The Queensland Trucking Association (QTA) says the transport industry is experiencing a ‘drive to the bottom’, with cost of living pressure continually pushing to cut freight rates despite rising costs.
QTA says driving down fleet incomes to unsustainable levels threatens to undermine the efficiency and safety of our supply chain.
“If this behaviour remains unchecked, it will have a significant effect on any comparative distinction Australia may hold in our supply chain,” QTA CEO Gary Mahon says.
“This means that if the current trend of cutting freight rates and reducing fleet incomes continues without intervention, it could harm Australia’s reputation or competitive advantage in global supply chains.”
Manufacturers, logistics providers, repairers, and others will be affected by the resulting imbalance from the misuse of market power with freight rates, until government authorities show strong resolve, Mahon says.
Productivity growth has stagnated since 2007, barely moving the needle from 0 per cent to ½ per cent.
Fleets are now facing contract terms of 90 to 120 days, and instead of rates rising to at least cover costs, freight rates are regularly being reduced by three per cent each year.
He says legislation should prevent escalation and not make matters worse.
“In response to the increasingly declining rate spiral, there is growing discussion about practices like SHAM contracting.
“If the chain of responsibility and industrial entitlements were properly addressed at the appropriate points within the market, we wouldn’t be experiencing a constant cycle of replacing one problematic behaviour in our supply chains with another.”
In the road transport sector, sham contracting can manifest when a transport operator engages a driver as an independent contractor while maintaining control over their work conditions.
Mahon says the road transport industry, which relies heavily on contracting arrangements, must be vigilant in preventing sham contracting to protect both workers and businesses.
Recent ACTU studies reveal that the number of workers on sham or “dependent” contracting are at a record high, now outnumbering independent contractors, and over 565,000 contractors are unable to subcontract their work.
“This explosion in sham contracting underscores the need for reforms to protect all workers and ensure fair labour practices,” Mahon says.
“This practice of sham contracting is not only unethical but also illegal in Australia.”
QTA says transport fleets should ensure workers are correctly classified as employees or independent contractors based on their working conditions and responsibilities, which involves understanding the legal definitions and criteria that distinguish employees from contractors, called the ‘whole of relationship test’.
The association says drafting contracts that outline the working relationship, including roles, responsibilities, and entitlements, can prevent misunderstandings and legal issues, and should be regularly reviewed and updated to reflect any changes.
“While authorities have a lot of enthusiasm to enforce measures targeting the symptoms of an unbalanced market, the issues just spread from one part of a system to others, causing broader effects beyond the causal issue,” the QTA boss says.
“It is now crucial to focus on the underlying contract terms and rates to address the rising use of sham contracting being used to lower costs.
“Addressing the unchecked decline in fleet incomes, implementing robust legal protections against sham contracting, and fostering a fair, transparent marketplace are vital steps toward sustainable growth.
“History has shown that courageous leadership and strategic reforms can transform industry challenges into opportunities for innovation and competitiveness and QTA applaud the Prime Minister’s initiative on productivity reform and strongly encourage that the road freight industry with its vital role to the economy be properly represented at the table.”
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