Trucking faces systematic overhaul under safe rates regime

Gillard Government releases paper that advocates radical shake-up of pay rates in the trucking industry

Trucking faces systematic overhaul under safe rates regime
Trucking faces systematic overhaul under safe rates regime

By Brad Gardner | November 29, 2010

The trucking industry faces a systematic overhaul of remuneration methods as part of sweeping proposals announced Friday by the Federal Government.

After months of delay, the Government has released its response to a 2008 National Transport Commission study which found poor safety in the industry was being driven by low rates of pay.

Following the NTC’s call for regulatory intervention, the Government’s Safe Rates Safe Roads discussion paper proposes a tribunal system with the power to determine pay rates.

The paper outlines three different models, including expanding the role of Fair Work Australia. Under this method, the Fair Work Act will be extended to sub-contractors, granting them rights currently enjoyed exclusively by employees.

"Fair Work Australia would be able to set employment-like terms and conditions for owner drivers in the relevant modern award," the paper says.

"This would ensure minimum contract rates and conditions for owner drivers would be sufficient to cover operating costs and earn at least the equivalent minimum award wage, while driving reasonable hours in a safe manner."

While the reforms will not include bargaining and industrial action for owner-drivers, Fair Work Australia will be tasked with hounding parties in the supply chain over unpaid contracts.

"This would ensure the recovery of unpaid minimum rates from those who do not take reasonable steps to ensure they are engaging compliant operators," the paper says.

Fair Work Australia will also have the authority to slot extra provisions into awards relating to chain of responsibility.

The proposal is likely to gain the support of the Transport Workers Union because it grants unions more power to raid businesses suspected of running down rates and jeopardising safety.

"It is envisaged that registered organisations representing owner drivers may have rights of entry to investigate suspected breaches of the legislation," the paper says.

The Government has also proposed the establishment of an independent authority or a panel system made up of Fair Work and industry representatives.

Both systems will not apply employment conditions to owner-drivers.


Regardless of which system is chosen, all decisions will be binding on all parties in the supply chain.

"Under each model, the tribunal would also be empowered to inquire into and address practices adversely affecting the way work is performed in the road transport industry (for example, loading practices)," the paper says.

According to the proposals, anyone in the supply chain can be ordered to appear before proceedings if the tribunal believes they wield economic influence on terms and conditions.

An arbitration model will be established, with conciliation and mediation to be held before disputes go before the tribunal.

The Government proposes protections for owner-drivers such as stopping prime contractors from unfairly terminating contracts.

"Owner drivers would have protection against adverse action taken because of a workplace right. For example, an adverse action could be contract termination because the owner driver refused to work in an unsafe manner," the paper says.

The Fair Work Ombudsman will be responsible for enforcing the regime.


The Government plans on giving the tribunal the capacity to set different rates for industry sectors and distinct rates based on vehicle configurations and types of trucks.

According to the paper, a safe rate will be the minimum rate necessary for an owner-driver to recover and earn the equivalent of the award wage whil driving safe and reasonable hours.

"The labour rate would be set with reference to the relevant safe rate for employee drivers. In all cases, the labour component of any safe rate for owner drivers would be derived from the rates and conditions in the relevant transport industry modern award," the paper says.

According to the paper, pay rates for truck drivers have steadily declined over the last 30 years despite significant growth in the freight task.

The paper cites the work of Professor Michael Quinlan and Lance Wright QC, who found low pay rates encouraged truck drivers to speed and work long hours to make ends meet.

Incentive-based payments such as cents per kilometre rates were also blamed for creating safety problems because they encouraged drivers to work for longer.

"The road transport sector is among the most dangerous industries to work in. The incidence of occupational injury in the industry is one of the highest in Australia…," the paper says.


The establishment of a tribunal is likely to take time, however, with the Government saying amendments will need to be made to existing laws. If an independent authority is established then new laws will need to be enacted.

Furthermore, the Government says it will need a "rigorous regulatory and economic analysis" to support an impact statement before any tribunal is enacted.

"In addition, it will have to carefully assess whether there will be an impact on other sectors of the Australian economy," the paper says.

The Government has hinted at a desire to use existing bodies to govern the scheme, with the report saying a new tribunal will likely require more resources, unlike an expansion of Fair Work Australia.

"The funding will need to be offset in the current budget and appropriated in future budgets," the paper says.

The report goes on to say that all jurisdictions, particuarly Western Australia and Victoria, which already have their own systems for dealing with disputes, will need to be involved in any national regulation of owner-drivers.

The Government has not ruled out introducing complementary measures alongside the reforms, such as a voluntary code of conduct and new obligations on those tendering for government contracts.

According to the paper, a code of conduct, if introduced, will consolidate laws, govern safe payments, establish dispute resolution procedures and introduce a voluntary accreditation scheme.

The Transport Workers Union (TWU) welcomed the release of the paper and says remuneration reform is vital to reduce the number of road deaths.

"This is the chance owner-drivers and employee drivers have been waiting for - they have seen the Government commit to reducing pressure on drivers and they are ready to act," TWU National Secretary Tony Sheldon says.

"A study by a team of academics in the US led by Professor Michael Belzer found the probability of a truck crash fell by 36 percent for every 10 percent increase in wages."

Sheldon wants an independent tribunal set up that has the power to rule beyond the driver and company by holding other players in the supply chain accountable.

The TWU was part of an advisory group formed by the Government last year to advise on how it should respond to the NTC's findings.

The group included Linfox, Toll and industry groups the Victorian Transport Association (VTA) and the Australian Road Transport Industrial Organisation (ARTIO).

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