Proceedings of the Standing Senate Committee on
National Finance

Issue 6 - Evidence

The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine the Estimates laid before Parliament for the fiscal year ending March 31, 2002.

Senator Lowell Murray (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, you may recall that on several occasions Senator Ferretti Barth and others, but princi pally Senator Ferretti Barth, raised the question of the investiga tion costs of airline disasters that occur on or near Canadian territory.

At one point, approximately a year ago, we were to have heard from the Chairman of the Transportation Safety Board of Canada, the Honourable Benoit Bouchard. That good intention was overtaken by prorogation of that session of Parliament. Nevertheless, we revisited the issue when the Estimates were before us again. Fortunately, we were able to arrange for the appearance this morning of three officials from the Transportation Safety Board: Mr. David Kinsman, Executive Director of the Transportation Safety Board; Mr. William Tucker, Director General of Investigations Operations; and Mr. Jean Laporte, Director of Corporate Services.

First, we will be looking for up-to-date information on the costs related to the investigation of the Swissair accident of September 1998, which was the occasion for Senator Ferretti Barth's questions.

Second, the officials will provide an overview of the discussions and negotiations relating to the international agreement on responsibility for the costs of air accidents.

Honourable senators, when the representatives of the Transportation Safety Board have completed their testimony, I intend to convene an in camera meeting of the committee to discuss future business. However, it is now my pleasure to call on Mr. David Kinsman, Executive Director of the Transportation Safety Board of Canada, who has an opening statement.

Mr. David Kinsman, Executive Director, Transportation Safety Board of Canada: Honourable senators, because I have only recently undertaken my responsibilities as Executive Director of the Transportation Safety Board, I have called upon two of my colleagues, who have already been introduced to you by the Chairman. Mr. Tucker is the Director General of Investigations Operations. He has been with the Transportation Safety Board for the 11 years of its existence. He was with the Canadian Aviation Safety Board prior to that.

[Translation]

To my right is Mr. Jean Laporte, Director of Corporate Services and Senior Financial Officer for the Transportation Safety Board.

[English]

With your indulgence, Mr. Chairman, I would like to make a few brief opening remarks and then respond to your questions.

[Translation]

With your permission, I will be speaking mostly in English. However, I will be happy to answer your questions in your preferred official language.

[English]

We appear before you this morning to respond to questions that have arisen about the costs of the ongoing investigation into the tragic crash of Swissair Flight 111 off the coast of Nova Scotia in September of 1998. In a broader sense, you have also posed questions concerning Canada's obligation to absorb the costs for such an investigation.

I believe you already have background material on the Transportation Safety Board, so I will not repeat our mandate or our operating principles. However, I would like to re-emphasize the importance that has been attached to the element of independence for the agency by the Canadian Transportation Accident Investigation and Safety Board Act. This independence is a critical factor in principle as well as in practice in ensuring that investigations are conducted in a fully objective fashion and, just as important, are seen nationally and internationally as being uninfluenced by external interests.

I will begin with a brief discussion of the costs of the investigation to this point. We have provided you with a breakdown of the costs incurred by Canada as of the end of the fiscal year 2000-2001. On the first page of the summary we have provided that breakdown by department and agency. For the TSB these are incremental costs - that is to say, costs above and beyond normal operating costs - and they are attributable directly to the Swissair Flight 111 recovery and investigation activity. Although the Transportation Safety Board had no direct control over the costs incurred by other departments and agencies, all of those costs were charged against TSB appropriations for ease of accounting and visibility.

The second page of the summary takes these same total incremental costs and breaks them down by activity. You will note that a significant percentage of the total costs are attributable to the unique circumstances of this accident and the extensive efforts applied to the search, recovery and identification of human remains, personal effects and aircraft wreckage. Those are the first three items of activity on the sheet.

Because the accounting framework did not arrange costs according to these activities, the distribution of costs represented on this page are approximations only. We are confident, however, that they are representative of the distribution of costs by the activities listed.

I would like to emphasize that these are only the costs to Canadians in the federal accounting framework. Clearly there were other costs, particularly to the province, to municipalities and to individuals, that are not captured in these figures.

Additionally, other substantial costs for which we do not have exact figures were incurred by the Boeing aircraft company and Swissair through the assistance they provided our investigation team, particularly during the early stages of the investigation. Other companies and agencies incurred costs as well, but they would be of a relatively minor nature.

Allow me to turn to a brief discussion of why Canada undertook the leadership role in this investigation and why Canada assumed the majority of the costs.

The conduct of the Swissair 111 accident investigation by Canada is in accordance with an international protocol established by the International Civil Aviation Organization, or ICAO. ICAO is an agency of the United Nations. Its current membership consists of some 185 states. Canada is not merely a party to the agreement; it is also the host country for ICAO's headquarters in Montreal, a strong supporter of the organization's aims and a very active participant in its work. That work encompasses many technical fields, including accident investigation.

The specific protocol regarding accident and incident investiga tion is contained in Annex 13 to the 1944 Chicago Convention on International Civil Aviation. Pursuant to section 26 of the convention, Annex 13 prescribes the responsibility of the state of occurrence, that is, where the accident happened, to undertake an investigation for safety purposes and to be responsible for its conduct. It also contains international standards and recom mended practices for the conduct of the investigation.

As an aside, Mr. Chairman, we have much material covering the details of the operations of ICAO in these regards, and we have brought extra copies along. I chose not to table them today because they are very detailed and would be difficult to follow, but we would be more than happy to follow up on any information that any members of your committee or the staff might have following our presentation.

Since its original adoption in 1951, Annex 13 has had periodic reviews and updates as a result of international meetings and working groups that were formed specifically for those purposes. One such meeting was the accident investigation prevention group meeting held in Montreal in September of 1999, known as AIG99. Coincidentally, the agenda items for that meeting addressed responsibilities for mounting an investigation and provisions for the allocation of resources for accident investiga tions, both of those being of direct relevance to the questions raised by this committee.

The issue of funding for major accident investigations was first raised formally at the accident investigation and prevention group, which I may from time to time refer to as the AIG during this presentation, during those meetings in 1974. It was then discussed at the ICAO assembly meetings of the same year and again in 1977. It was raised yet again in the 1992 AIG divisional meeting. Finally, the issue of funding for major accident investigations was raised again at the ICOA AIG meeting in 1999.

The delegates discussed development over the past 20 years or so with respect to public demand for thorough safety investiga tions, new technology for locating and recovering wreckage from the ocean, and improved flight data recorders that facilitate thorough investigations. They also discussed the safety implica tions of insufficient funding, some of the possible solutions, and some cautionary notes and additional considerations. The view of the participants was that this issue required immediate action. The members made the recommendation that ICAO undertake a study aimed at identifying solutions for the funding of large accident investigations.

I should point out that the focus of the current concerns is on how to resource accident investigations in those countries that simply do not have the resources or organizational capacity to mount an investigation in the wake of a major air accident.

ICAO is responding to that recommendation, and Canada has volunteered to be a part of any working group that may be formed. If any significant changes are proposed, they will likely be referred to a full assembly meeting involving all ICAO member states. The bottom line, however, is that there has not yet been a consensus for change, and ICAO operates on a consensus basis.

The existing arrangements within Annex 13 also include the ability of the state of occurrence to delegate all or part of the conduct of an air accident investigation to another state. Furthermore, there is provision for the participation and assistance of other states, notably the state of the operator and the state of the manufacturer, regardless of which state is conducting the investigation.

Finally, the arrangements include provision for, and even an expectation of, considerable involvement in the investigation by what are known as technical advisers. These technical advisers are from both government and industry in the various states that are involved with the accident.

To use the Swissair 111 investigation as an example, Canada has certainly not been working alone. The accident investigation was registered in Switzerland and the flight was operated by a Swissair crew. However, it was being operated on a shared flight with Delta Airlines of the United States. The McDonnell Douglas MD 11 type of aircraft was designed and built primarily in the United States, where it also received its initial certification. Thus, both Switzerland and the United States have participated extensively through an accredited representative from the accident investigation agency in each of those countries. They have been assisted by numerous technical advisers from their own agencies, from their respective country's aviation regulator, for example, the Federal Aviation Agency in the United States, and from Swissair, Boeing and other private companies that were involved in the manufacture, installation or maintenance of the aircraft or its components. While Canada has borne the bulk of the recovery and investigation costs from this accident, the assistance of these other organizations has been substantial.

Why do countries choose to conduct investigations and absorb the associated costs for accidents that occur within their boundaries? First, it is simply to honour the commitment they have made to other nations of the world by becoming a signatory to the Chicago convention. All ICAO states recognize that enhancing the safety of air travel has a price and that the investigation of air accidents and incidents is but one component of those costs. Canada, with her strong involvement in the International Civil Aviation Organization, would naturally be very reluctant to break away from the framework of consensus upon which that organization is based.

Second, I would suggest that there is also an element of sovereignty. Most states prefer to exert full control over their sovereign air space, and that includes being prepared to act when something goes wrong within their territory.

Finally, and of particular importance from an investigative standpoint, is the issue of independence. Any decision to transfer some or all investigative responsibilities or financial obligations to other parties, particularly those with a vested interest with respect to findings and recommendations, would almost certainly limit the freedom of investigation action, thereby jeopardizing the credibility of the investigation, or potentially doing so at least.

Nevertheless, change is rapid in aviation technology, and ICAO obviously has to evolve with those changes. As I have already stated, consensus is the operating principle of ICAO, and changes are rarely progressed unless there is such consensus. This is normally achieved through the discussion of working papers. Then there is usually a state letter sent from the Secretary-General to request the views of state, thereby establishing whether there is international consensus.

Coordination of Canada's view is normally achieved through the office of the Canadian delegation at ICAO and two interdepartmental committees that are chaired by Transport Canada. The first of these, the international aviation technical committee, deals with all technical matters and maintains close liaison with the second. That committee, the ICAO interdepartmental policy committee, has the responsibility of ensuring that they recognize matters that need to be referred to cabinet before a Canadian position is determined.

[Translation]

That concludes my remarks. We will now be happy to answer your questions.

Senator Ferretti Barth: On seeing the high cost of the investigation, I wondered what was going on. You are still relying on a convention that is 50 years old. Is it not part of your mandate to review your directive? In 1999, officials met in Montreal to try and hammer out a consensus, but they were unsuccessful. How can we continue to work this way in 2001, given the heavy air traffic and a convention that is fifty years out of date?

Pursuant to section 26 of the convention, the country in which the accident occurred should initiate the investigation. However, the convention does not say that this country should cover the full cost of that investigation. Following the crash of Swissair, Canada invited Switzerland to share in the cost of the investigation.

Furthermore, countries are required to review the recommenda tions and the convention every five years and to abide by a cost-sharing arrangement. For the two countries involved, are there any assurances that costs will indeed by shared? I am concerned about this because it represents a substantial expense for our country. How much money will Canada have to spend? The time has come to look at the situation and amend the convention. I have other questions, but I will submit them to you later in writing.

Mr. Kinsman: I will do my best to answer your questions. If you have any others, I will be happy to respond either in writing or in person at your office.

I admit that the convention has been in place for some 60 years. As time goes by, certain questions are reviewed to ensure that the ICAO's fundamental policies are still relevant. The issue of who should be responsible for conducting an investigation and covering subsequent costs in still under discussion. Judging from what I have observed, the ICAO appears to be concerned at the present time about the fact that there are 185 member countries. As you can well imagine, a number of countries lack the training, the organization and the resources required to conduct an investigation and to pick up the tab.

We need to determine how to go about ensuring air transportation safety throughout the world when an accident occurs in a country that lacks the capability to conduct an investigation, for instance, a country in Africa. Recently, airplane crashes have occurred in certain African nations which lacked the resources to conduct an investigation. The cost issue for countries like Canada, the United States, France and Great Britain is, in my view, a secondary consideration. Instead, we should be concerned about countries that lack the resources to carry out investigations of this nature.

Even though the convention was first drafted in 1944, I would not say that it is outdated. The Transportation Safety Board is concerned about this issue and is taking part in the discussions. Basically, either the ICAO needs to change its internal operating procedures or we need some recommendations from the Departments of Transport and Foreign Affairs.

Senator Ferretti Barth: I can understand that certain African nations that are signatories to the convention do not have the means to initiate an investigation. However, we are talking about Swissair in this particular instance. I am not a politician, but a taxpayer. If another accident similar to the Swissair crash were to occur, Canada would again have to foot the bill for a major investigation at the public's expense. The money spent on the investigation could be earmarked for other purposes.

The time has come to arrive at a consensus. This situation is of some concern to us and to other large countries as well. We need to devise a kind of cost-sharing arrangement. Internationally, do you think it might be possible to arrange with the airlines to have accident insurance?

Mr. Kinsman: The Government of Ireland has in fact purchased this kind of accident insurance.

At its final meeting of 1999, the ICAO discussed for the very first time the question of insurance. However, these discussions were only informal and the Irish representative volunteered to familiarize the countries with the concept of insurance.

I will now defer to my colleague, Mr. Tucker, whom I believe attended that very meeting.

[English]

Mr. Bill Tucker, Director General of Investigations Operations, Transportation Safety Board of Canada: In a nutshell, the method that has been employed by Ireland since about 1995 is still one very directly linked to the state. It is the Government of Ireland who has purchased the insurance underwritten by Lloyds of London. They are now in their second five-year policy.

The question here is the practice of a government regarding insuring itself against liabilities. As I understand it, the Government of Canada chooses to self-insure in most cases. In this case, the premium is a little over Can. $300,000 per year. There is a deductible and an ample upper limit. It goes up to about Can. $150 million.

That kind of policy is available. Ireland has explained to us that, when they first started, there was very little interest shown in the tendering process, but in the last tender, several companies showed an interest. That is one way that the idea will progress.

ICAO also supports a bilateral or regional arrangement where a group of states agree to spread the liabilities among themselves.

[Translation]

Senator Ferretti Barth: Mr. Kinsman stated that the cost of the investigation was quite prohibitive for Canada. I am curious as to whether Switzerland contributed, financially or otherwise. For the current year alone, requests for funds totaled in excess of $2 million.

Mr. Kinsman: The Swiss government has not incurred any costs. However, Swissair has spent a considerable sum of money to assist us with our investigation. For example, it placed one of its aircraft at our disposal so that our investigators could examine its internal structure.

Senator Ferretti Barth: As a national airline, Swissair is surely subsidized by the Swiss government. The accident occurred over three years ago and we are still receiving requests for money to complete the investigation. How much longer will this investigation take? Has the black box been recovered?

When ICAO members met in Montreal, did a consensus emerge on a cost-sharing arrangement in the event of other catastrophic incidents on foreign soil?

Mr. Kinsman: The investigation is taking a long time because it is very complex. Over two million pieces of the aircraft were recovered from the ocean floor and these had to be identified by investigators. It is a very time-consuming process.

Canada has not waited for the final report to put forward recommendations aimed at improving air safety. A total of 11 recommendations have already been issued further to this crash. We were able to draw a number of conclusions after examining the black boxes and pieces of wreckage. For instance, we found that some of the insulating materials used on the MD-11 were not flame retardant. Therefore, a year and a half ago, we recommended that these materials be replaced on this type of aircraft. Approximately 800 aircraft around the world use identical materials. The US Federal Aviation Administration is requesting that the changes be made within the next five years. Therefore, we have already accomplished one of the goals of the investigation.

We hope to have the final report ready within the year. Some people will likely be disappointed because charges will probably not be laid against anyone. However, that is not important. What is important is that our findings improve passenger safety.

Senator Ferretti-Barth: Will any steps be taken to amend the convention so that the country in which the crash occurs does not have to bear the full cost burden? In my view, it is unfair that Canadian taxpayers have to foot the entire cost of the crash of a Swiss aircraft.

Mr. Kinsman: I agree, but there is an up side to this as well. We were able to investigate Swissair here in Canada.

Senator Ferretti Barth: Yes, and that is why I think it would be better for everyone if we could amend this convention and arrive at a consensus for sharing the costs of an investigation or insurance fees. People would be quite happy to see Canadians concerned about their future responsibility. According to the convention, we are authorized to conduct investigations, but we are not required to pay for them. We need to find some evidence of good will on the part of the Swiss government to share the exorbitant costs. The investigation, which is still ongoing, has already cost over $50 million. When it comes to investigations, we always know where they begin, but never where they end. That is what concerns me the most.

Mr. Kinsman: I understand very well.

[English]

Senator Bolduc: I have only one question. What is Canada's position in terms of changing the convention? It strikes me that our territory is very large and most accidents happen when flights are landing or taking off. Cities like Seattle, Minnesota, Detroit, Cleveland, Buffalo, Rochester, Boston are not far from our border and they all have flights to Europe.

Every night, hundreds of planes leave for Europe and fly over Canada. I am quite troubled that we should be responsible for all investigation costs for so many possible accidents. Compared to Norway or Sweden or Finland or the Netherlands, we have a much greater chance of having to pay for accident investigations.

Mr. Kinsman: There are two parts to your question, Senator Bolduc. First you ask about the position of Canada with respect to changes. My view would not represent an official position because that is not my place, but I can give you a flavour for the mentality as I see it.

There is an issue on the table at ICAO on costs for investigations. As I mentioned before, the preoccupation of the president of the council is to deal with under-developed countries. Nevertheless, as Senator Ferretti Barth says, this is a very large sum of money.

The primary preoccupation of ICAO is to ensure that accidents that happen anywhere in the world are investigated in a proper fashion.

Senator Bolduc: I agree with that. I agree that Canada, as one of the 30 developed countries, should do its fair share with regard to under-developed countries. However, there must be some merging of our richness, our capacity to pay, and our responsibility in terms of territory. Somehow there should be a mix, and I am not certain that the current mix is acceptable.

Mr. Kinsman: I understand that.

Senator Bolduc: This is exactly what happened in the United States in its dealings with the United Nations. In 1945, the U.S. had about 40 per cent of the world protection, so they agreed to pay more than their share of the expenses of the United Nations. About five years ago, they said that, unless the rules were changed, they would not pay, and that is what they have been doing.

Finally, an administrative officer from a department in Washington was moved in as the administrative manager of the United Nations. The job of the Secretary-General is to fly around the world and talk about principles. At the same time, the U.N.'s huge bureaucracy was spending money. The Americans said that was enough and they got serious about making some changes. Now the rules have been changed and the Americans are paying a bit less, which is fair.

Perhaps Canada should take the same approach in this instance. We can extrapolate from that United Nations lesson and refuse to pay for all of this. I am not sure that the Department of Foreign Affairs has discussed the business aspect of this.

Mr. Kinsman: Nor am I sure of that. I could not tell you. My colleagues and I are working at a lower level within ICAO. It is that position which I am representing to you today. I am less familiar with official positions.

Senator Bolduc: I understand, but when I am talking to you, I am, in fact, addressing my remarks to the minister.

Mr. Kinsman: I understand. I would add one comment which is, I admit, somewhat subjective. As I see it, the importance for Canada is to consider the balance. Notwithstanding one very large accident which has cost a lot of money, in the balance of air accident investigations around the world, has Canada suffered unduly with the expenditure of $50 million to $60 million for the Swissair accident?

To use your example, there is clear evidence that the United States paid to the United Nations a tremendous amount of money for UN missions even if they were not involved. I am not sure we could make the same case for accident investigations in Canada. We must remove ourselves for just a second from the very significant costs of Swissair and ask: Does our history show that Canada has been called upon in a disproportionate manner to mount investigations and to pay for them?

As your background information points out, we have had two major accidents in the last 30 years or so. Your information is absolutely right with respect to the majority of accidents - over 75 per cent - taking place in the arrival phase and about 20 per cent taking place in the departure phase. Our statistics show that less than 4 per cent of air accidents take place in what we call the cruise phase.

Senator Bolduc: I was referring to the fact that many major U.S. cities are near the Canadian border.

Mr. Kinsman: That is a good point. I would be the last person in the world to sit in front of you today and say that, just because they took off in the United States, does not mean such flights have no impact on Canada. In fact, I would up the ante. As global, over-the-pole routes become more prevalent and as that market opens up, even more aircraft will pass through Canadian air space daily.

Senator Bolduc: I have another question. Do you have any idea of the investigation costs for the Lockerbie accident?

Mr. Kinsman: I have to admit I do not. Let us collaborate for a moment.

Senator Bolduc: Were those costs paid by Scotland or by Britain?

Mr. Kinsman: My very astute colleague Mr. Tucker, who was brought up in the context of Newfoundland politics, said: Tell the senator that it was paid for by the United Kingdom.

The Chairman: Ireland has been mentioned. The infamous Air India tragedy took place off the coast of the Irish republic.

Mr. Kinsman: Yes.

The Chairman: Did the republic end up paying the costs of that investigation?

Mr. Tucker: It was closest to Ireland, but it was actually in international waters, so the primary role was played by the Government of India. Canada, the U.S., the U.K. and Ireland were all major contributors, as I think France might have been, but certainly the first four I mentioned.

Senator Tunney: Senator Bolduc has broached two or three very good points that I would have made, and I thank him for doing it.

Insurance is, in my mind, a dangerous way of approaching the funding of these losses, and I will tell you why. Lloyds of London, or any other insurance company with their actuarial experience, never intends to lose money on an insurance policy. The deductible, which is the first few hundred thousand dollars that the applicant pays, and more dangerously, the upper limit that would apply, would mean that the insurer would add the premium to the deductible, and in some cases the amount over the limit. That insurer country would never really know what the exposure would be. We should investigate that very thoroughly if in fact we ever think about insurance.

My distinct preference would be for the signatory countries, and I think some manufacturers should be involved here, too, to establish an insurance fund paid by the countries and perhaps the companies, to see that there was a fund available to pay these sometimes very substantial costs. There would need to be, as I think exists now, an agreement up front on a myriad of matters such as the size of the country, the size of the airline and, I suppose, the ability of small countries from, say, Third World areas to pay a premium and who would have difficulty if there were a large exposure involving that country.

I put this out for thought. You need not respond if you do not wish to do so.

Mr. Kinsman: Without responding to that, because I think those are all thoughts that I would support, I should like to highlight one concern. It is important that people whose job it is to conduct investigations do so in as independent a fashion as possible, and I know I keep returning to the word "indepen dence." In the same fashion as we would have considerations with insurance companies, one of the considerations when accepting financial support from any organization, agency, or whatever it may be that might have a vested interest, is the question of whether or not the people supporting the costs also bought into the philosophy of undertaking the investigation. We investigate to advance safety; we do not investigate to find cause. In many cases nowadays, we find ourselves, in all of the modes of investigation that we do, with a basic misunderstanding by folks in a litigious society who want to use our material to go to court to try to mete out their pound of satisfaction.

We have a concern. It is very difficult to put a finger on it, but we have a concern, and it is certainly a consideration. If someone were to be funding an investigation to some extent or another that the Transportation Safety Board of Canada was doing, what would be the new dynamics that would come into play? People may be looking for something. There are not many altruistic people out there paying millions of dollars. It is a consideration.

Senator Bolduc: There is also another aspect to this question. People who fly are insured. We are talking about $50 million for the costs of the accident but, collectively, the passengers may be insured to the tune of $300 million. Each passenger could be insured to the extent of $500,000 or $1 million. The insurance companies are already paying that.

Mr. Kinsman: Indeed, Senator Bolduc, to the best of our understanding, the litigation that is on the table now as a result of the Swissair crash is in the order of $20 billion.

[Translation]

The Chairman: If there are no further comments, I would like to thank the witnesses for appearing before the committee this morning.

[English]

Thank you for engaging so fully with us on this important subject.

The committee adjourned.

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