Forget safe rates, give us paid waiting times: NatRoad

Date: 15.02.2011

Industry group rejects push for safe rates, instead telling governments to give trucking operators paid waiting times

By Brad Gardner | February 15, 2011

Industry group NatRoad has rejected government attempts to impose safe rates, instead urging policy makers to legislate paid waiting times for truck drivers.

Similar to other representative associations, NatRoad has used its submission to the Federal Government’s Safe Rates, Safe Roads consultation paper to claim there is "little evidence" to show higher rates of pay will change on-road behaviour.

NatRoad President Rob McIntosh says unpaid waiting times – which can stretch for hours on end – are more important than safe rates to the trucking industry.

"After consulting with the trucking industry on the ‘safe rates’ proposal, it is apparent that the most pressing issue concerning safety and remuneration relates to demurrage, or non-payment for time spent waiting to load or unload," he says.

"There is general concern that distribution centres regularly require drivers to wait anything up to 10 hours before loading or unloading.

"Drivers are mostly unpaid for this component and are unable to claim the waiting time as an official rest break – having consequential implications for earning capacity and fatigue management."

Under NatRoad’s plan, paid waiting times will be calculated using the hourly rates in the Road Transport and Distribution Award and an additional fee will be imposed to cover the standing cost of the truck.

"Chain of responsibility arrangements would require distribution centres to make demurrage payments after a specified waiting period has been exceeded," NatRoad’s submission says.

According to the group, demurrage payments will target problematic parts of the supply chain and lead to higher productivity because distribution centres will have an incentive to reduce waiting times.

NatRoad says the system will be easy to enforce because it will apply to wages and standing costs rather than a safe rates scheme that will determine a rate based on individual classes of vehicles.

NatRoad suggests establishing a low cost dispute resolution system within Fair Work Australia to hear claims.

"Mandating demurrage payments after a specified minimum period is a more realistic alternative to the general ‘safe rates’ proposal," McIntosh says.

The Federal Government is currently receiving industry feedback on its proposal to introduce a tribunal-like system to set a minimum safe rate for employees and owner-drivers.

The move is in response to a 2008 study that found a link between low rates of pay and poor safety.

Paid waiting times are being introduced later this month at Port Botany to bring tardy stevedores into line.

Once the system is introduced, stevedores will need to pay a trucking operator $25 for every 15 minute delay, $100 if a slot is cancelled within two hours of the agreed access time or $50 if the slot is cancelled outside the two-hour timeframe.

Trucking operators will pay $50 for a late arrival and $100 if their trucks do not show up.

SAFE RATES NOT THE ANSWER: NATROAD
While saying it acknowledges a link between remuneration and driving practices, NatRoad questions the evidence supporting a safe rates scheme.

It says its members are unconvinced that current rates are responsible for crash risks and that government intervention will improve safety.

"There is a glaring absence of reliable examples demonstrating that higher rates of pay have actually improved on-road safety," NatRoad says.

It cites NSW-specific data from the Roads and Traffic Authority that claims motorists are responsible for crashes 69 percent of time and statistics from the Bureau of Infrastructure and Transport pointing to a decrease in heavy vehicle accidents.

Work carried out by respected US transport academic Associate Professor Michael Belzer revealed a link between pay and safety.

In a study with JB Hunt, one of the US’ largest trucking companies, Belzer found that every 10 percent increase in pay reduced the probability of a crash by 36 percent.

Another study of 102 transport carriers over one year found that for every 10 percent increase in pay there was a 9.2 percent drop in crash rates.

NatRoad claims an alternative conclusion can be drawn from the findings that larger transport firms are able to invest more in remuneration and safety initiatives.

It also refutes Belzer’s crash probability claim, saying it is hard to believe a 30 percent increase in wages will effectively end heavy vehicle crashes considering RTA statistics show trucks are liable 31 percent of the time.

"NatRoad considers that there is little evidence that the establishment of a ‘safe rate’ will result in a significant change in on-road behaviour," the group says.

In its submission, NatRoad says there is no Australian statistical evidence showing a high crash risk from incentive-based payments.

A 2008 report by the National Transport Commission (NTC) references the work of Professor Ann Williamson, who found that drivers paid under incentive-based schemes were more likely to take stimulants to drive long hours to earn more money.

The NTC also references coronial inquests in South Australia and NSW that ruled reward-based payments such as kilometre rates were dangerous.

According to the same report, the Director of the Institute of Transport and Logistics Studies at the University of Sydney, Professor David Hensher, found that freight rates had a significant influence on speed.

Furthermore, the NSW Industrial Relations Commission states: "We consider that the evidence in the proceedings established that there is a direct link between methods of payment and/or rates of pay and safety outcomes."

In the same case, the Commission ruled that: "As long as driver payments are based on a rate per kilometre there will always be an incentive to maximise the hours they drive, not because they are greedy but simply to earn a decent wage."

SAFE RATES TO LEAD TO LONGER WORKING HOURS?
While the proposed safe rates scheme is designed to reduce the number of hours drivers work for, NatRoad claims it will have the opposite effect.

"Basic economic theory advocates that higher rewards will generally increase, rather than decrease, the incentive to work," its submission says.

"Higher remuneration also decreases the relative attractiveness of leisure time because the opportunity cost associated with not working becomes greater."

NatRoad says drivers will still commit current practices under a safe rates scheme because other factors such as competition, long contracting chains, poor bargaining positions and employer demands will remain.

The submission also raises concerns over the effect a fixed rate will have on those currently being paid more than their counterparts.

"Many consignors will immediately question why they should offer more than the standard ‘safe rate’ when tendering contracts to the market," NatRoad says.

Furthermore, it says a regulated rates system will reduce the flexibility of operators to accept backloads or enter into ad hoc arrangements.

NatRoad says it understands there are some owner-drivers who struggle to understand their cost structures and feel pressured to accept work on unsustainable terms.

"NatRoad considers that this issue is more directly related to driver education, information transparency and market positioning than safety matters which are already strictly regulated," it says.

SAFE RATES A ‘DANGEROUS PRECEDENT’
The submission goes on to claim that tinkering with remuneration will set a "dangerous precedent with implications for all industries".

According to NatRoad, other union groups will pursue safe rates in the mining, construction and agriculture sectors if the scheme is introduced in the trucking industry.

Despite its opposition to safe rates, NatRoad says if the Federal Government establishes a tribunal it should operate within Fair Work Australia.

It wants a clause allowing safe rates to be unravelled if the scheme fails to improve on-road safety. NatRoad says success should be based on whether accident rates have fallen beyond what is already predicted.

Under the Federal Government’s proposed scheme, a tribunal will be established with the capacity to set different rates for industry sectors and distinct rates based on vehicle configurations and types of trucks.

The Government says a safe rate will be the minimum rate necessary for truck drivers to recover and earn the equivalent of the Award wage while driving safe and reasonable hours.

In their 2008 paper, Professor Michael Quinlan and Lance Wright QC supported remuneration reform after finding a link between safety and pay.

"Major stakeholders in the industry continue to deny there is a connection, while essentially proffering little if any research or credible evidence to discount or provide alternative explanations to research indicating that such a connection exists," the authors noted.

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