I now declare this 23rd meeting of the Standing Committee on Public Accounts in order.
Colleagues, as you can see, we have guests with us today to give testimony on the report we're reviewing. Beforehand, if I may, I will ask for the indulgence of our guests to give me a moment to do a little quick business. I think that would then negate any need for us to have a follow-up business meeting at the end.
Today, obviously, we're here doing chapter 7 of the fall 2013 Auditor General's report. There was another hearing scheduled for Monday, which we cancelled, and we are trying to reschedule that one for next Monday. We had an open date on the calendar and we're good from the AG side. We're still waiting for confirmation from the department involved.
Upon receiving confirmation that they can be here, we'll go ahead and schedule that meeting, as we had agreed to earlier. If we get a no-go answer, then I would suggest, colleagues, that we flip that meeting from a hearing meeting into report writing. We have a number of reports to go through, so we don't need to lose any time. If you're in agreement, that's what will happen going forward.
For next week, though, we do need to do some scheduling, because we don't have anything scheduled after next week. We have a lot of work. We just haven't sorted it out yet. We will need to do that.
Also, just as a reminder to everyone, next Tuesday, May 6, Mr. Ferguson will be releasing his spring 2014 report. You will recall that on the day it's released we will be meeting here at nine in the morning informally, in camera, to receive a briefing a couple of hours prior to the report being tabled in the House.
As you'll recall, that's an invitation to all members of Parliament, so it includes all members of the House as well as the Senate. I want members to remind themselves that it is actually the Auditor General's meeting, and the chair of our committee chairs it at the request of and as a matter of convenience on behalf of the Auditor General. At 10 a.m., when the report is tabled in the House, we will open the doors, and that ends that.
The next day, we'll receive the report publicly. At that time, all chapters are up for discussion and presentation by the Auditor General. Subsequent to that, our responsibilities as a committee will be to decide which chapters of that report we're going to have hearings on, and then, of course, to decide the process of scheduling those hearings and holding them.
If colleagues are good with the status of our work plan and our business—I see no interventions, so I'll assume everybody is good with that—then I will turn us to the matter at hand.
Today, on chapter 7 of the 2013 Fall Report of the Auditor General of Canada, “Oversight of Rail Safety”, we have with us, of course, the Auditor General. We also have with us Madam Lévesque, the deputy minister from Transport.
I'll ask each of you to introduce your delegation when you take the floor.
Unless there are any last-minute interventions—and I see none—we will now begin the hearing.
Therefore, Mr. Ferguson, welcome. It's good to have you here, sir. Condolences on your recent loss.
You have the floor, sir.
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 is Régent Chouinard, principal, who was 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 report 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 in 2012. It has also made progress in addressing many recommendations from the 2007 Rail 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 is 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 audited only 26% of the federal railways that it planned to audit 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 of 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 are pleased to report that Transport Canada agreed with our recommendations. Transport Canada has shared its action plan with us and it includes actions for each of our recommendations. The department expressed its commitment to implement all of them by early 2016.
This concludes my opening remarks. We would be pleased to answer any questions the committee may have. Thank you.
Thank you very much, Mr. Chair. No offence. I hope it's not a harbinger of things to come.
I thank the committee for the opportunity to talk to you today. As you mentioned, Laureen Kinney is with me as the newly formally appointed assistant deputy minister for safety and security, but has been in the portfolio and the business for a long time. I also have Luc Bourdon with me, who is the director general for rail safety and is a very experienced manager of safety issues.
The Auditor General’s report identifies major priorities for Transport Canada to improve its rail safety oversight. It identifies some areas that Transport Canada could further improve upon, and we accept all the recommendations made in the Auditor General’s report.
Our efforts to strengthen the rail safety program and to address the Auditor General’s recommendations, have led to the development of an accelerated action plan. Work has already begun on its implementation. Most action items are to be completed by fall 2014 and the entire action plan is expected to be fully implemented by fall 2015. Putting the action plan to work is a departmental priority for the coming years.
I would first like to take a few minutes to explain what a safety management system, or SMS as most call it, is exactly.
A safety management system is a formal framework that helps railway companies integrate safety into their day-to-day operations. It encourages the development of a safety culture throughout all levels of an organization and ensures that safety is considered a factor in all decision-making in the business.
The safety management system approach is not deregulation or self-regulation. In fact it helps organizations comply with regulatory requirements and demonstrate their commitment to the safety of their employees and obviously their whole operation. Key elements of safety management systems for railways include the development of safety goals and performance targets; risk assessments; clarification of rules, responsibilities, roles, and authorities in respect of safety; and development of rules and procedures in monitoring and evaluation processes.
Companies have a wide range of options for compliance within the regulatory requirements and are encouraged to identify means of compliance that are in keeping with the regulations and tailored to specific company circumstances.
In the past, railways and many other safety-critical industries pursued safety through compliance with prescriptive rules and regulations. As safety research progressed during the 1990s, it became clear that compliance tools and regulations alone were insufficient to ensure the highest possible level of safety. What companies really needed for a truly effective safety regime, in addition to specific prescriptive regulation, was a proactive, systemic approach to safety that allowed them to proactively identify hazards and mitigate risk in order to prevent accidents. This approach also allowed lessons learned from minor incidents in day-to-day operations to input into the system, thereby creating a state of continuous safety improvements with more likelihood of avoiding accidents in the first place.
In short, SMS is predicated on moving away from a finite and fixed risk mentality to a greater focus on systemic issues, from being reactive to becoming proactive, from simply measuring by the number of interventions to being really focused on the results, and from only inspecting individual elements to also auditing the whole system. The benefits of a more advanced approach were recognized during the Railway Safety Act review in 1994. Amendments were introduced in 1999 requiring railway companies to develop and implement safety management systems.
When the Railway Safety Management System Regulations came into force in 2001, they were the first of their kind in the federal transportation sector. They were created with significant industry input and emphasized the railways’ responsibility for safe operations.
These regulations were not intended as a replacement for existing rules, regulations and inspection practices. On the contrary, they were implemented as an important complement to other forms of rail safety oversight, which is how they remain today.
That being said, there is always room for improvement, and I am happy to share how Transport Canada is addressing the recommendations of the Auditor General.
On the regulatory framework, the report recognizes that Transport Canada has kept abreast of safety issues and it has made significant progress in implementing recommendations from the Railway Safety Act and the Standing Committee on Transport, Infrastructure and Communities, but notes that more work needs to be done, and we agree with that.
We remain committed to addressing all remaining relevant recommendations, and we have developed a detailed plan to complete their implementation.
We are accelerating the development of several regulations to further strengthen the rail safety federal regulatory regime. Our intent is to pre-publish the proposed regulations of top priority in the Canada Gazette Part 1 before Parliament rises for the summer break in June 2014. In fact, as part of Transport Canada's accelerated plan, the department has already pre-published two proposed regulations in the Canada Gazette Part 1: the grade crossings regulations on February 8, 2014, and the railway operating certificate regulations on March 15, 2014.
The department has also established a formal process to assist with addressing safety issues on an accelerated basis. The department's rail safety integrated gateway data system will track and monitor progress on safety issues from the time they are identified to the point they are mitigated to an acceptable level.
In addition, the department will continue to work with the Advisory Council on Railway Safety and its working groups to mitigate safety Issues. As a matter of fact, following Lac-Mégantic we have already had specific meetings and follow-ups with them to address safety issues.
On the planning side, to respond to the Auditor General's recommendations Transport Canada is undertaking a review of its risk-based planning process with a view to ensuring our audit and inspection activities are focused on areas of highest risk, including railway companies' compliance with the regulatory framework. From the results of the review, the risk-based planning process will be enhanced and will provide the basis for the number of annual audits and inspections.
Resources will be allocated accordingly, keeping in mind the need for the rail safety program to complete a sufficient number of audits and inspections to provide assurance that the federal railways have implemented adequate and effective safety management systems to comply with the regulatory framework.
By fall 2015, according to our plan, the department will have identified key safety risk and performance indicators and specific safety performance information that it requires from railway companies. It will have developed the regulatory requirements outlining the specific safety performance information required from railway companies, and will have communicated this information to federally regulated railways. It will also collect risk and performance information on an ongoing and systematic basis. In that respect, we have regulatory initiatives to ensure we have the instruments to do that. It will review the information to ensure it is both reliable and complete, and analyze information gathered and taken it into account when preparing annual oversight plans.
To this end, Transport Canada' s rail safety program in headquarters and the regions will together monitor the implementation of the annual oversight plans and, if necessary, adjust plans and calibrate planned inspections and audits in response to emerging risks to ensure that plans provide for adequate coverage.
Regarding the conduct of oversight activities,
Transport Canada will use its Rail Safety Integrated Gateway data system to address the Auditor General’s recommendations on conducting oversight activities. This system was developed to provide inspectors with the tools needed to document, analyze and report on the results of their oversight activities.
To enhance its systems-based approach to oversight, Transport Canada will amend the current Railway Safety Management System Regulations. That is in keeping with the new Railway Safety Act that was passed and came into effect last spring.
In addition to existing measures requiring a railway company to address deficiencies within its safety management system, the amendments would also require the railway company to document the results of the activities undertaken to implement and monitor the corrective actions taken.
Transport Canada also has a detailed action plan in place, which includes measures to enhance its oversight activities. Under this plan, the department is updating and developing tools, processes and guidance materials as well as delivering training to ensure that oversight activities are conducted consistently following established processes and procedures.
In order to achieve this, we will meet the following deadlines.
By next spring, we will have developed, documented, and communicated a management review process for rail safety oversight activities. The process will define roles, responsibilities, and accountabilities for both management and inspectors. We will have included performance expectations in managers' annual performance agreements.
By next fall, we'll have developed the follow-up procedures for audits and inspections and will have begun tracking follow-up activities in our railway data system.
By the spring of 2015, we will have updated the inspection procedure to refine the expectations.
To ensure the methodology is consistently applied, training and guidance on all new initiatives will be provided to managers and inspectors on a timely basis.
With regard to human resource planning, we continually analyze our workforce, and we work to recruit and retain staff to make sure we have the resources where they're needed to provide the greatest safety benefits. We have a highly dedicated professional corps of inspectors, which I personally meet with on a regular basis here in Ottawa and across the country.
Transport Canada developed a human resources strategy that will identify the inspector skills and competencies required in a systems-based approach to oversight. It will also include an assessment of skills and competencies found in its current workforce and an assessment of the gaps, if we find any. The assessment will form the basis for inspector training, recruitment, and retention strategies that will ensure the rail safety program has the required staff with the skills and competencies it needs to plan and implement its oversight activities.
Targeted timeframes for mandatory training will be established and monitored on a regular basis to ensure that training required for inspector credentials for oversight activities is taken in a timely manner.
The department will also put in place additional measures. In fact, I shouldn't say “will”: we have put in place additional measures that require all inspectors to update their conflict-of-interest declarations every two years and submit new declarations whenever circumstances change. The railway safety program validates on a regular basis that inspectors have complied with this requirement, if instituted in a departmental cycle, to ensure that they maintain their independence and objectivity.
In terms of quality assurance, Transport Canada Rail Safety has a comprehensive quality management system that includes directives, procedures and processes and a quality assurance program to identify any gaps and best practices.
Transport Canada Rail Safety has developed a risk-based approach to prioritizing internal assessments as part of its established quality assurance plan, which includes regular evaluations of audit and inspection procedures.
A three-year plan for conducting quality assurance assessments, based on risk, has been established and includes periodic assessments of oversight activities, including audits and inspections.
Rail Safety has scheduled a quality assurance assessment of oversight activity on the inspection procedure to be completed by next fall.
We certainly recognize that we need to continue to improve our program, and we certainly take to heart the message. We're making progress, but we need to accelerate the pace of progress.
Last week, Minister announced multiple decisive actions that Transport Canada is taking to address the Transportation Safety Board of Canada's initial recommendations regarding the ongoing investigation into the Lac-Mégantic train derailment. As we speak, and as people may be aware, there's an ongoing incident in the U.S. involving another derailment of crude oil, in Lynchburg, Virginia. Obviously, we are working continuously with our American counterparts to ensure we share as much information as possible, both to keep our regimes integrated and to benefit from learning about everything that happens in North America.
These actions, in combination with the Transport Canada rail safety action plan presented to you today, not only demonstrate the department's commitment to improve railway safety in the transportation of dangerous goods by rail, but also will further strengthen Canada's regulation and oversight of rail safety and the transportation of dangerous goods.
The Auditor General's report certainly confirmed that the issues we have identified and the actions we are beginning to take are the right ones, which makes us confident that in the coming years we will respond to the Auditor General's recommendations and contribute to Transport Canada having a strong, risk-based safety program. This will ensure that the Canadian railway system remains one of the safest in the world and one that Canadians can trust.
Thank you, Mr. Chairman. Obviously we welcome questions from committee members.
My question is for the official from the Department of Transport who indicated a few moments ago that his department's objective was to develop a safety culture and to determine what areas were high-risk in order to rectify the situation.
Please note that the Auditor General indicated the following in section 7.57:
...However, in almost all the files that we reviewed, inspectors did not follow up to verify that the railway had implemented adequate corrective actions. We recognize that it may not be practical to follow up on some findings. However, the Department did not document the rationale for not following up on findings and did not analyze the risks of not doing so.
In your answer, you said that you will have measures in place to correct the situation by mid-June 2014. However, how do you explain that there has been no follow-up mechanism to date to ensure that the companies have taken the necessary corrective actions?
For instance, according to your representative, MMA received 10 letters with concerns from your department stating that there was a problem. You established that the company posed a risk because it carried hazardous materials. That risk was clearly established.
More than that, you said earlier that you communicated with an American representative from the Federal Railway Administration, who also recognized that this company posed a risk, and that he also took action ensuring there was follow-up and imposing 28 fines amounting to $150,000.
The difference between the two countries is clearly attributable to Transport Canada's failure to follow up on irregularities. You say that you are going to determine the risks. However, what happened when you knew about the risks? You let 50 people burn alive. That does not work; there is a major problem.
Voices: Oh, oh!
Mr. Alain Giguère: Well, you identified a problem, you recognized that some cars were defective and that one company posed a risk. You knew all that. Your American colleagues told you they had enforced 28 fines. In addition, you sent out 10 letters with the items that needed to be fixed.
Unfortunately, an accident happened because you did not follow up. Section 7.57 clearly indicates that the follow-up was not done.
After the Lac-Mégantic tragedy and other tragedies in other parts of Canada, how can Canadians trust your system of self-regulation?