Those weaknesses include a lack of knowledge of rail routes used to transport dangerous goods, too few safety auditors, poorly trained inspectors and an absence of follow-up or sanctions when safety problems are found.
"What we identified was that there were weaknesses in all aspects of how Transport Canada is overseeing rail safety systems in the (rail) companies," auditor general Michael Ferguson told a news conference Tuesday.
His report found that only 14 safety audits of Canada's 31 federally regulated railways had been completed in the previous three years — just a quarter of the audits Transport Canada had expected to carry out.
Moreover, "the scope of the department's audits is very limited," stated the report.
And eight of those 14 audits focused on just the two largest operators, CN and Canadian Pacific, leaving Canada's smaller operators largely unchecked.
One of those small rail companies was the Montreal, Maine and Atlantic, whose unattended, single-operator train carrying 7.6 million litres of volatile crude oil derailed and exploded in Lac-Megantic on July 6, killing 47 people.
The auditor general's report, which was wrapped up barely a week before the crash, explicitly states it makes no assessment of the Lac-Megantic disaster.
However, Ferguson acknowledged Tuesday that the deadliest rail accident in Canadian history highlights the audit's significance.
"Any time there's a serious, significant incident, it's always going to raise questions," he said.
"Particularly when we come out with an audit that says there are weaknesses in the way the department oversees this system. When you put those two things together, it's going to cause those types of questions."
Transport Minister Lisa Raitt issued a statement blaming her bureaucrats for the audit problems.
"I've told Transport Canada officials that the public expect better of them," she said in the release.
"I have made my expectations to my department clear that these recommendations will be fulfilled."
At a later news conference, Raitt insisted "we're all pulling in the same direction."
"This is about creating a safety culture for the whole rail system and the officials at Transport Canada are fully committed to this."
Among the issues identified by the auditor general:
— Transport Canada lacks information on which routes are used to transport dangerous goods.
— The department is not getting the internal risk assessments conducted by railway companies.
— Information on the condition of railway bridges is missing, as is financial information on privately owned railways.
— The department hasn't properly developed regulations to establish when a railway gets an operating certificate.
"The department did not take any enforcement action to require railways to maintain adequate and effective systems in place, even when inspectors identified deficiencies that could affect the safety of railway operations," says the audit.
Many of the problems are long-standing issues that have been previously flagged, dating back a dozen years to when the federal government adopted a new rail safety regime called Safety Management System, or SMS.
The SMS program relies on Ottawa doing in-depth safety audits to ensure rail operators are complying with whole-system safety protocols, rather than just spot checks for ad hoc deficiencies.
Instead, the auditor general has found that Transport Canada still carries out tens of thousands of poorly designed inspections by under-trained inspectors. Safety audits, meanwhile, languish.
Ferguson suggested the government needs to rethink or recommit to the SMS model.
"They need to reconsider: Are audits the right approach? Audits augmented by inspections, is that the right approach?"
Raitt defended the SMS program.
It was begun by the previous Liberals in 1999 "on good solid policy reasons, and that still exists today," said the Conservative minister.
With 46,000 kilometres of track and the third-biggest rail system in the world, Canada's rail inspections can't cover everything, said Raitt.
"The SMS makes sense. It's accepted by the Transportation Safety Board."
In 2009, Transport Canada estimated it needed 20 systems auditors to do the work properly — even though the auditor general found this estimate was not based on audit methodology or other key determinants of workload. Be that as it may, the department has just 10 auditors.
It will take years to audit all 31 federally regulated railways, says the report, and Ottawa has just added responsibility for another 39 non-federal rail operators to its safety workload.
Some 40 per cent of Transport Canada's inspectors, meanwhile, are eligible to retire in 2015.
Raitt said Transport Canada has agreed with all the report's findings and is working to put in place fixes, starting this winter and running into 2016.
"In our view, it is taking too long to resolve significant safety issues," the auditor general concluded.
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