[Peetwo]

Evidence: CASA holding back industry innovation & investment-

Ref Senate Estimates thread:

Ps Having developed a recent interest in the Joint Parliamentary committee for treaties - see HERE &..

...I was pleased to note that the membership in this parliament of JSCOT also included Senator Sterle.

I also noted with interest certain lapsed inquiries from the 44th Parliament were carried across and reinitiated for inquiry - see top 2 & No. 6 HERE.

Pps Due to the very relevant content the No.6 reinitiated inquiry will be taken as being actively monitored by PAIN and all previous records, submissions, Hansard etc. plus any updates will appear on the AMROBA thread...

This was the ToR & link for the No.6 JSCOT inquiry:

New  Implementation Procedures for Airworthiness - USA
        Status: Current
        Date Referred: 12 September 2016

Track Inquiry                

Now if you go to the submission, you will see (at this stage) there is only one submission from AMROBA:

1 AMROBA (PDF 90 KB) 

Committee Secretary
Joint Standing Committee on Treaties
PO Box 6021
Parliament House
Canberra ACT 2600

The Bilateral Aviation Safety Agreement (BASA) between Australia and the United States has been fairly restrictive for Australian aviation businesses to trade with the United States of America. Australian manufactured aviation products approved by the Civil Aviation Safety Authority (CASA) are available to be sold now. The only thing that is holding our industry back is this international agreement and CASA/FAA [Federal Aviation Administration] Implementation Procedures. The CASA/FAA Implementation Procedures cannot be signed until the BASA has Parliamentary approval. It needs to approved this year.

Over the last couple of years, industry has been requesting these changes to this Agreement so Australian manufactured aviation products can be sold in the USA.

The FAA required analysis and assessment of the CASA approval process has been completed and sample manufactured products have been accepted by the FAA.

Australian manufacturers are concerned that administrative delays in getting these changes to the BASA can be stalled in Parliament if the amended document sits for the 20 day period. This could delay the approval by the FAA of amendments to the Implementation Procedures between CASA and the FAA.

Australian manufacturers have CASA approved products ready to market in the USA. CASA and the FAA have agreed to amend "Implementation Procedures" and can be signed this year if the BASA is expidited through parliament so it does not have to tabled for the standard 20 days.

CASA staff are with the FAA next week.

The Minister of Innovation, Mr Wyatt Roy is fully aware of one such product and has promised support.

Regards

Ken Cannane

Executive Director

AMROBA

www.amroba.org.au

Safety All Around.

Treaties tabled on 2 February 2016

Submission 1

 
However prior to end of the last Parliament there was one public hearing that was particularly interesting...

Here is the Hansard where Senator Fawcett once again made the CASA executive trough dwellers, look quite frankly like deer in the headlights, inept & completely out of touch with reality   (P2 - Also note the part in bold from MP Whiteley):

Joint Standing Committee on Treaties

02/05/2016
Treaties tabled on 2 February and 2 March 2016

BALA, Ms Nisha, Section Head, International Relations, Civil Aviation Safety Authority
HUTTON, Ms Carolyn, Branch Manager Government and International Relations, Stakeholder Engagement Group, Civil Aviation Safety Authority
NIKOLIC, Mr Peter, Manager Initial Airworthiness, Standards Division, Civil Aviation Safety Authority
WALKER, Mr Robert, Stakeholder Engagement Group Manager, Civil Aviation Safety Authority
WEEKS, Mr Roger, Acting Executive Manager, Standards Division, Civil Aviation Safety Authority
Committee met at 11:16

Agreement on the Promotion of Aviation Safety between the Government of Australia and the Government of the United States of America

CHAIR ( Mr Hartsuyker ): I now declare open this public hearing. The Joint Standing Committee on Treaties will take evidence on the amendments to the implementation procedures for airworthiness under the Agreement on the Promotion of Aviation Safety between the Government of Australia and the Government of the United States of America.

I welcome representatives from the Civil Aviation Safety Authority. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and warrants the same respect as proceedings of the House and the Senate. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of the parliament. If you nominate to take questions on notice could you please ensure that your written response to questions reaches the committee secretariat within seven working days of your receipt of the transcript of today's proceedings. Do you wish to make some introductory remarks?

Mr Walker : Yes, we would, Chair. Thank you for the opportunity to make some opening remarks around the amendments that are being considered here today. Under article 7 of the Agreement on the Promotion of Aviation Safety between the Government of Australia and the Government of the United States of America, more commonly known as the Bilateral Aviation Safety Agreement or BASA, it is proposed to bring into force a number of amendments to the Implementation Procedures for Airworthiness, or the IPA. The BASA is a bilateral technical cooperation agreement that provides the overall framework for cooperation on aviation safety. It also provides for the development of treaty level implementation procedures, or IPs, on specific areas of aviation safety oversight. This agreement was signed in June 2005 and the first and currently only set of IPAs, the Implementation Procedures of Airworthinesss, was signed in May 2006 and entered into force on 28 November 2006.

The agreement and the IPA facilitate mutual acceptance of approvals, evaluations and monitoring associated with civil aviation products, personnel and facilities. These proposed amendments will provide significant benefits to Australia manufacturers of aeronautical parts and appliances by enabling them to export Australian certified aeronautical parts directly into the United States. The benefits will extend to owners and operators of transport category aircraft, normal category helicopters and transport category helicopters as well. The proposed amendments will remove a limitation related to the state of design so that the United States Federal Aviation Administration, the FAA, will accept Australia's Civil Aviation Safety Authority's supplemental type certificates for those small aeroplanes where the United States is not the state of design. Australian parts and appliances—which include any instrument, mechanism, equipment, part, apparatus, appurtenance or accessory, including communication equipment, that is used or intended to be used in operating or controlling an aircraft in flight, is installed in or attached to the aircraft and is not part of the airframe, the engine or propeller—will no longer have to undergo additional often duplicated manufacturing certification by American authorities when exporting to the United States.

The original IPA established the working processes for recognition of a range of aviation safety certification approvals issued by CASA and the FAA. Following negotiations with the US FAA, amendments to the IPA were signed by representatives of the Australian government and the government of the United States in Washington on 7 May 2010. These amendments extend FAA recognition to CASA's Australian parts-manufacturing approval processes, addressing an imbalance in the IPA where Australian regulation already recognised and accepted US manufactured and FAA aviation parts. The approval of this amendment will provide significant financial benefits to the design and manufacturing sectors of the Australian aviation industry. This will open one of the biggest aviation markets in the world to Australia and will allow for export of Australian designs and products without any additional commitments for Australia. The proposed amendment IPA will replace the current IPA, and no change is required to the BASA. No financial costs to the Australia government are anticipated in the implementation of the proposed amendment IPA and no new legislation is required to give it effect.

I thank the committee for the opportunity to make this opening remarks. We welcome any questions from the committee.

CHAIR: I have two questions. Firstly, what is the size of the market that is likely to be opened up for Australian producers as a result of these changes? Secondly, what are the likely savings in relation to the reduction of the need for validation?

Mr Walker : Obviously the US aviation market is one of the largest in the world. The way the market currently runs is that Australian certification that is done here in Australia has to be revalidated before parts or aircraft can be exported to the US. The real value of these changes is that a lot of the expense that is involved in doing that is going to be taken out of the equation. I will refer to my colleagues for some of the specifics around the actual money saved, but it goes without saying that it is about the range of what is on offer here. These changes will provide opportunities for the larger regular passage of transport operators like Qantas and Virgin when they reach end of lease for aircraft frames et cetera and want to sell those frames back into the US right through to the smaller operators, particularly parts manufacturers here in Australia. There are some great opportunities for some of the smaller aerospace sector operators. In terms of the quantum, it is one of the biggest markets in the world. In terms of the money that can be saved—and I might refer to my colleagues here as well—we are talking about millions of dollars of savings to individual operators.

Mr Weeks : Chair, just to give some sense of differentiation in the size of the two markets, within Australia we have about 15,000 aircraft on our civil register. In the United States there are in excess of 207,000 aircraft. So the potential for our manufacturers to access that market is obviously a significantly greater quantum than what they would have access to here domestically. In relation to the costs it is difficult, because this is a potential opportunity. But we know that, for example, if one of our major carriers was wanting to undertake a refit or refresh of their cabin, at the moment they would have to engage a United States firm to do the certification processes and our own, and it can be in the vicinity of millions of dollars of additional cost to duplicate that certification. That would be removed under this arrangement.

Senator FAWCETT: I want to take you to a couple of points. One is just a question of clarification. My understanding is that CASA STCs for part 25, 27 and 29 aircraft are limited. So where Australia is the designer of the aircraft or where the US is the designer of a small aircraft essentially we can provide STCs for anything, but as soon as we get into the commercial field and the RPT type aircraft my understanding from my notes here is that it is limited. Can you expand on what that means? It appears to limit or put barriers in the way of the most lucrative part of the American market.

Mr Nikolic : Regarding the way this was negotiated, when we approached the FAA for the first time with the wish to expand our scope they requested that we provide them with evidence of our competency—CASA as well as industry. We provided a number of STCs in different categories to demonstrate that competency. They reviewed that and they based their limitation and scope on the basis of what we could demonstrate at the moment as a level of competency, so on those bases they could simply accept those approvals without any further validation. Regarding the way the amendment is structured, we have two tiers of STCs. The first tier will be the one that will be automatically accepted, which means that they will administratively just accept the application and will issue their validated certificate without actually checking anything. The second tier is anything else.

When it comes to anything else, basically that is open to any STC and then it will come to a negotiation between the FAA and CASA as to how deep they need to dig into that more complex STC that they deem outside that initial scope.

What we achieved with that first tier, which is acceptance, is that we managed to cover probably 80 to 90 per cent of the work that is currently being done in Australia, especially when it comes to part 25 and potentially part 29 transport category fixed wing and rotary wing aircraft. The acceptance will be related to cabin refurbishments, which is the main thing for airlines. Every 3 to 5 years they refresh the cabin to be more competitive. It will also cover automatic acceptance for emergency medical outfits, which is what is mainly done by our design organisations to equip new helicopters for state emergency services and so on. These are probably the most lucrative areas that currently could be exported to the US and other countries. From the savings point of view, what Qantas and Virgin told us is that each of these STCs when contracted in the US would cost between $2 million and $4 or $5 million. They do probably between three and five projects every year. So there are significant savings there. Also, there is the potential for further development of the manufacturing sector in that particular area. It is potentially undeveloped for the reason that in the past that work was mainly outsourced to the US. That is a big—

Senator FAWCETT: Under the current assessment of this limitation where does that leave, for example, the firm down at Moorabbin that under APMA approvals used to manufacture landing gear struts for Metroliners? They had a very large market in the United States. Where do they stand under this new interpretation of limitations?

Mr Nikolic : If they specifically work on landing gear or for part 25 aircraft they would probably need to go to a slightly higher level of review by the FAA. However, up to this point they did not have any option. They could not enter that market at all with the Australian—

Senator FAWCETT: They have been in the market for five or six years.

Mr Nikolic : Only if they have the FAA approvals. If they have an FAA approval, which means they would need to contract an FAA design organisation, and they have an overarching FAA production approval holder who would take them as a supplier, then they could access that market. With this particular arrangement they would be able to contract an Australian design organisation, get a CASA approved STC and then under their own production approval they would be able to export that. So the option is there. How deep the FAA would seek to go into validation of that STC is a matter of negotiation.

Senator FAWCETT: My next question goes to CASA's capacity to support industry. The feedback that I got extensively a couple of years back when we were doing the Forsyth review was that for people who want to export parts or services into foreign markets time to market was critical. Someone would identify, they would put up a request for tender, people would tender but then they had to deliver within a pretty quick time frame. The feedback that I got consistently was that for anything that was delegated under the old CAR 35 system, where an engineer would sign off on CASA's behalf, that tended to work well but, wherever CASA needed to have its people look at things, capacity constraints—and sometimes it was possibly linked to a shortage of people within CASA with the relative experience—meant that what an independent engineer could sign off within a week was taking up to a year. I think the worst case I came across was nearly two years for CASA to sign off, which meant that it was impossible for them to meet market demands. Where is CASA at at the moment in having the capacity to work with industry and get timely turnarounds so that they can take advantage of this?

Mr Weeks : Senator, that is a difficult question. Because industry is aware that this is likely to occur, we have certainly seen an increase in the number of applications for things like STCs. The branch is working on those applications as we speak. I think it is up around 40 or so. Each STC does take variable time to assess, depending on the complexity of the product that is being applied for. I am confident that with the staff we have we are prioritising the STCs that require the approval. But it is variable, unfortunately.

Senator FAWCETT: That is not quite my question, though. My question is: are you adequately resourced? If the government's agenda is to encourage innovation and agile activity by industry to export and if a regulatory clearance is part of the system that they have to negotiate, then if you are already under-resourced in your ability to respond in a timely manner—which is what I have been hearing from industry—if the demand goes up because of agreements like this it is just going to make the situation worse. My question is: are you currently adequately resourced? Industry is telling me the answer is no, so I am interested in your perspective. And either what would you need to do to be adequately resourced internally or do you have planning in place to look at how you can delegate engineering authority to third parties to whom CASA has said, 'We accept your degree of competence and you can sign on CASA's behalf'?

Mr Weeks : Senator, in broad terms—and I will ask Mr Nikolic to provide some greater detail—it would be fair to say that if we received a significant increase in applications that would place pressure on us. In the current process I think we have a reasonable degree of being able to handle that, but Mr Nikolic will give more detail on that.

Senator FAWCETT: Just before Mr Nikolic starts, the third part of that question was around delegating to third parties. You have done that in the past. That appears to have contracted somewhat. What is CASA's current view? Do you have plans to reimplement some of those delegated options?

Mr Weeks : Yes. Mr Nikolic will provide more detail, but we have moved away from the CAR 35 process into the CASR part 21 approved design organisation process. There are some things for which at the moment CASA only issues the approvals, but there are also a wide range of approvals that are delegated or given to a part 21 design organisation. Mr Nikolic will—

Senator FAWCETT: Again, sorry just before we go to that I want to talk at the strategic level initially. Again the feedback I have had from industry is that there are frequently people with more expertise in industry than CASA has been able to employ and retain, which leads to deep frustration in industry when there are capacity constraints at CASA. Why are you not looking for an opportunity to outsource the maximum extent possible, as opposed to retaining a range of functions within CASA, if industry can demonstrate that they actually have more capacity and demonstrated competence?

Mr Weeks : That is a good point and that is the model of part 21—to the maximum extent possible have the experts and industry undertake those types of design and approval processes. In terms of our obligations as a regulator, there are some things that we will obviously need to continue to be involved in.

Mr WHITELEY: Can you give a percentage break up of those two differentials? What do you retain for whatever reasons you retain? You said you retain some and you are acknowledging that you already do outsource some, so what bits?

Mr Nikolic : The percentage is difficult to give because all these tasks are random. They do not come in a scheduled manner. However, from a strategic perspective I can say that all minor modifications and minor repairs are already delegated 100 per cent to industry and with major modifications and major repairs there are two options. One is that industry would come to CASA and request that they approve, in which case we would be looking at what the actual request is and in many cases delegate that to industry, and in some cases, if it is a very complex task, we would probably do a partial delegation to industry and partially keep it in CASA. This is the setup that has been in place since CAR 35 days, so it has not changed.

We also looked into strategically delegating more to industry and for that purpose a regulation was put in place two years ago, which is known as subpart 21J approved design organisations. That particular regulation allows an approval to industry, to an approved design organisation, that basically will have almost all the options and approval powers as CASA. There are certain areas where industry would literally have everything except the issuing of the final certificate, which is kept for CASA. So that is already in place.

Senator FAWCETT: My concern comes from a recent visit I made of a firm which for many years has been one of Australia's leading aviation providers that modifies aircraft and does things with delegated authority. Now for the things that are not structural, not external to the aircraft, not impacting at all on the safety of the aircraft—and purely for domestic use, not for export—CASA are insisting on sending staff to look at frames and brackets that are being fitted inside the aircraft. So if you are resource constrained already I question why for something this company has done without issue, safety breach or anything for years CASA is now all of a sudden delaying the process considerably by insisting people come out and check step by step the installation of essentially some frames and brackets for equipment to go on the back of an aircraft. It strikes me that there is a mismatch there between what you are telling us and what is actually happening on the ground. I am just trying to understand why. There are always two sides to a story. I went for a visit and asked some questions and this is what I heard. I would like to hear CASA's perspective.

Mr Nikolic : Without getting into the detail of what firm that is—and it is difficult to talk hypothetically without a specific example—I would assume that we are talking about certain conformity inspections that are done by CASA. We are in the process of making arrangements to be able to delegate those as well. That has not been done up till recently.

Senator FAWCETT: Can I say: in the past—

CHAIR: We are running out of time, Senator. Can I just ask that you write to us and provide further information along those lines, and detail where you are at. You get the thrust of where Senator Fawcett is coming from.

Senator FAWCETT: Chair, can I just ask one must question?

CHAIR: Very quickly.

Senator FAWCETT: You can take it on notice if you need to. Does this agreement—and it strikes me that you are doing some restructuring to facilitate this agreement with the FAA—still provide local companies the option to say, 'We don't want to export. This is purely a modification. We would like to do it under an engineering order'—as they have done in the past? Or are they now required to go through this process? It strikes me that, if somebody has no intention to export, and if they are aware of all the limitations of doing it domestically and having to take it back to the FAA baseline, can they still do that? Or is that commercial impost an unintended consequence of this agreement?

Mr Nikolic : They can still do it using the existing systems. We are currently going through a post-implementation review of the Part 21. We are trying to find other solutions for general aviation apart from the approved design of implementation of 21J. We have a significant group of industry advisers in a working group that work with us. We are trying to find a workable, sensible solution so that not necessarily everyone needs to be a 21J-approved design organisation, and not necessarily everyone needs to have an overhead cost of a design organisation. So we are working on that, as well.

CHAIR: Deputy Chair?

Mr KELVIN THOMSON: In the interest of time, Chair, I will let that opportunity pass.

CHAIR: Mr Whiteley?

Mr WHITELEY: No, I will leave it. It was a very good line of questioning, I have to say. There are a number of obvious questions that could be followed up. I think we should wait. There is an obvious theme within the Senator's line of questioning that, I think, should be taken very seriously. The general perception is that the organisation is nowhere near as efficient or as best practice or as industry standard—whatever the words are—as it should be. My only query would be is that, at the moment, with the current level of applications, you are resource okay. But I think I heard you say that, if it goes up, which we believe it will, you probably would not be. My only question would be, and you might want to address it in your letter, is: right now, are you at industry standard? Are you as efficient through the approval process and the certification process as it would be if a third-party independent contractor was used? I would be interested to hear that.

CHAIR: Senator Fawcett, we do have a couple of minutes left if you have a final question.

Senator FAWCETT: You rushed me to a conclusion!

CHAIR: Sorry, but I thought the Deputy Chair had some questions which he wished to ask. I apologise for that. Being almost 11.45 am, we will bring it to a conclusion. Thank you for attending and for giving evidence today. If the committee has any further questions, the committee's secretariat may seek further comment from you at a later date.

MTF...P2