internal Audit

13.117 For the Marine Transportation Program, we found that, from 1978 to 1982, many internal audits and operations reviews were oriented toward examining individual organization units. Many audits concentrated on administrative areas such as financial, personnel and materiel management systems. Many operations reviews of the Canadian Coast Guard examined its management and operating practices, and the reports provided useful information on these subjects to the Marine Administrator. For example, the reports pointed out weaknesses in the planning process, such as undefined levels of service. Others indicated the need for Headquarters guidance in developing operating standards and procedures for many of the Coast Guard's activities. However, significant management issues in marine navigation, safety and capital investment in the fleet were not examined on an activity-wide basis.

13.118 Thus, these results were not reported to the Deputy Minister in a way that revealed their full financial and other impact. This made it difficult for the Deputy Minister to appreciate the full significance or the urgency of weaknesses identified by internal audit. Consequently, Internal Audit did not provide the Deputy Minister with the kind of information required about the way the Marine Transportation Program is managed.

13.119 Follow-up on previous recommendations. The Department has taken a number of steps to improve its internal audit in response both to the recommendations in our 1978 and 1982 Reports and to recent comments by the Comptroller General. We were informed that many improvements in the internal audit planning, evidence gathering and reporting processes have been initiated. Furthermore, in consultation with the Comptroller General, a re-organization of the internal audit function has been implemented.

Measuring and Reporting Program Effectiveness

13.121 Program evaluation. The responsibility for conducting program evaluations, which would, among other things, assess the effectiveness of Transport Canada's Programs, was assigned to the Program Evaluation Branch, initially in 1975. This mandate has since been reaffirmed on two occasions, most recently in March 1983. Although the Program Evaluation Branch has conducted a number of studies of marine activities, we consider that they were either management or operational reviews. The Branch has recently completed a feasibility assessment for evaluating floating aids to navigation. However, no program evaluations of the Marine Transportation Program have been completed.

13.122 Performance measurement. Responsibility for monitoring performance was assigned in 1976 when the Department required that indicators for performance measurement be developed. The Canadian Marine Transportation Administration (CMTA) has initiated the development of such indicators for the activities of the Canadian Coast Guard. However, at present, information on the impact of CMTA's activities in terms of the safe and efficient movement of marine traffic is not collected, analysed and reported routinely and systematically to keep the Deputy Minister informed of the overall effectiveness of its activities.

Departmental Expenditure Plan