Interview – Dick Smith

DS: I believe someone on the outside looking in would say that virtually nothing has changed. In fact people often claim to me it has actually got worse and I was recently welcomed by a prominent member of the aviation community saying to me, “Well how are things in the Cease Aviation Authority”. But being within the organisation and being able to see the groundwork which is being done, I believe that there is certainly light at the end of the tunnel. I have a feeling that there is potential to become, as the old Department of Aviation was fifteen years ago, the best of its type in the world.

JT: At the moment there appears to be something like a dozen specific reviews currently coming up for final consideration over the next six months. Do you think the majority of these reviews will rectify the problems you identified in your book, ‘Two Years in the Aviation Hall of Doom’, back in 1984?

DS: I believe they will because in the past it was believed, and I think correctly believed, that a review was instigated basically to make sure that the whole matter was delayed and then possibly forgotten about.

What’s happening now is very different in that there is, especially at the board and senior management level, a real intention to make the changes that are necessary and you can’t make changes, especially where safety is involved, unless there is very good objective evidence available. Just in the year that I have been on the board, when someone has come up with a good objective reason for changing something, especially if it is something that will save costs to the industry and at the same time not reduce safety, that suggestion has immediately been acted upon. Now if you look at say the Yates/Terrell inquiry into the certification of aircraft, I have believe that if the objective evidence shows that we can change to a far quicker and less expensive form of certification while not reducing safety, then I have no doubt the changes will be made.

JT: And standards? accept overseas certification

DS: If that’s what the report shows is the best way to go, I have no doubt that we will do that. I believe that when it comes to aviation safety, objective evidence is most important and I’ve always had difficulty in trying to fathom out why we should have a different standard to the United States or England, especially when our own standard is ultimately so close. Normally we have a few minor differences. Now, I have not yet seen the evidence that shows that gives a commensurate increase in safety for the extra cost. If the evidence shows that, I will personally support retaining our present system. If don’t show it, I believe that we have got to make a change.

JT: Would this actually save money within the CAA?

DS: The key to it will be trying to save money because we have got corporate aims which are totally orientated around cost to the Authority which then of course reflect cost to the industry and the travelling public. Our aim is to reduce costs wherever possible while maintaining an acceptable level of safety. This is the extremely healthy difference between the Authority and the old Department of Aviation.

In the past with the old Department, the money came out of the Budget which meant competing with other causes such as Aboriginal Affairs, Social Services and dozens of others. Nowadays we substantially raise our money from the industry and obviously this has the advantage because it means that unless the industry is successful and lots of people fly, the Civil Aviation Authority isn’t successful. We are basically in it together for the first time.

Now lots of people in the industry would say that there are many people in the Authority who still don’t grasp this and I would agree with that. It’s going to take time before everybody realises that not only is this so but it is healthy for us to be economically bound together. For example, this now means that if there is a lowering in safety in aviation less people will fly and this will not only hurt the industry but it will also affect the Authority – there will be less income for the CAA, less room to pay better salaries and to buy better equipment. I believe this is healthy because it means that now not only do we have a government directive to ensure safety but we also have an economic incentive to ensure safety.

JT: One complaint we continually get from operators is that they can bring in an aircraft that is well known in Australia, say a Piper Chieftain or a Bell Jetranger and yet it still takes four to six weeks or more to actually get it on to the register and yet at the same time they are paying an enormous amount of interest on a debt that could be as high as a million dollars. What is being done to try and make this registration of already certificated aeroplanes a bit more manageable?

DS: What’s being done of course is the review being undertaken by Ron Yates and Mike Terrell. I am particularly concerned about this situation and I think I know the reason for it. Our people in airworthiness have a very skilled expertise in the knowledge of the airworthiness side of aircraft, ie; will a wing fall off if too much load is put on it, how much seNice an engine requires and all of the type of things which are important for maintaining safety. What they don’t have training in is the other side of the cost/safety equation and that is the resultant cost of the requirements. This is where the industry has really fallen down because even though it has talked and complained emotively, and mostly individually, it’s never come up with the factual evidence of what the actual costs are. I have a feeling, and I have got this feeling because I have personally had three aircraft put on the Australian register, that these extra costs probably add to millions of dollars a year. Once we can find out what these specific costs are, someone then can work out what extra level of safety we get from them, if we do or not, and then make a decision on whether they are necessary.

One thing I can add. I have absolutely no doubt that if the Yates/Terrell inquiry comes up with good objective evidence to show that we can accept an overseas standard as our standard without any extra changes and that we can do that with a large cost saving and with no reduction in safety, I have no doubt that we will do it.

JT: How do you think that we will be able to cope under deregulation in the future with a significant decline in the numbers of in the field surveillance people from airworthiness?

DS: I see a real problem there and this is a result, of course, of the wages accord. Now, if you want to have the advantages of an accord, and they have been considerable for industry, there always seems to be an equivalent disadvantage. The disadvantage in this case is that there is an anomaly. It seems obvious to me that in the case of air traffic controllers in certain locations and in the case of airworthiness inspectors that we simply have to pay more to get the required numbers. The industrial systems is now looking into this so I’m hopeful changes will be made.

JT: How is airworthiness going to be able to physically cope with the increase in aviation activity though with such a large decline in people at the work face?

DS: Well there will have to be a lot more industry self regulation. There is now an increasing understanding in the CAA that the industry also has an enormous vested interest to be safe. It is really only the fly by night operator, who tends to be the very small operator, who is not interested in the long term success of a business.

Any sensible business owner realises that safety is important if you want lots of people to use your service. But as well as that, I still believe that you need to have good surveillance and I am personally concerned that we are going to go into a system of deregulation where we are going to need, I believe, a lot more surveillance and we really don’t have the people to do it. Obviously we will have to rely more on industry self regulation and also shift more of our existing personnel to continuing airworthiness matters.

JT: You have spent quite a bit of time overseas looking at alternative ways and means of operating this great industry we call aviation, in fact you have just returned from a trip to the US to see the FM and the CM in the UK. What do they do that we don’t, and what could we do that you feel they do better than we are doing now?

DS: Virtually every bit of success that I have ever got out of life is by copying the success of others. I am a great copier. My attitude to aviation or to business or to anything for that matter is to go and look at what everyone else is doing and then copy the best of their ideas and improve on them slightly if you can.

One of my greatest disappointments with my involvement in the CAA is that we don’t do that enough. There is an attitude that says we in Australia know better. I have yet to see the evidence of that. I believe that there are some things that we are doing rather better and could indeed be copied by other countries but there are lots of unique things that we are doing that don’t result in extra safety and also result in extra costs. So I have been going and looking at overseas agencies and asking them why they do things differently. They normally have a very good reason.

I have found that, for example, the airworthiness engineers in the United States and in England are just as dedicated as ours and have just the same belief that they are doing the right thing. However some of our quite different standards shows that everyone can’t be right. I can see that there are cost savings which could be made in Australia and this will be a benefit to the industry because it will allow it to be more profitable. That will both encourage a higher calibre of management which we need and also businesses which are profitable are normally safer businesses. But as well as that, by reducing any costs, especially costs which are normally wasted, you will find that more people will fly and this will be good because all forms of paid air travel, whether it be charter, or commuter or RPT, are safer than going by road.

JT: Are there certain areas, particularly in say general aviation, that we could improve upon in terms of an operational spectrum?

DS: I am particularly concerned about the lousy Australian safety record in general avia tion, that can’t be because of our regulations because we already have some of the toughest and most stringent in the world. I believe now that one of the reasons for our quite bad GA safety record is the fact that a lot of businesses in general aviation are not profitable and I think this affects the overall safety level of that organisation.

Obviously cost pressures do have an effect on safety. If a business is profitable and successful it will do more than the minimum that is required when it comes to safety whereas a business which is losing money, which many companies in general aviation now are, will naturally try and keep its head above water and often rationalise that it is okay to reduce certain safety standards. This in the long term works against the industry and against the public interest. If you want to maintain high safety levels you have got to make sure that the industry is successful. This is the attitude of the board and the management of the CAA.

Of course, there are still some people in the CAA who don’t yet grasp this. They believe that the worst thing that could have ever happened is to make us accountable for costs and earning our own income. I happen to believe that it is the best thing that could ever happen because it finally gives everyone the same incentive to ensure that the aviation industry is successful. And it can only be successful if it is both safe and profitable.

JT: Do you think the standard of management generally in Australian general aviation is up to the standard that it should be in terms of being able to win their case?

DS: No, I believe the general standard of management in general aviation in Australia is weak and I think this is one of the reasons that it’s taken so long to make the changes which are necessary within the regulatory system.

This is going to be a long-term exercise in changing as we gradually and slowly and conservatively update our regulations. This, I believe, will ultimately save the industry large amounts of money, it will make it more profitable which will then attract a higher calibre of owner and manager to the industry which in turn will make it safer. But all this takes a while to do. What I notice, not only within the CAA, but especially within the industry, is a total lack of urgency. There is no real pressure to make the changes. Most people in the industry want to whinge about cost recovery, when it is five years too late, instead of coming up with constructive and objective evidence of how the CM can reduce its costs to the industry.

The CAA has a corporate aim, which is probably the most important corporate aim that it could have, and it says, “the CAA will ensure that Australian regulations are not more restrictive or result in extra cost to the industry and travelling public than regulations accepted in other leading aviation countries unless there is evidence supported by objective, professional judgement and, where it is available, by quantitative data for the difference”.

Now this to me is a fantastic corporate aim and all we now need is an astute industry that holds us to our aim, which I can assure you we are prepared to be held to. That means that we need an industry that is happy to come up with the evidence and the quantitative data and the objective, professional judgement that is necessary to make the changes that are needed. What I have seen in the twelve months that I have been on the board is that if any one person or group in industry has come up with those specific facts which show that costs can be reduced and safety maintained then our management has changed the regulation immediately. I have not yet seen one case when that hasn’t happened. Now in the past, if you made a suggestion to the old Flight Standards Division of the Department to try and change something, it was almost as if you were committing a heresy.

Times have now changed within the CAA and there’s this attitude, especially within top management, towards making the necessary changes. Of course, what makes that difficult is two forces, one is a large force of people in the industry who are apathetic or lazy and don’t do anything and, also, naturally enough, many people in our own organisation who still don’t yet understand the need for and the benefits from change.

Gradually as both of those groups see what’s happening, you will find that the CAA will move to becoming the best of its type in the world. After all, if we can take the best ideas from every other country, the most cost-efficient ideas that also give the highest level of safety and incorporate them together with the best of our existing system, we will then have the best aviation system in the world.

JT: If for instance you were running a general aviation company and you had specific problems dealing with the CM and you thought you were being disadvantaged by actions you thought weren’t backed up by fact, what specifically would you do to achieve what you thought was justified.

DS: Well, what I would do is if I had come up with objective evidence which showed that a change could be made which reduced costs while maintaining or improving safety, I would point out to the particular person who was in charge that the corporate aim of the CAA was not being followed and then if still a change wasn’t being made, I supposeTwould write to the Chief Executive.

I have a feeling though! Generally won’t happen because I think the weakness in the past has come because we have an industry that tends to believe that it’s going to be intimidated, or believes that it hasn’t got time to come up with the evidence. In fact, it doesn’t have time not to come up with the evidence!

When I ran Dick Smith Electronics, the first thing I did was become an active member of the Retail Traders Association and this saved my company millions of dollars. Now, at the moment, I get up to 60 letters a week from people in the aviation industry, each of them complaining about their own personal problem. Most of those people are not members of any of the established aviation organisations. In future I am going to return their letters and say that unless they can show me that they are a member of the GAA or AOPA or the RFACA, or the HAA, or all of them, I am just not going to spend my time in helping them. What’s tended to have happened in the past is that you have all these individuals selfishly looking at their own little personal advantage or disadvantage and not getting down with an industry body and making the improvements which are going to allow aviation to boom again in this country.

JT: Consultation is generally looked upon as being a function where the CAA has already made up its mind and pursues its objective regardless of what industry might suggest. Would this change now that the new Industry Advisory Group has been established?

DS: Yes, I believe it will. Consultation in the past has been frequently claimed by industry people, and with quite a lot of evidence, to be a total waste of time. Well that has changed because the CM attitude has changed. In the past, and I know it well, you had a group of people within the old department who said that what they were doing was the best thing in the world, they didn’t need any consultation, they didn’t need to be given any advice because they knew it all. Well, I have found that this has changed and the management we now have are openly looking for suggestions, but they also do want some objective facts to go with it.

That’s where the industry has got to lift its game. It’s no good going to a meeting and coming out with a lot of emotive diatribes without any evidence. At the moment the CAA is totally orientated to reducing any cost which can be reduced if the level of safety can be maintained and there are obviously lots of things which would comply with those parameters.

We just need someone to come up with the evidence. If someone can tell me that they’ve come up with this evidence and a change hasn’t been instigated, I would be willing to look into it. It hasn’t happened yet. To give you an example, last time when I went to apply for my approval to fly my aircraft privately overseas, which is a very time consuming form, I used to fill it in each time and then send off $120. I got in touch with the person responsible within the CAA and asked why we required this approval. I then sent a letter explaining how it wasn’t required overseas and how I believed it didn’t add to safety at all, it just added to costs. Well, within two weeks I heard that the requirement was abolished.

This is the type of thing which will now happen again and again. This interview is not long enough for me to go into giving examples of the many times where Alan Heggen, Ron Cooper, Alan Rainbird or Collin Freeland have specifically abolished requirements which only add to costs and not to safety.

JT: Can you give us a few instances?

DS: Certainly, I can just quickly run through some very quickly. At one stage single engine helicopters were not to be allowed to do pilot transfers at Port Hedland. That restriction has now been removed pending good objective evidence on the balance of safety and cost.

At one stage I heard that the Bankstown parallel runways were going to be closed down because of existing regulations. That was looked into with good objective evidence, and the runways were not closed.

Someone wrote to me and complained about the cost of air operators certificate renewals and said the cost was too great. Not long after renewals were abolished completely. It was interesting, the person who complained to me just said the cost was too great but hadn’t looked into it and found out why the cost was so high. That’s what they should have done. These are just a few examples. (refer separate item on Reviews in progress. Ed)

JT: Your book Two Years in the Aviation Hall of Doom’ came out in 1984, do you think your efforts to achieve change will have been realised by, say, the end of next year for a totally revitalised CAA?

DS: No, I think it will take a lot longer than that. I am totally dedicated to our organisation becoming the best of its type in the world. I have never been associated with failure before in my life and I’m not going to make this the first time.

Everything is here for us 10 make the CAA the best in the world. We are in a country which can afford to have the best aviation system. We can afford the best radar, th. e best equipment. We can afford to pay for the best people within our organisation and I think we now have a formula where we can make changes that will result in the best regulations. It’s going to take time. I am very impatient for change but I am having to learn patience in this new environment.