Independent Review of Rail Safety Arrangements in Australia

Booz Allen & Hamilton
Sydney
September 1999.

Download the Report to the Standing Committee on Transport

Executive Summary

• Introduction
• The Railway Industry Environment
• Implementation of the 1996 IGA on Rail Safety
• Main Findings
• Interim Arrangements
• Priorities
• New Intergovernmental Agreement
• Recommendations

Introduction

In April 1999 the Australian Transport Council agreed that the Standing Committee on Transport establish an Independent Review of rail safety arrangements. The Review was to focus particularly on the interstate system, was to include a review of the 1996 Intergovernmental Agreement (IGA) on Rail Safety and have input from the self-review being undertaken by the Rail Safety Committee of Australia.

Booz·Allen & Hamilton was commissioned in July 1999 to undertake the Independent Review and to report in time for Ministerial consideration at the ATC meeting in November 1999. The study objective was to recommend the most efficient and effective rail safety management system that will adequately satisfy the safety accountabilities of industry participants and governments.

The Review was undertaken with extensive industry consultation and analysis of the issues, of the principles of railway safety management and of a range of models for future railway safety arrangements. The results of the work are presented to the Standing Committee on Transport in a detailed report dated September 1999.

The Railway Industry Environment

Railways in Australia perform diverse functions ranging from tourism to heavy freight haulage. The industry has an annual turnover of $7 billion. It plays a major role in export trade in moving grain, coal and minerals to port, moves large tonnages of freight within and between States and, as an urban transit mode, plays a critical role in the efficiency and structure of Australia's major cities. Its task is growing, but it is subject to intense competition from road transport, and within the rail mode itself.

The railway industry is now essentially national, and railway business is conducted over various networks without regard (except as an impediment) to network boundaries. The defined interstate network is of little commercial relevance to most operators in the present environment, and of no direct significance for railway safety. Export freight movements largely do not use the defined interstate network; however, there is a strong case (equal to that for interstate traffic) for these to be considered in a national framework given their importance to Australia's economy.

The railway industry has been subject to intense change as the reform agenda and competition policy initiatives have taken effect. The pace of this change has accelerated as the end of the 1990s has approached.

The most significant outcome from this change process has been the fragmentation of the industry into multiple operational, management and regulatory jurisdictions. The key issue faced by policy makers with regard to railway safety in this environment is to ensure that safety does not become a casualty of the radical and accelerating economic reforms.

Implementation of the 1996 IGA on Rail Safety

Substantial progress has been made with railway safety management in Australia and arrangements envisaged under the 1996 IGA have reached a stage of maturity where the administrative process is now functioning. There is a great deal of goodwill and effort by both industry participants and accreditation authorities to make it work and to enhance the efficiency of the process.

The overall intention of the 1996 IGA on Rail Safety was to achieve a cost effective, nationally consistent approach to railway safety, ensuring no barrier to entry of third party operators. The present railway safety arrangements are as envisaged in that IGA:

• Each Party to the IGA except the Commonwealth has put in place a regulatory regime and accreditation authority for interstate (and other) operators and owners^[1].
• Owners and operators have been accredited or have interim accreditation.
• The mutual recognition principles, after some establishment problems, are effectively in place, with a significant level of national consistency.
• A panel of investigators has been established.
• The Railway Safety Standard parts 1-6 have been completed, with part 7 (covering open and independent investigations) outstanding.
• The review provisions are now being put into effect through the ATC decision to undertake this Independent Review.

At the same time there are little, if any, reliable and consistent data being assembled at a national level from which to measure performance, or to assess outcomes from the process. The process is presently procedure based, rather than based on assessment of risk, performance and outcome.

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Safety regulation of the railway industry through accreditation of operators and of owners is regarded by all sectors of the industry as a fundamental requirement. There is a consensus among industry participants that the co-regulatory model for railway safety regulation is appropriate and should continue. However, achieving a national agenda with State based safety arrangements continues to expose shortcomings as the industry develops and as the distinction between operators on the interstate and intrastate networks becomes increasingly redundant.

The shortcomings relate mainly to role differentiation, interface management, performance and risk information, and administration. The issues are exacerbated by the multiple regulatory jurisdictions and by the structure of the administration, for which there is no national accountability on a day to day basis. They require a greater national focus on information management, consistency of interpretation and on risk management and safety performance.

Main Findings

The review has found that stronger national roles and accountabilities are needed to better fulfil the goals of the IGA, particularly the goal of 'a cost effective, nationally consistent approach to rail safety'.

Safety regulation of the railway industry lags behind the industry itself, to the point where it may become an impost on productive management. It also lags behind best practice, exemplified by a co-regulatory, national, performance-based risk management regime. Such a regime is consistent with the drive for national consistency in its chief competition, road, and with the national approach that exists in aviation and increasingly in the maritime sector.

The preferred model for railway safety arrangements in Australia is premised on a National Rail Safety Regulator established as a statutory corporation under Commonwealth legislation mirrored by the States and Territories. The role of the Regulator would be to accredit operators and owners on the basis of their risk management processes, to maintain a statistical information base, to manage compliance and performance and to apply sanctions (as a last resort) where the necessary outcomes were in doubt. The model also includes a separate Rail Safety Investigations Authority, set up with the necessary investigation powers, and research and analytical capability, as an independent unit within the Australian Transport Safety Bureau (ATSB). The Investigations Authority's prime role would be to perform independent investigations for all serious accidents and incidents, and for other incidents when requested by appropriate parties.

There are arguments for all of the information and analysis functions to be placed with the Investigation Authority. These are primarily concerned with maintaining an independent oversight of the regulatory regime, and this is the basis of the models used in the other modes administered by ATSB. In the co-regulatory model, in Australia unique to rail, the information base will form a key input to the Regulator's monitoring of performance of the operators and owners. There is on this basis a preference for the database to be maintained by the Regulator. The essential features are that the data are available to both bodies, and that the separation of regulation and investigation is maintained.

The proposal for a national regime of this kind is consistent with recommendations from previous public inquiries which propose various forms of a national railway safety regulator and independent investigator, and with the endorsement by the Rail Safety Committee of Australia of a national regulator as an ultimate goal. It would also facilitate the implementation of the recommendations of the report "Independent Investigation and Open Reporting of Rail Occurrences" endorsed by ATC in April, 1999.

The review notes the need to consider the special requirements of the urban passenger systems in the major cities, and of local, isolated tourist and resources railways. The review therefore provides an option to allow a limited number of small scale subordinate regimes, certified by the national regulator, to manage safety in such special cases. This would require careful consideration, and under no circumstances should it force any operator into multiple safety accreditation.

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Interim Arrangements

National regulation and investigation represents a radical change in safety arrangements in an industry already undergoing radical change. This itself presents a risk profile warranting analysis in its own right.

A two-phase approach to enhancing the railway safety arrangements is therefore recommended.

As an immediate priority, it is recommended that Ministers agree to establish arrangements within the Commonwealth Department of Transport and Regional Services (which includes the Australian Transport Safety Bureau) for coordination of railway safety management, and for collation and analysis of statistical and other data on operational incidents and accidents. The Commonwealth would also undertake investigation of major incidents and accidents on request from the States, and provide open and timely reporting to industry on safety trends and investigation results.

As is now occurring with aviation (BASI), maritime (the Marine Incident Investigation Unit), and the safety research role of FORS for the road sector, the investigation function (and possibly other functions such as research) could best be performed by an independent rail safety investigation unit to be established within the Australian Transport Safety Bureau in the Commonwealth Department of Transport and Regional Services.

The Department of Transport and Regional Services should also be tasked by ATC to improve coordination and consistency among State Accreditation Authorities, working with the Rail Safety Committee of Australia and major industry players as an interim arrangement. As part of this role it would progressively move toward administering mutual recognition and accreditation fees for all interstate and multistate operators and owners.

These interim arrangements meet the dual need to retain the strengths evident in the current regime while moving towards a National Rail Safety Regulator and a Rail Safety Investigations Authority established under Commonwealth auspices.

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Priorities

The major priorities of the interim administration should be:

• To assume responsibility for management of the national incident data-base, including development of consistent definitions and normalisation.
• To develop performance benchmarks for rail safety.
• To ensure that appropriate accountabilities for interface management are verified by accreditation authorities for accredited owners and operators.
• To progress the development of a risk management basis for rail safety arrangements.
• To implement a new accreditation fee structure that removes the anomalies now present and apportions charges on the basis of the risk profile of the industry sector concerned, and which acknowledges that there exists a 'public good' component in the benefits of railway safety management. A

New Intergovernmental Agreement

A new Intergovernmental Agreement on Railway Safety is required to confirm these arrangements and to underpin the establishment of a National Rail Safety Regulator and Rail Safety Investigations Authority. International experience and the experience in other Australian transport modes strongly suggest that interface issues that can cause safety problems, and inconsistencies that cause complexities for the industry, are most efficiently and effectively addressed by a strong national regulator. There is similar evidence, and industry support, for a national investigation body.

Ministers need to determine whether the regulatory environment (including safety) in which railways in Australia operate should constrain or facilitate their national role, and hence their contribution to international competitiveness. The new IGA should reflect a national perspective rather than merely interstate.

The proposals from this review can be expected to lead to savings by the industry, and in the system overall. At the very least, placing the resources which are currently deployed in rail safety accreditation into a coherent, nationally accountable, framework will lead to a broader competency base than is possible with multiple smaller bodies.

Railway operations differ from other sectors in the much stronger systems linkages between the operators and the supporting medium (the track) than occurs in other modes. Highly complex Interface management, that in a co-regulatory regime would fall to the track manager and operator, would otherwise need to be undertaken at a regulatory level. The industry also differs in the corporate nature of the majority of players - road, aviation and maritime jurisdictions need to deal with both corporate entities and with many individuals as operators (car drivers, small aircraft and boat owners). Individuals are not in a position to construct risk management plans in the way that businesses are.

For these reasons the prescriptive regulatory approach of the aviation, maritime and road sectors is less appropriate for rail. This is also the view of the industry. The new Intergovernmental Agreement should therefore continue to be based on the co-regulatory model.

As with the previous IGA, owners and operators would be accredited consistent with the provisions of the Australian Rail Safety Standard. Particular emphasis should be placed on the risk management provisions of the Standard and, in addition, accreditation should seek to reflect measurement of performance and outcomes.

Recognition of nationally accredited operators and owners would apply in all jurisdictions that are party to the Agreement. Operators or owners accredited under subordinate regimes would be restricted to the jurisdiction of the certified subordinate regime.

The new IGA should require the Rail Safety Investigations Authority to undertake independent investigations of all serious accidents and serious incidents, and other incidents when requested by appropriate parties. A State or Territory may request an RSIA investigation, at the State or Territory's cost, of incidents and accidents outside of direct RSIA jurisdiction. Powers, protection and conditions would be provided in RSIA legislation.

The Parties should provide for the Commonwealth to manage the provision of consistent performance, cause and other data on accidents and incidents, and make available analyses and trend information on a basis agreed between the Parties. The Parties should likewise agree for the Commonwealth to collect all fees payable by accredited owners and operators operating in multiple jurisdictions until the regulatory function is transferred to the Commonwealth. Until this occurs the Commonwealth would make payments to the State Regulatory Authorities on a basis agreed between the Parties.

The Interim arrangements in the new IGA should reflect the two year timetable proposed in the Independent Review.

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Recommendations

It is recommended that Ministers agree as follows:

Recommendation 1:
To the Commonwealth establishing a national body for rail safety regulation.

Recommendation 2:
To the Commonwealth establishing a national rail safety investigations authority.

Recommendation 3:
That the national rail safety regulatory body (NRSR) and the rail safety investigations authority (RSIA) be established as Commonwealth statutory bodies.

Recommendation 4:
That NRSR be constituted with an expert board of advisors.

Recommendation 5:
That NRSR maintain a corporate plan approved from time to time by the Commonwealth Minister with advice from the Australian Transport Council.

Recommendation 6:
That enabling legislation provide for protection of witnesses from prosecution on the basis of evidence provided to RSIA.

Recommendation 7:
That fees charged to the industry for accreditation reflect the risk profile of the sector within which the operator/manager works.

Recommendation 8:
That the Commonwealth undertake selected national rail safety functions within existing departmental structures ahead of the creation of a national rail safety regulatory regime.

Recommendation 9:
That risk management principles, and the issues of roles and responsibilities, interface management and information management should be addressed as priorities under Commonwealth leadership.

Recommendation 10:
That other national initiatives, particularly harmonisation of standards, be progressed in parallel, with strong accountable leadership drawn from the industry and supported nationally.

Recommendation 11:
To a two year target to put in place the National Rail Safety Regulator and the Rail Safety Investigations Authority.

Recommendation 12:
That the Commonwealth, States and Territories enact the necessary mirror legislation to empower the proposed Commonwealth rail regulatory and investigatory bodies to undertake the functions envisaged.

^[1] 'Owners', for the purposes of this report, include track managers.

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Last Updated: 9 June, 2005