As a remote spectator to the goings on of CASA, judging by the commentary and issues I have seen raised in these threads the simple issue is the division of power within CASA. Practically all democratic systems rely on separating the executive and legislative arms of power - but this does not seem to be the case with CASA.
It seems the aviation community would be better served by having a purely legislative and standards department, a an independent investigation and compliance department, with the ATSB maintaining its independent role (as any safety investigations could possibly look at the role compliance played in an incident). Ideally there would be a transparent dispute resolution process through the justice system (say magistrate hearings etc prior to enforcement of sanctions etc).
At least in that model you can keep the bureaucrats happy in there legislative department, you are more likely to have aviation experienced or interested people within the compliance arm actually interacting with the aviation sector. Also when unclear or contradictory legislation is in place you have a body in authority who can argue for clearer legislation, because they are the ones enforcing it.
Yeah, I know. Tell him he's dreamin'....