Glen, if this is a true statement of affairs, then it is utter crap on CASA's part. What CASA are willfully ignoring is what is called in the military: "The Chain Of Command" - a series of interlocking delegated authorities codified in law.
In the military perspective the chain is; Sovereign - GG - officers - NCO's - private soldiers.
In civil matters there is the same set of interlocking authorities: Civil contract - sub contract - contract of employment.
CASA's argument is the equivalent of asking the head of the NBN how he will exert "direct operational control" over a sub - sub contractor who willfully runs over a Koala in his Hilux during working hours.
FFS that is why we have sub contracts and employment contracts! CASA lawyers are in fact questioning their own existence - making a nonsense of the very thing that is supposed to require their services - a set of interlocking contracts. ALL contracts have an implied clause that those bound by it will comply with applicable law and regulation! You can't write an enforceable contract that says they don't have to!
I can see why CASA would do this being cynical. They don't get to bully individual schools under the APTA model. Either they argue with APTA - a bigger customer, or shut up. If they catch a school stuffing up, then they report it to APTA and APTA deals with it to CASAs satisfaction.. What could be simpler?