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1995 – “Morris report”

Senate report Peter Morris Chairman 1 December 1995

This report is a first report of what has been the most comprehensive inquiry conducted by the committee in the 37th Parliament.

The next report will cover unfinished matters including flying training, sports aviation and ultra lights, Section 20A of the Civil Aviation Act 1988 and the impact of government charges on air safety.

The inquiry has been charactarised by personality conflict, unsubstantiated allegations, a venom and viciousness not experienced by committee members in previous inquiries.
The catalyst for the inquiry was the report from the Bureau of Air Safety investigation on the Monarch Airlines crash in June 1993. Since then the Civil Aviation Authority, its successor the Civil Aviation Safety Authority and air safety have been the subject of constant media attention.

The period of the inquiry saw significant changes to air safety regulation in Australia. Foremost was the decision to establish a new authority, the Civil Aviation Safety Authority. The committee examined its enabling legislation and made several recommendations to improve the quality of the legislation, which were accepted by the government.

The report reveals a regulator at war with itself and under constant attack from vested interests within the general aviation and commuter industry.

Ensuring safe air travel must be the first priority of all participants in the industry as well as the regulator. This will require a major change of attitude and culture by many in the industry.

Conduct of the inquiry and preparation of this report would not have been possible without the consistent support of my committee colleagues Stewart McArthur, Deputy Chair, Gavan O’Connor and John Sharp.

Other committee members participated from time to time despite their workloads.
I thank each of them. I thank also all those who made submissions, who attended public hearings and responded to our requests for additional information.

The committee made heavy demands on CAA and CASA often at short notice. We appreciate their efforts and the time they gave to committee requests.

The Bureau of Transport and Communications Economics assisted the committee again. We thank them for the advance copy of their study on general aviation.

Similarly the Department of the Parliamentary Library provided valuable assistance to the committee.

I especially thank Denis James for his support in the analysis of statistical and economic/financial data relevant to aviation.

The committee expresses special appreciation and thanks to our advisers Trevor Thomas and Robert McBride, committee secretary Malcolm Aldons and committee officer June Murphy of their hard work and support throughout the inquiry.

Much of this report deals with the Civil Aviation Authority. However the committee stresses that the Civil Aviation Safety Authority should not be judged by the performance of its predecessor.

The committee’s recommendations are constructive and are intended to make the Civil Aviation Safety Authority a more effective regulator.

The committee expects industry, trade unions and others to be similarly supportive of the Civil Aviation Safety Authority.

The safety of the travelling public demands no less.

PETER MORRIS Chairman 1 December 1995

12.32 The committee recommends that:

Improving safety

(a) the Civil Aviation Safety Authority publish serious deficiency reports on a monthly basis, initially for charter operators, commencing March 1996;

(b) the Civil Aviation Safety Authority undertake special unplanned surveillance of charter operators in 1996;

(c) the Civil Aviation Safety Authority conduct randomly selected audits of aircraft maintenance organisations to check whether documentation for stores stocks comply with the regulations;

(d) air operators and ticketing agents be required to provide information, at the point of sale and in a prominent place on all tickets, on

(i) the name of the operator
(ii) the type of operation
(iii) the aircraft type, and
(iv) an explanation of the different levels of regulated safety for the different types of operation;

(e) the Civil Aviation Safety Authority and the Bureau of Air Safety Investigation prepare and publish aviation safety indicators;

(f) the Civil Aviation Safety Authority accept as recommendations requiring response, the options on increased aeronautical experience and the establishment of an industry based organisation given in the report on the
Review of the Australian Flying Training Industry;

(g) the CASA publish in the next Corporate plan a timetable for the completion of the harmonisation of standards with world aviation authorities;

Improving the effectiveness of regulation

(i) the CASA appoint expert groups or panels to produce periodic reports on the adequacy of standards in the low capacity RPT and general aviation sectors;

Improving accountability

(q) Industry bodies encourage their members to take their complaints of victimisation by officers of CASA to the Commonwealth Ombudsman.

12.35 Be that as it may, the way ahead is full of challenges. Ageing aircraft, unscrupulous maintenance organisations, the potentially explosive problem of bogus parts, pilots prepared to bend the rules and shonky operators are a dangerous mix. This requires CASA to be free of internal conflict, free of daily confrontation with sections of the industry and free to concentrate its resources to maximise its effectiveness.

12.36 The recommendations of the committee are intended to assist the Civil Aviation Safety Authority to be a more effective safety regulator. The expectation of the committee is that industry organisations, trade unions and others will be similarly supportive of the new regulator of aviation safety in Australia

1999 = 2000 auditors Report into CASA

“Borrowed AOCs”

5.39 One of the significant recommendations arising from the Commission of Inquiry into the SeaView air crash was that the Civil Aviation Regulations be examined and, if necessary, amended to prevent sham arrangements involving the use of another operator’s AOC. This arrangement is sometimes referred to as “borrowing“ and refers to the process where an operator uses another operator’s AOC in order to undertake activities for which they would otherwise be unauthorised.
In March 1999 CASA’s Quality and Internal Audit Branch issued a report on an audit of how CASA regulates the practice of “borrowing” AOCs.

The audit was requested by the Director.

5.40 The findings of the Quality and Internal Audit Branch audit included:

• although legislative changes had been made in October 1998, they did not cover all circumstances of borrowing an AOC;
• the limited legislative controls over the details included on the AOC’s for passenger charter operations and the current prescribed levels of surveillance limit opportunities for CASA to detect instances of borrowing/lending in this sector; and • the nature of CASA’s records resulted in its management being unable
to obtain an accurate picture in respect of AOC actions or for inspectors to access a comprehensive history of non-compliant operators who may apply for permissions in a different location.

5.41 The audit identified 16 circumstances where “borrowing” or “lending” was occurring with no basis for administrative action to be taken against the AOC holder.

It found that of 13 AOCs that had been cancelled/varied/suspended, or where other enforcement actions had been initiated by CASA, during the 22 month audit sample period, four of those operators were involved in borrowing another AOC. Although CASA inspectors were concerned about the safety and legality of the process, there was no legislative basis for them to take action. Part of the difficulty is that if an AOC is cancelled, the operator is no longer an aviation entity in terms of the current legislation and CASA can take no further action against the operator.

5.42 The basic problem related to the differing legislative and ASSP controls between RPT AOCs and charter AOCs.

The information required to be included on RPT AOCs is far more comprehensive and significantly limits the opportunities for a borrowing arrangement. Similarly, the range of controls in the surveillance program applied to RPT operations precludes the likelihood of borrowing. As a consequence, the findings of the Quality and Internal Audit Branch report indicate that borrowing of AOCs is far more common amongst charter operators than amongst RPT operators.

5.43 Another issue that emerged from the report was the complexity, in some instances, of some of the borrowing and business arrangements which made detection and evaluation of the arrangements by CASA difficult. This was further complicated by the lack of a national database of actions initiated by CASA against non-compliant operators.

5.44 The Quality and Internal Audit Branch report contained a number of recommendations to address the problems identified in that report.

While CASA management had not, at the time this audit, provided any direct responses to these recommendations, the Director wrote on the 7 October 1999 to all AOC holders engaged in either charter or RPT operations to advise of proposed measures to address these issues. CASA envisages that the regulatory amendments necessary to implement the proposed changes will be finalised by 2000.

Mr TRUSS (Wide Bay—Minister for Agriculture, Fisheries and Forestry) (9.57 a.m.) —I move:

Hansard April 2000  That the bill be now read a second time.

In July 1996 the government announced that the Civil Aviation Safety Authority, CASA, would conduct a complete review of the civil aviation legislation in Australia, with the objectives of harmonising it with international standards of safety regulation and making it shorter, simpler and easier to use and understand. We are taking a measured and sensible approach to these reforms because we recognise that Australians are conservative about air safety.

The process of review of civil aviation legislation is ongoing. Recent efforts in this regard have been directed at promulgating standards for air traffic services, rescue and fire fighting services and telecommunication services, and reviewing the law in relation to air traffic controller and aircraft maintenance engineer licensing, parachuting operations and aircraft maintenance.

The primary purpose of this bill is to make a series of small but significant changes to terminology in the Civil Aviation Act 1988, which will assist in the development of regulations dealing with aircraft maintenance and maintenance engineer licensing.

The proposed legislative changes to the act seek to achieve compliance with standards and recommended practices of the International Civil Aviation Organisation, ICAO, and to harmonise with the requirements of other national airworthiness authorities, NAAs, by removing, wherever practicable, maintenance requirements and terminology currently unique to Australia.

The internationally recognised and accepted terms `aeronautical product’, `maintenance’ and `line maintenance’ will replace existing terminology and reflect the requirements necessary for the enabling legislation dealing with aircraft maintenance.

The proposed changes will have no effect on the current aircraft maintenance requirements prescribed by the Civil Aviation Regulations. They will, however, ensure that new Australian regulations harmonise with international standards and practices and promote the maintenance of air safety.

The bill also makes two other important amendments to the Civil Aviation Act. Firstly, the bill gives CASA the function of entering into so-called `Article 83 bis agreements’ with the NAAs of other countries. Under the Convention on International Civil Aviation, Chicago 1944 (the Chicago convention) a state party to the convention is generally responsible for the safety regulation of aircraft on that state’s register, irrespective of where the aircraft is in the world.

Some obvious difficulties in administering safety regulations arise when an aircraft registered in one country is operated in another. Article 83bis is a relatively recent addition to the Chicago convention, and enables the transfer of safety regulatory functions from the state of registration of an aircraft to the state of operation of the aircraft, on agreement of both states.

The ICAO considers that such agreements should be made between the relevant national aeronautical authorities, as they are administrative instruments of less than treaty status.

Australia ratified article 83bis on 2 December 1994 after amending the Civil Aviation Act by the Transport and Communications Legislation Amendment Act (No. 2) 1993. Importantly a new section 4A was inserted which allows provisions of the Civil Aviation Act implementing the functions under articles 12, 30, 31 and 32 of the Chicago convention:

 to be applied to a foreign aircraft identified in an Article 83bis agreement which transfers those functions to Australia; and

 to be dis-applied to an Australian aircraft identified in an Article 83bis agreement which transfers those functions to another state.

This bill ensures that CASA will have the function to enter into article 83bis agreements on behalf of Australia. Administrative and technical provisions concerning the implementation of these agreements will be covered in regulations to be developed by CASA and my department in consultation with industry.

Taking into account Australia’s objective of harmonising with international standards of safety regulation, the ability for Australia to enter into article 83bis agreements should also benefit the Australian aviation industry and the consumer in terms of increased economic opportunities and reduced costs.

For example, domestic operators would potentially have greater flexibility and more cost-effective options in operating their aircraft fleets, and in being able to lease aircraft to overseas operators, that are underutilised in Australia during periods of low demand. Australian maintenance organisations could have increased opportunities to carry out work on foreign aircraft that would otherwise have been carried out overseas.

Secondly, the bill adds to CASA’s suite of enforcement tools, by giving it the power to accept written undertakings from people in relation to compliance with civil aviation safety legislation. Giving of such undertakings will be completely voluntary—CASA will not have the power to compel the giving of undertakings. However, once a person has given an undertaking, CASA will be able to seek an order from the Federal Court requiring a person to abide by his or her undertaking. The provision is modeled on section 87B of the Trade Practices Act 1974.

Finally, the bill makes amendments to the Civil Aviation (Carriers’ Liability) Act 1959 to correct an inadvertent error which imposed a liability on foreign charter operators which is inconsistent with Australia’s international obligations under the Convention for the Unification of Certain Rules relating to International Carriage by Air, Warsaw 1929 (the Warsaw convention). The correction ensures that Australia imposes certain liabilities only upon Australian airlines, not foreign.

There will be no anticipated added cost to the budget due to the amendments of the Civil Aviation Act or the carriers’ liability act.

There will, however, be long-term cost benefits to those aviation industries involved in international trade which will flow from the legislative changes, as Australia’s law will reflect the law of major markets for aviation products and services. On behalf of the Minister for Transport and Regional Services, I present the explanatory memorandum to the bill.

Debate (on motion by Mr Horne) adjourned.