If CASA draft the regulations, (appallingly I admit), they have no right policing those laws and claim any independence or statutory authority under the mantle of safety.
1) CAA, (omit the safety), should draft the regulations based on FAR's.
2) A new branch of Commonwealth Police should enforce those rules, carry out investigations aided by an in-house ATSB and,
3) The DPP prosecute any breeches.
4) Get rid of the AAT and give The Commonwealth Ombudsman more open terms of reference to enable third party investigations outside the umbrella of government and give him powers to make findings not just recommendations.
As for smoking big holes, the buck stops with The Minister and his Advisors.