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The University of Western Sydney Faculty of Law Strategies of Enforcement Utilized by the Australian Civil Aviation Regulatory Body and their Influence on Safety Carol Lesley Durkin A Thesis submitted in fulfilment of the requirements for the award of Doctor of Philosophy 2009 STATEMENT OF ACKNOWLEDGEMENT Many people have helped me to have a better understanding of the issues, which formed the complex subject matter of this thesis, including a wide range of people within the Civil Aviation Safety Authority. Nevertheless special thanks must go to my supervisors Associate Professor Michael Head and Associate Professor Steven Freeland who agreed to take over my supervision after the untimely death of my original supervisor. I owe a great debt of gratitude to my former supervisor, the late Associate Professor Alexis Goh, for it is she who encouraged me at the very beginning when the going was tough and she who constantly reassured me that the subject was indeed worth the effort to keep pursuing. Finally, and by no means least, a special note of thanks must go to my husband Stanley, for his endless patience, understanding and support during the whole research process. STATEMENT OF AUTHENTICATION The work presented in this thesis is, to the best of my knowledge and belief, original except as acknowledged in the text. I hereby declare that I have not submitted this material, either in full or in part, for a degree at this or any other institution. i ABSTRACT Enforcement strategies utilized by the civil aviation safety regulator in Australia have to date, received scant attention from researchers. This thesis is a first attempt to look at such enforcement strategies and apply them to practical situations. It does so in an all embracing manner, taking into account the part played by aviation's historical origins, both international and domestic, that have led to the complex set of aviation safety regulations now in existence. It pays particular attention to the historical importance of Australia's former unique two-airline policy and the constitutional problems facing the early lawmakers dealing with a constitution written before the advent of aviation. It describes and examines regulatory theory as it relates to such enforcement strategies and attempts to bring together such theory with practice by applying it to practical examples. Finally it analyses how certain pressures and influences may have swayed the type of enforcement strategies pursued by the regulator at various times as these are evidenced in parliamentary inquiries and reported cases in the years since economic de- regulation of the aviation industry. The thesis puts forward the hypothesis that strategies of enforcement employed by the civil aviation regulatory authority have a profound effect on aviation safety. It contends that evidence drawn from inquiries and reported cases over a twenty-year period point to a regulator who prefers a compliance strategy of cooperation with industry, rather than a sanctioning or deterrence strategy. The thesis also emphasizes that the evidence drawn from various inquiries and coroner's inquests points to the fact that such a strategy, if it is lacking or seen to be lacking in adequate checks and balances, can pose an increased risk to aviation safety. Emphasis is placed on the need for the aviation safety regulator to be at all times cognizant of the dangers that are inherent in a compliance based enforcement strategy, especially where the regulator puts itself in 'partnership' with industry. A number of topics have been identified for further research. They include the need for a greater comparative analysis of enforcement strategies used by regulators in similarly aligned countries to Australia, the concept of regulatory 'capture' and a comparative inquiry into the sometimes ambiguous dual role of 'educator' and 'policeman' expected of the regulator. ii TABLE OF CONTENTS ABSTRACT i TABLE OF CONTENTS ii ABBREVIATIONS viii SUMMARY AND METHODOLOGY ix CHAPTER 1 THE EVOLUTION OF AVIATION'S REGULATORY RULES: FROM LIFT-OFF TO 1939 1 1.1 Introduction 1 1.2 The First Two Decades of International Aviation 2 1.3 International Aviation in the Aftermath of World War I 6 1.4 Australia's Early Contribution to the Evolution of Aviation 8 1.5 The Australian Scene 1921 - 1939 16 1.6 Constitutional Turbulence in the 1930s 21 1.7 State and Federal Legislative Co-operation 24 1.8 The Kyeema Disaster 27 CHAPTER 2 THE RAPID EXPANSION OF CIVIL AVIATION IN THE AFTERMATH OF WORLD WAR II: 1939 - 2000 32 2.1 The Chicago Convention of 1944 32 2.2 The International Civil Aviation Organization (ICAO) - A lasting legacy of the Chicago Convention 38 2.3 The Role of ICAO and its Historical Evolution as Aviation's International Regulatory Body 41 2.4 The Dominant Role of the United States 46 2.5 The Development of Safety Audits and the Role of the International Air Transport Association 50 2.6 Australia's Civil Aviation Situation - Post World War II 52 2.7 Australia's Two-Airline Policy, its political background and the style of regulation with which it was accompanied 54 iii 2.8 The Legal Basis of the Two-Airline Policy 58 2.9 The Australian Domestic Scene Following Deregulation 66 2.10 The Effect of Deregulation on the Regulator 68 2.11 Two Major Air Crash Investigations and Two Damning Inquiries 71 2.11.1 Monarch Airlines 72 2.11.2 Seaview Airlines 75 2.11.3 Commission of Inquiry into the Relations between the CAA and Seaview Air 79 2.11.4 The Plane Safe Inquiry 83 CHAPTER 3 CONSTITUTIONAL ISSUES 88 3.1 Introduction 88 3.2 The Commonwealth Trade and Commerce Power - Section 51 (i) 89 3.3 The External Affairs Power - Section 51 (xxix) 96 3.4 The Corporations Power - Section 51 (xx) 101 3.5 Interstate Trade and Commerce - Section 92 101 3.6 Territories of the Commonwealth - Section 122 103 3.7 The Supremacy of Commonwealth Laws - Section 109 104 3.8 The Power to enter into International Treaties - Section 61 105 3.9 Current State Commercial Regulation 106 CHAPTER 4 THE CIVIL AVIATION REGULATORY OUTLOOK AT THE BEGINNING OF THE TWENTY-FIRST CENTURY 108 4.1 ICAO Enters the Twenty-first Century 108 4.2 ICAO's Plan for its Future Role 108 4.3 Australian Regulatory Management Crisis in the late 1990s 110 4.4 CASA's 1999/2000 Audit 112 4.5 The ARCAS Airways Inquiry 116 4.6 CASA's Recent Enforcement Policy 118 4.7 Safety in Regional Aviation 128 iv 4.8 Regulatory Reform 131 4.9 The Lockhart River Crash 137 4.10 The Relationship between CASA and the ATSB 141 4.11 The 2008 Senate Inquiry into CASA's Administration 145 4.12 The 2008 'Green Paper' on a proposed Aviation Policy 152 CHAPTER 5 REGULATION THEORIES AND STRATEGIES OF ENFORCEMENT 156 5.1 Introduction 156 5.2 Regulation Defined 157 5.3 Current Theories of Regulation 159 5.4 Public Interest Theory 161 5.5 Private Interest Theory 163 5.6 Institutionalist Theory 166 5.6.1 Tripartism 167 5.6.2 Regulatory Space 170 5.6.3 Systems Theory 172 5.7 Strategies of Enforcement 174 5.8 The Traditional Model of Compliance and Enforcement 175 5.9 Responsive Regulation 180 5.10 Smart Regulation 183 5.11 Strategies of Enforcement and the Role of Discretion 187 5.12 The Practical Dilemma of the Aviation Safety Regulator 191 CHAPTER 6 AN ANALYSIS OF PARLIAMENTARY AVIATION INQUIRIES REVIEWS AND REPORTED CASES: 1988 - 2008 193 6.1 Introduction 193 6.2 Section 1: Inquiries and Reviews 1989 - 1995 198 6.2.1 Regulatory Capture, as highlighted in the Plane Safe and Seaview Inquiries 205 v 6.2.2 The Difficulty of Reconciling User-pays with Effective Regulation 212 6.2.3 The CAA's Enforcement Policy - Contradictory and Confusing? 214 6.2.4 Reported Cases 1988 - 1995 223 • Re Aquatic Airways Pty Limited and Civil Aviation Authority (1989) 223 • Burns and Civil Aviation Authority (1989) 226 • Millar and Civil Aviation Authority (1990) 230 • Re Darren McPherson and Civil Aviation Authority (1991) 232 • Re Ronald F McInerney v Newman Air Charter Pty Ltd v Civil Aviation Authority (1992) 234 • Robin Louis Nominees Pty Ltd and Civil Aviation Authority (1994) 238 • Moores Airspray Pty Ltd and Civil Aviation Safety Authority (1995) 241 6.2.5 Summary of the period 1988 - 1995 243 6.3 Section 2: Inquiries and Reviews 1996 - 2002 244 6.3.1 The ARCAS Airways Investigation and Allegations of Institutional Timidity within CASA 245 6.3.2 Regulatory 'Capture' 246 6.3.3 Anecdotal Evidence from an Aviation Journalist 251 6.3.4 Reported Cases 1996 - 2002 256 • Richards Aviation Services and Civil Aviation Safety Authority (1996) 257 • Ian Reginald Wall (Trading as South East Coast Air Services) and Civil Aviation Safety Authority (1998) 260 • Michael Russell Mark Broadbent v Civil Aviation Safety Authority (1999) 263 • Re Coral Sea Airlines Pty Ltd and Civil Aviation Safety Authority (1999) 265 • Paggi (trading as Paggi's Aviation) and Civil Aviation Safety Authority (2000) 269 vi • Mark Allen trading as Jackaroo Aviation and Civil Aviation Safety Authority (2000) 272 • Ord Air Charter Pty Ltd v Civil Aviation Safety Authority (2000) 274 • Sydney Harbour Seaplanes Pty Ltd and Civil Aviation Authority (2001) 279 6.3.5 Concluding thoughts on the period 282 6.4 Section 3: Inquiries and Reviews 2003 - 2008 283 6.4.1 The 'Swing of the Pendulum' and The Senate Inquiry in 2008 283 6.4.2 CASA's Current Enforcement Policy 288 6.4.3 Reported Cases 2003 - 2008 295 • Andrew Brazier and Civil Aviation Safety Authority (2004) 295 • Cape York Airlines Pty Ltd and Civil Aviation Safety Authority (2004) 298 • Darrel Mowbray Cole and Civil Aviation Safety Authority (2004)

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