Cost and consequences critique of RSRT draft

Contractor driver draft order takes fire over breadth and ensuing complications

Cost and consequences critique of RSRT draft
It is argued that increased costs implied will have a negative impact.


A significant grouping of road freight operators and their customers has joined calls for the Road Safety Remuneration Tribunal (RSRT) to recast its draft Road Safety Remuneration Order (RSRO) for drivers.

The draft Contractor Driver Minimum Payments Road Safety Remuneration Order 2016 has been under concerted attack from industry representative bodies, including the Australian Long Distance Owner and Drivers Association (ALDODA), the South Australian Road Transport Association (SARTA) and the Australian Livestock and Rural Transporters Association (ALRTA).

Now NatRoad, Road Freight NSW and the Australian Industry Group (Ai Group) have combined to have a crack, though NatRoad has already blasted the proposal saying its membership believes there are holes in it.

The grouping’s submission, led by the Ai Group, argues compliance with a January 1 start that the proposed order’s start date is unrealistic.

"Given the breadth of the Draft RSRO’s scope, there are likely many thousands of hirers and supply chain participants that would be impacted by the order," it says.

"It is unreasonable to expect that hirers will be able to accommodate significant increases in the costs associated with the engagement of contractor drivers.

"More significantly, it is unrealistic to expect that hirers will be able to meet increases without significant advance notice of the obligation."

The lack of exemption for specialised sectors is of concern, with uniform and inflexible regulation for its own sake on widely differing supply chain arrangement is argued against.

It says that "the onus should rest with those that advocate for the making of an order to establish that it is both appropriate and necessary.

"This should include the specific problems prevalent in such sectors and the nature and needs of the relevant supply chain and the operational, economic and trading environment that the order will interact with and disturb."

As an example, while the RSRT’s KPMG-researched report that informed the draft order is seen as reflecting  the "Transport Industry General Carriers Contract Determination, but differs sharply from that applied by industry, the system in operation under the Road Transport (Long Distance Operations) Award 2010 or various contact determination of much greater relevance to the raft of sectors covered by the Draft RSRO".

And it notes the determination, which related to short-haul work, has its own exemptions for refrigerated produce, energy sources and kiln-fired goods.

The upshot is a call for exemptions for baked goods transport,  the cash in transit industry, the wharf and port sector, the waste management industry, car carriers, the oil, fuel and gas sector, along with split loads or circumstances in which a contractor driver is performing work for multiple hirers.

The submission also raises the possibility of conflict with the Australian Competition and Consumer Commission over pricing freedom it says is protected under the Competition and Consumer Act 2010 and that law’s aim "to enhance the welfare of Australians through the promotion of competition".

It argues that under the Road Safety Remuneration Act, road transport collective agreements are protected but not conduct related to RSROs.

The grouping’s submission notes the draft order has complex implications along the supply chain that need further investigation, including cost-recovery, a theme Linfox takes up in its own submission.

If the order is to be passed, Linfox, which backs the thrust of the draft, wants provision for a system of recovering increases by the hirer.

"Linfox submits that should the clause be included in the Order this will encourage transparency in the supply chain and allow the hirer to recover the costs without impacting upon the road transport driver or create downward pressure on the supply chain," the company writes

It also calls for the various driver payment means, including "box rates, trip rates, pallet rates and the like", to be recognised and raises the issue of the draft Order’s conflict with fatigue break payments rulings in New South Wales, which are unpaid under an Industrial Relations Commission full bench ruling.

Toll, while not opposing an Order being made but unhappy with KPMG’s work in the matter, joins those industry bodies that warning that the use of owner-drivers in the supermarket sector is likely to be curtailed, due to the increased cost involved.

It puts the increases at 20-30 per cent, and up to 55 per cent in regional areas and seeks a ‘lowest cost fit-for-purpose’ model be used.

"Toll’s consideration of the KPMG Report is that many inputs to make up the rates proposed are incredibly inflated or overstated and not experienced within the industry," Toll’s submission reads.

"Likewise, in many instances, hours of work performed in the supermarket distribution and long distance sectors are not accurately reflected.

"This, together with assumptions that all Owner-Drivers only provide their vehicle for use for 48 weeks of the year results in an underestimation of annual kilometres travelled, and a high base on which to spread fixed costs of business."

It also views the audit requirements through the supply chain to be "burdensome and over-regulatory".

KPGM’s report is also questioned on its treatment of goods and services tax, particularly on ‘representative vehicles’ and taken to task over its understanding of fuel issues repair and maintenance,  tyre cost, hours worked per week and time worked.

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