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Hard work, but owner-drivers are toiling for a pittance

More than one quarter of Australia’s owner-drivers would earn more money flipping burgers than hauling freight across the nation

By Brad Gardner | November 25, 2011

More than one quarter of Australia’s owner-drivers would earn more money flipping burgers than hauling freight across the nation, according to analysis from PricewaterhouseCoopers.

The advisory firm’s regulatory impact statement on the proposed safe rates tribunal has laid bare the conditions some of the country’s 71,000 owner drivers are forced to toil under, including taking home less than the minimum wage.

Commissioned by the Federal Government, the analysis says 29 percent of owner-drivers earn on average $29,465 a year before tax. The national minimum wage is $15.51 an hour, meaning someone working a 40-hour week is earning $620.40 a week or $32,260 annually.

“Evidence from submissions and available data shows that owner drivers generally work longer hours and are paid considerably less than employee drivers,” PricewaterhouseCoopers says.

It compared an owner-driver with an employee under the Road Transport (Long Distance Operations Award) earning $24.47 per hour and working nine hours of overtime each week, which PricewaterhouseCoopers believes is the standard. According to its figures, the driver would take home $65,530.66 annually.

“Many employee drivers would be on higher rates, as they would be covered by enterprise agreements,” PricewaterhouseCoopers says.

However, the hourly rate mentioned in the RIS has increased by almost $2 an hour on the back of recent minimum wage rulings, meaning the driver would be taking home more than what PricewaterhouseCoopers estimates.

An industry association representative who contacted ATN says some owner-drivers “would be better off working at McDonald’s”.

Under the Federal Government’s plan, the tribunal will be established within Fair Work Australia and handed the authority to make binding orders on pay-related conditions to improve safety covering individual sectors or the entire industry. This includes ruling on payment terms, minimum rates, waiting times and incentive-based payments.

It will also hear disputes over unsafe work practices, while the Fair Work Ombudsman will be responsible for enforcing its rulings. The tribunal is the government’s response to a 2008 National Transport Commission report that found a link between low rates of pay and poor safety.

The RIS modelled its findings on the tribunal covering 60 percent of the owner-driver sector and achieving a 90 percent compliance rate.

Under this scenario, PricewaterhouseCoopers believes the tribunal will reduce heavy vehicle crashes by 25 percent if almost all owner-drivers receive higher pay rates.

“Despite the fact that studies and academic literature have not conclusively proven the extent to which rates and safe transport outcomes are related, there are a number of market failures or factors that would suggest that it is not unreasonable to expect that the manner in which owner drivers are remunerated will impact on safety,” PricewaterhouseCoopers says.

It says it is reasonable to suggest owner-drivers will receive higher pay under the government’s reforms and that the tribunal may reduce incentives to speed, take drugs, work fatigued, overload vehicles and forego truck maintenance.

The RIS says governments may also save money in terms of health costs due to fewer road transport injuries and fatalities. It has rejected talk higher rates will equal significant price increases for consumer goods.

“As the increases in costs are expected to be spread widely, the increases are likely to be insignificant for individual consumers,” the RIS says.
The document says owner-drivers lack bargaining power and do not necessarily have the right information to negotiate a fair rate to cover their costs.

“Another explanation for drivers accepting low rates of pay is that people tend to care about the present…owner drivers feel pressured to accept work even if it is not on favourable rates as it allows them to meet their immediate truck lease and other commitments,” the RIS says.

It says holding parties accountable for queuing times could, in a best case scenario, deliver a $155 million fillip to owner-drivers and prompt the supply chain to improve scheduling practices.

“Currently, costs for unpaid working time, such as time spent queuing, is a cost which is absorbed by drivers, creating no incentive for other parties to address the efficiency issues leading to that practice,” PricewaterhouseCoopers says.

“By requiring the real cost of this time be passed on in the cost of moving those goods, there may be efficiency gains and potential improvements in safety outcomes.”

The industry representative is hopeful associations will unite in calling for an industry-wide payment for waiting times.

“You could all put your hand up and say, ‘We want a paid waiting order’,” they say.

The Australian Trucking Association’s (ATA) owner-driver representative, Frank Black, wants the matter made a priority when the tribunal kicks off on July 1 next year.

The RIS points to back-loading as another concern in the industry, saying drivers receive significantly less pay for the return leg of a trip. However, it adds that regional businesses could be affected under changes to the practice.

“The introduction of mandatory rates and/or conditions may mean that drivers could not carry loads on backhaul trips for rates below the ‘safe rate’,” PricewaterhouseCoopers says.

“This would impose costs for businesses in regional areas that provide goods to the larger markets. These impacts could be minimised if a reduced rate is established for backhaul trips.”

The government this week introduced the Road Safety Remuneration Bill and the Road Safety Remuneration (Consequential Amendments and Related Provisions) Bill into the House of Representatives to establish the tribunal.

The Opposition has not determined whether it will support the reform, but it has disputed a link between pay and safety. It wants the bills sent to a committee to examine.

Labor MP Chris Hayes labelled the announcement of the tribunal a “significant initiative” and one designed to improve pay and conditions for owner-drivers.

“It is designed to give these people a fighting chance at their business to make sure they are paid fair rates,” he says.

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