Devils in detail when examining 'safe rates' case

By: Rob McKay

Hassall raises inconsistencies in argument as TWU seeks to bolster its stance

Devils in detail when examining 'safe rates' case
Kim Hassall


With the political debate moving towards sloganeering, many of the ‘safe rates’ analytical points that have been starved of oxygen are being aired again.

In the first of a two-part take on the issues in the next edition of ATN magazine, industry academic and associate professor Kim Hassall, a veteran of the then Industrial Relations Commission 1997 hearings on the Transport Workers Union (TWU), has been moved to question some of the assumptions made and raise other relevant factors.

Particularly, he wonders if there actually is a problem that ‘safe rates’ will fix.

Using data from insurer NTI’s National Truck Accident Research Centre (NTARC), Hassall starts with the hire-and-reward sector that is only part of the sector affected by the Contractor Driver Minimum Payments Road Safety Remuneration Order 2016 (RSRO)

The data shows 71 per cent of the high impact collisions occur on those forward legs that have a 45 per cent freight premium compared to the backhaul legs.

"The implication is that the more you pay the more accidents you have," Hassall states.

"Is this a silly implication or do accidents happen for other non-freight rate related causes?"

Also noted is that there is a miniscule difference between the percentage of driver deaths divided between salaried ancillary operators and hire-and-reward owner-drivers (ODs) – 49.2 per cent compared with 50.8 per cent, despite ancillary drivers far outnumbering owner-drivers.

"Being an employee will not lessen the probability of a driver having a fatal accident," Hassall notes.

He then turns to an owner-driver cost index that was commissioned by an industry body,  which measures two types of owner driver, a single semi-trailer and a B-double operator, and one produced by the Australian Bureau of Statistics (ABS), which compiles quarterly an index of the cost that customers pay transport operators.

The latter is referred to as the Transport Producer Price Index (Transport PPI).

For 15 years, the correlation has been very close between the two OD costs have fallen sharply since the fall in fuel prices, starting two years ago.

"Perhaps customers are not getting the full benefit of the fuel cost downturn or alternatively a large proportion of the Transport PPI is not impacted on by diesel price falls as much as owner-driver linehaul costs," Hassall observes.

He continues: "Against other well know linehaul cost indices (LHCI), such as the National LHCI, the Owner Driver B-Double Index runs some 3.5 per cent below that linehaul cost index and the Owner Driver Single Semi Cost Index 2.9 per cent below the National LHCI over the period since September 2000. Are owner drivers actually owed a freight rate increase instead of being the meat in the sandwich for a regulatory fixed rates regime? And over what period might this differential be paid?


The TWU has also sought to marshall its various arguments to rebut personal, business and financial arguments raised in opposition to its and the RSRT’s approach.

These include:

  • Employee driver versus owner driver claim –The argument that owner drivers will be driven out of business because they will be more expensive to engage than employee drivers just doesn't hold up. An employer will have to own their own trucks for employees to drive and keep them maintained – a massive capital spend for any company. Employee drivers must be paid all year round award or agreement wages and allowances plus superannuation, insurances, holiday pay and benefits.
  • Evidence of pressure– A Safe Work Australia report in July showed: 31 per cent of employers say workers ignore safety rules to get the job done; 20 per cent accept dangerous behaviour, compared to less than 2 per cent in other industries; 20 per cent of transport industry employers break safety rules to meet deadlines – this compares with just 6 per cent of employers in other industries.
  • Bankruptcies – According to the Australian Securities and Investments Commission, transport operators have one of the highest rates of insolvencies of any industry and small firms of five full time employees or less are the most likely to go bankrupt. In the financial year to June 2015 there were 275 insolvencies among these small operators. In the financial year before that there were 548 insolvencies, with many still being hit with the effects of the GFC. The main reason for the insolvencies was inadequate cash flow.
  • Low pay– Many owner drivers are not making enough to get by as it is with average income of just under $29,500 and $29 per cent of them underpaid (this is based on an analysis by PriceWaterhouseCoopers of the 2006 census which was included in the regulatory impact statement for the Road Safety Remuneration Bill 2011). Transport companies are consistently in the top five industries for insolvency, with the vast majority of them small firms with five or less full-time employees. 
  • Suicide – Suicide is currently rampant among truck drivers with an analysis by the Victorian coroner’s court showing truck drivers had the highest number of suicides out of any other profession, with 53 drivers taking their own lives between 2008 and 2014.
  • NSW – Higher rates than the Order already exist under the NSW General Carriers Contract Determination and in many agreements across the country, and owner drivers have not gone out of business.

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