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Sterle, Sen Glenn
Rural and Regional Affairs and Transport Committee
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TAX LAWS AMENDMENT (LUXURY CAR TAX) BILL 2008
A NEW TAX SYSTEM (LUXURY CAR TAX IMPOSITION—GENERAL) AMENDMENT BILL 2008
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QUESTIONS WITHOUT NOTICE
(Coonan, Sen Helen, Sherry, Sen Nick)
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Thursday, 18 September 2008
Senator STERLE (10:28 AM) —I present the report of the Senate Standing Committee on Rural and Regional Affairs and Transport on the administration of the Civil Aviation Safety Authority and related matters, together with the Hansard record of proceedings and documents presented to the committee.
Ordered that the report be printed.
Senator STERLE —I move:
That the Senate take note of the report.
On 29 May 2008 the Senate Standing Committee on Rural and Regional Affairs and Transport resolved to hold an inquiry to consider the administration of the Civil Aviation Safety Authority. The committee called for submissions and held hearings in Canberra in July. In all, 61 submissions were received by the committee. They were made by a number of representatives: individuals, engineers, aero clubs, flight groups, pilot associations, regional and metropolitan aviation associations, larger commercial aviation providers as well as CASA and ex-CASA employees.
In 2003 CASA embarked on an extensive program of reform, involving all elements of its organisational and regulatory structure. Unfortunately, evidence provided to the committee suggests that this reform process has not been satisfactory to many in the aviation industry or to the committee members. This inquiry allowed the committee the opportunity to hear of the reforms and initiatives undertaken by CASA and to discuss the progress made on them over the past five years since the review was undertaken. In its submission to the inquiry CASA provided an overview of the change program which had been implemented since 2003. Elements of the program included management and staffing measures, regulatory reform, operational measures, industry safety, education and training.
After five years of extensive change management, the committee was interested to understand the extent to which industry shared CASA’s confidence that the structural changes within CASA have better aligned the regulator with the industry it regulates and facilitated better and more efficient management and operations. Through submissions and information presented during this inquiry, the committee was informed that CASA’s regulatory reform process since 2003 was very slow and required conclusion as quickly as possible to provide certainty to industry and to ensure CASA and the industry were ready to address future safety challenges.
The regulatory reform program’s implementation had been deferred and delayed over the past five years. Now, five years later, this program still has not been completed. The regulatory reform program was initially supported by the aviation industry as a way of improving and enhancing CASA’s abilities in Australian aviation. Unfortunately, CASA did not progress with the regulatory reform program and it, therefore, became sadly ineffectual. Submitters to the inquiry expressed concern at the lack of progress of the regulatory reform program and suggested that the aviation industry has begun to lose patience with what one submitter described as the ‘glacial’ pace of reform.
Further, over time CASA lost valuable staff and human resources, as its employees and managers moved out of the organisation. The loss to CASA and to Australian aviation regulation and safety with the loss of these staff and their corporate knowledge has been significant. Mr Shane Carmody, the Deputy CEO of CASA, informed the committee that, as a result of the sustained change management program, CASA has experienced a significant turnover in staff. Specifically, Mr Carmody informed the committee that there had been a 50 per cent turnover in CASA staff and that, of those, 134 staff had been offered a redundancy. Based on responses to questions on notice, CASA also confirmed that 128 staff had been affected by the CASA restructure and other efficiencies during the period from 16 November 2005 to 30 June 2008. Of those, 82 staff had accepted a voluntary redundancy and 16 had separated through resignation. The committee understands that 53 of the officers who accepted voluntary redundancies were Canberra based.
The committee was concerned and wanted to understand what impact such a significant turnover in staff has had on CASA’s ability to maintain the technical competence of its staff. A number of submissions received also expressed concern at the extent to which CASA currently has access to sufficient adequately trained technical staff to meet its regulatory responsibilities. Some submitters also argued that safety standards could be compromised as a result. A former CASA employee told the committee that CASA had few technical staff still in its employ and that most of the new recruits who are technically competent are often not adequately trained for the regulatory role.
A similar review of regulatory reform was completed in Canada and another is currently underway in the USA. An outcome which bears some resemblance to Australia’s situation is that the aviation regulatory and safety bodies focus their energies on maintaining partnerships with industry rather than regulating the aviation providers themselves. In Qantas’s submission there was an important note. It described CASA’s role simply as one of regulation and to tell industry what needs to be done to maintain safety in the air. Qantas said that the aviation industry do not want or need a partnership with CASA; they need a regulator.
The committee also received a range of submissions in relation to CASA’s move to become a partner with the industry, rather than continuing with the more traditional regulatory approach. The committee notes that this shift in emphasis and priority has led to strong differences of opinion with CASA and similarly polarised views within the wider aviation industry. It is vital for Australian air safety that CASA be the regulators of aviation safety in this country and not focus on a partnership approach. A lack of an enforcement mindset has been proven to lead to lower standards of air safety. It is crucial that our aviation regulator be aware of this and implement strategies to address it.
The Canadian experience showed that, where there was a focus on relationship building with the industry partner, there were shortcomings in the regulatory role. The committee notes the concerns raised by some witnesses that CASA’s partnership approach is based on models in other jurisdictions which have been found to be flawed. In particular, the committee was referred to a review undertaken earlier this year by the US Department of Transportation. In its report the department found that a federal aviation administration office had developed an overly collaborative relationship with an air carrier. The department concluded that the overly collaborative relationship had occurred because of shortcomings in FAA management controls over its partnership program. The committee’s attention was also drawn to press reports that the Chairman of the House Transportation and Infrastructure Committee observed that the flurry of maintenance problems in the US was partially the result of a cosy relationship between the FAA and airlines and a lack of an enforced mindset by regulators.
The committee also received a range of suggestions regarding avenues for strengthening CASA’s relationships with the aviation industry. Principal among these was the need for more effective use of consultative mechanisms. It is a statutory requirement that CASA must publicly consult on all proposed legislative changes which will affect business or restrict competition. The Australian Federation of Air Pilots considered that CASA’s consultative and communication processes have improved but also highlighted the need for improvement in CASA’s less formal communication with industry. Virgin Blue’s submission also suggested improvements to CASA’s approach to consultation, focusing on the CASA executive and industry. This recommendation for greater consultation between industry and CASA was also reflected in Qantas’s submission.
The Australian and International Pilots Association informed the committee that it had found consultation with CASA to be unnecessarily frustrating and difficult due to inefficiencies. AIPA also argued that poor project management had the capacity to undermine confidence in the consultation process. What also came out very loud and clear from submitters was that there should be a requirement to re-implement a board to oversee CASA.
On that note, I would like to thank my fellow committee members and also the secretariat for their hard work at such short notice. We have a number of inquiries on the go. I thank everyone else for their help.