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CASA Annual Report 2003 04 Part 1: Overview of CASA in 2003-04

Overview of CASA in 2003–04

This year in brief

A new phase for CASA

As part of its aviation reform agenda, the Government sought more direct oversight of CASA’s regulation of aviation safety. Major corporate governance changes were introduced in the Civil Aviation Amendment Act 2003, which became law on 21 October 2003. These changes:

  • abolished the CASA Board, but retained CASA as an independent statutory authority
  • designated the Director of Aviation Safety as chief executive officer (CEO), responsible for managing CASA under the Minister
  • gave the Minister stronger and more direct control over CASA’s governance and accountability.

Under the new arrangements, the Minister has a greater role in setting policy directions and performance standards for CASA, while the role of Director/CEO effectively combines the responsibilities of the former director and the former board. To ensure regulatory independence, the Minister may issue only general directions and notifications about the way CASA performs its regulatory functions.

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New directions

The Minister issued a new Charter Letter to CASA in November 2003, setting the tenor for CASA’s future approach to regulation.

The Charter Letter recognises that safety is CASA’s primary concern, but requires that CASA also be aware of the Government’s aviation reform agenda and respond fully to Government policy directions and decisions. CASA is now working more closely with the Secretary of the Department of Transport and Regional Services (DOTARS), who is responsible for policy advice to the Minister in respect of all portfolio matters, including in respect of CASA.

The Minister wishes CASA to work with the industry firmly but fairly, and CASA was given better tools to pursue those ends with the introduction of a new enforcement regime in February 2004. The Minister has asked that CASA pursue a dual role as regulator and educator, and act in a way that ensures industry meets its safety obligations but at the same time permits growth and development in Australian aviation.

CASA’s new Chief Executive Officer also introduced change through a series of formal Directives that:

  • refocus the Regulatory Reform Program
  • initiate a new approach to risk assessment and management, taking an industry-wide perspective
  • move to increase the presence of CASA inspectors in the field
  • set the parameters for a new complaints handling mechanism
  • improve CASA support to aviation manufacturers
  • revisit the scope and cost of the CASA Improvement Program
  • put in place new frameworks for policy-making and delegations.

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Ongoing change for the aviation industry

Uncertain times continued for the aviation industry, with all sectors facing considerable economic and competitive pressures. These pressures and the availability of new technologies both prompted and provided the opportunity for change.

There was ongoing rationalisation and restructuring of the industry in terms of operators, size of operation, types of aircraft used and routes flown. For CASA, this environment was reflected in continuing high demand for regulatory services, the need for new standards, and potentially increased safety risks that required extra vigilance.

Major work

Major projects on CASA’s desks during the year included:

A number of these projects had a high public profile and all involved a significant cross-CASA and/or cross-agency effort.

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Finances

Overall result

The net operating result for the financial year was a $3.992 million surplus, against a budgeted operating deficit of $2.748 million.

This is a particularly good outcome, given the financial pressures against CASA’s operating budget, including a shortfall of $2.360 million against aviation fuel excise revenue.

Operating expenses

Staffing numbers dropped slightly, with an average staffing level of 689 in 2003–04 compared with 699 in 2002–03. Employee expenses were largely within budget.

Operating expenses have remained under continued scrutiny, to manage and minimise spending in non-essential discretionary areas (particularly international and domestic travel, and administration) and to ensure value for money. This has significantly contributed to containing expense increases and offsetting the large fall in aviation fuel excise revenue.

Savings were achieved by reducing the number of planned overseas visits, use of the Internet domestic travel fares, restriction of non-essential travel and reduction of the number of non-essential conferences and seminars held with the aviation industry.

Project expenses, including the CASA Improvement Program, the Regulatory Reform Program Implementation and minor projects were also under budget due to slippages in planned project activities.

Operating revenue

The operating revenue for CASA in 2003–04 was $110.859 million from appropriations, fees and miscellaneous revenue, as set out below.

Appropriation funding of $106.019 million was paid to CASA during 2003–04 for CASA’s price to Government for outputs. This was comprised of the following:

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Table 1: Appropriations, 2002–03 and 2003–04

Revenue source 2003–04 $m 2002–03 $m
Commonwealth Appropriations 45.599 44.846
Special Appropriations 60.420 53.964
Total 106.019 98.810

Funding from aviation excise collections is appropriated to CASA under the Aviation Fuel Revenues (Special Appropriation) Act 1988. During the year, domestic aviation fuel consumption declined by 3.8 per cent, thereby leading to a corresponding decline in aviation fuel excise revenue against budgeted forecasts.

This decline in consumption is largely due to the continuous replacement of older aircraft fleets with more fuel-efficient next generation aircraft, which are better suited to Australian routes and passenger volumes. The decline in consumption was partially offset by the supplementation provided by the Commonwealth through the elevation of excise and customs duty on aviation gasoline and turbine fuel to 2.854 cents per litre from 1 July 2003.

Under the schedule of fees in the Civil Aviation (Fees) Regulations, CASA charges fees directly to the aviation industry for regulatory services provided. Revenue received in 2003–04 was $3.203 million compared to $3.459 million in 2002–03.

Other miscellaneous revenue totalled $1.637 million in 2003–04 compared to $1.983 million in 2002–03, due to:

  • a decrease in interest revenue as a result of a reduction of available investment funds arising from expanding capital requirements, financing of operating deficits in 2002–03 and 2001–02, and a general decrease in interest rates
  • a decrease in other sundry revenue.

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Fees review and long-term funding strategy

CASA’s functions under the Civil Aviation Act 1988 include provision of regulatory services, such as issuing certificates, licences and permits to the aviation industry. At present, CASA has limited cost recovery arrangements in place for provision of these regulatory services.

In December 2002 the Government adopted a formal cost recovery policy to improve the consistency, transparency and accountability of Commonwealth cost recovery arrangements and promote the efficient allocation of resources. The Government issued Commonwealth Cost Recovery Guidelines for Information and Regulatory Agencies, to assist with the design and implementation of the policy. In accordance with this policy, the Government has set a five-year review schedule. CASA is required to undertake its review in 2004–05.

During 2003–04 CASA, DOTARS and the Department of Finance and Administration reviewed CASA’s long-term funding arrangements. As part of this examination, it was noted that CASA’s current fee levels were well below the cost of providing services. As well as this, CASA has absorbed the Goods and Services Tax which, since its introduction in 2001, has applied to some of CASA’s service fees.

 

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Highlights

  • The total accident rate in the general aviation sector is estimated to have fallen at a steady rate of 4.4 per cent per year over the past decade, while the fatal accident rate has declined by 5.7 per cent each year.
  • The total accident rate in the regular public transport sector is estimated as averaging, over the decade, 0.2 per 100 000 hours for the high-capacity sector and 1.1 per 100 000 hours for the low-capacity sector.
  • A fairer, more transparent, enforcement regime in which natural justice is enhanced and ‘the punishment fits the crime’ was introduced.
  • Six new CASR Parts were made, relating to enforcement, instrument flight procedure design, medical, synthetic training devices, dangerous goods and aircraft registration.
  • Industry completed the transition to new production rules under CASR Part 21 and CASR Part 92 (Dangerous Goods).
  • CASA developed an award-winning quantitative risk model to assess, compare and predict safety risks.
  • A comprehensive new Surveillance Procedures Manual was implemented to ensure a consistent approach.
  • The CASA Service Centre continued to reduce the time taken to process certain certificate applications and improve the on-time issue of certain certificates. 86 per cent of survey respondents were happy with the service they received.
  • CASA achieved a net operating result for the financial year of $3.992 million surplus against a budgeted operating deficit of $2.748 million.
  • CASA broadened its risk-based approach to regulation from an individual to a systemic focus, which will provide a better base for safety standards and another driver for safety education programs and surveillance.
  • CASA began a broad review of the safety of the aviation system to identify major risks by sector and test CASA’s activities against those risks.

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