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The fix is in: Feds told to mandate trucking rates

Federal Government to face pressure to legislate trucking rates, while industry "ignored" link between pay and safety

By Jason Whittaker

The Federal Government will face intense pressure to legislate trucking rates, while the industry itself stands condemned for ignoring what a major report has called the “overwhelming” link between pay and road safety.

The report into safety and pay rates in the trucking industry, authored by Professor Michael Quinlan and Lance Wright QC for the National Transport Commission (NTC), has strongly recommended the most radical shake-up in the commercial trucking market in decades, in a major rebuff to employer groups.

The Remuneration and Safety in the Australian Heavy Vehicle Industry report, which widely consulted stakeholders including the Transport Workers Union (TWU) and employer groups, is clear in its findings: there is an indisputable link between safety and payment systems and only a regulated marketplace can correct the commercial imbalance between smaller operators and prime contractors.

And the authors have attacked employers who “continue to deny there is a connection” between safety and pay rates while providing “little if any research or credible evidence to discount or provide alternative explanations to research indicating that such a connection exists”.

They call for a new specialised body under federal transport legislation with “wide powers” to fix rates of remuneration for both employed drivers and owner-drivers.

“This is the only viable and direct mechanism for addressing the imbalance in bargaining power confronting owner-drivers that affects safety in the road freight industry,” the report states.

A new tribunal made up of industry, industrial relations and safety experts will then decide industry rates by sector and enforce misconduct, including under existing chain of responsibility laws.

The report dismisses two other options, including legislative deeming of owner-drivers and employees to regulate under an industrial tribunal, and the union’s idea of referring powers to the Australian Industrial Relations Commission to determine conditions for both employees and owner-drivers.

“[Setting up a new body] represents a solution that balances the respective interests of the industry stakeholders and pays due regard to the public interest considerations involved in achieving a safer road transport industry,” Quinlan and Wright argue.

“We conclude that a clear case has been demonstrated for a form of regulation to be established in the context of the chain of responsibility to ensure that rates of pay and other elements of remuneration in the long haul transport industry may be determined to provide for safe rates, conditions and remuneration.”

That regulation must be “dynamic”, they argue, to speedily deal with changes in the industry and fix rates across a variety of different industry sectors.

The report also picks up on recommendations from some groups for ‘plan English’ contracts to be mandated, “even to the point of developing proformas”. It recommends a legislative provision to enforce this.

Under its plan, every heavy vehicle, along with transport companies and customers, would have to carry information on pay rates for the current trip/s showing compliance with the relevant safe rate.

Penalties will be applied to customers who fail to pay the minimum rate within a specified period of no more than two weeks, with escalating penalties for repeat offenders.

“Enforcement measures to ensure compliance with safe rates for both employee and owner-drivers needs to be adequately resourced, proactive (not simply complaint-driven) and strategic,” the report says.

The combination of power exercised by clients, intense competition for work, the use of multi-tiered sub-contracting and the associated dependency on sub-contracted operators, imbalances in freight movements and individualised trip/incentive-based payment schemes inhibit the capacity for operators to recover cost increases, the report finds.

What’s more, fierce competition amongst operators and cost containment pressures from large clients has increased the use of subcontracting who are hired at “reduced and arguably often unsustainable rates”.

That has also placed pressure on the payment systems of employed drivers, the report argues, leading to the extensive use of trip and kilometre-based rates and “widespread problems of compliance” with awards and agreements.

“Even with the best business practices, owner-drivers are often in no position to bargain effectively with more powerful parties and evidence suggests community and driver safety is the loser from such an imbalance,” the report says.

“Transport operators will still have a strong incentive to provide a cost-effective service by making astute use of market niches, technology (such as GPS) and other operational efficiencies (a number of which were identified in this report as illustrative of other evidence made available in this regard).

“However, the setting of minimum rates will mean that the incentive to cut labour costs and engage in work practices that compromise safety will be removed as a basis for competitive advantage.”

Many industry groups argued there was no direct link between payment systems and industry safety, uniting against the long-time campaign by the TWU to fix rates.

But the NTC report concludes the “overwhelming weight of evidence” indicates commercial practices in the road transport sector play a “direct and significant role in causing hazardous practices” for both owner-drivers and employed drivers.

“There is solid survey evidence linking payment levels and systems to crashes, speeding, driving while fatigued and drug use,” the report states.

“This evidence has been accepted and indeed confirmed by government inquiries, coronial inquests, courts and industrial tribunal hearings in Australia over a number of years.

“The review was also told by owner-drivers and small operators that inadequate remuneration had obliged them to cut back on costs relating to the maintenance and repair of their vehicles. The extent and safety implications of this are unknown but the practice is disturbing.”

Quinlan and Wright say the industry has ignored the evidence from people like Professor Ann Williams, a renowned sleep and safety expert who has long advocated the impact pay schemes have on driver safety.

“Unfortunately, while there is evidence linking remuneration and safety in the Australian heavy vehicle industry for over 15 years this connection has been largely ignored by policy-makers and regulators (and not, for example, factored into multi-causal investigation of serious truck crashes by road transport authorities, despite evidence from court proceedings and coronial inquests),” they say.

“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.

“Thus, for example, the findings of Professors Hensher and Williamson have been largely ignored, even though they are also consistent with what owner-drivers and employee drivers told this review and previous inquiries (not to mention the submissions of the TWU).”

The report also dismisses claims by many in the industry and major retailers like Coles, which wrote to the review, that mandatory rates will push up the cost of delivered goods.

Instead, it endorses the view of Williams and others that setting safe rates will make the industry more attractive to potential workers and ease wage inflation brought on by the shortage in qualified drivers.

The Federal Government will now come under pressure by the TWU to act on the findings of the report. ATN is seeking comment from ministers and industry groups.

The Labor Government instigated the report in July, at the time pointing to the increased cost burden on small operators with rising fuel prices.

“The Government is committed to working with the transport industry, unions and other stakeholders to improve road safety for Australian families, ensure a fair go for both employees and owner-drivers, and sustain the long-term viability of the trucking industry,” a joint statement from Transport Minister Anthony Albanese, Employment Minister Julia Gillard and Small Business Minister Craig Emerson read.

Last Friday, transport ministers agreed at their regular Australian Transport Council meeting that poor payment methods have a potential impact on safety.

Albanese pledged to raise the issue at a federal level and report his findings back to the ATC. It’s unclear whether ministers had seen the NTC report.

“Ministers agreed that there is a case for investigating a whole of government regulatory approach to address this issue,” the communiqué from the meeting reads.

From 2000 to 2004, one in five road deaths involved heavy vehicles, with speed and fatigue reported to be significant factors.

Quinlan, an occupational health and safety expert at the University of New South Wales, wrote the seminal Burning the Midnight Oil trucking safety report many years ago, which didn’t go as far to suggest fixing pay rates, while Wright is the former president of the NSW Industrial Relations Commission.

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