Is the transport industry being manipulated by unions and oligopolies?

By Peter Strong and Matthew Munro

The Council of Small Business of Australia (COSBOA) and The Australian Livestock and Rural Transporters Association (ALRTA) is concerned about the Contractor Driver Minimum Payments Road Safety Remuneration Order 2016, which the organisations believe will be to the detriment of small business owners – titling the scales once again, in favour of big business.

From April 4, new laws will take effect and will, for the first time, set national minimum payments for certain contractor drivers in the road transport industry, specifically small business people, making competition even more difficult.

What is going on in the transport sector? A government tribunal has decided the minimum price an owner/driver will charge for his or her services. An owner/driver is someone who has probably borrowed a lot of money and has between one and five trucks; perhaps a delivery truck or maybe a B-double or B-quadruple. Due to the tribunal, the owner/driver is no longer in control of their own business. The government and the unions now have control.

We will come to why this silliness is happening later but first please note the rules do not apply to big transport companies. That’s right – big transport companies can charge whatever they want. They can undercut the owner/driver, who by law cannot go lower in price. So goodbye to a competitive and diverse transport industry. Big players will now dominate and as time goes by this will encourage a number of takeovers, until we end up once again with oligopolies running another industry sector in Australia – this time transport. History shows that when this happens, prices will go up and wages will drop.

From April 4, 2016, owner/drivers will be required to charge a minimum rate for all freight, including backloads. For example, if a consumer wants to send a large gift, by truck, from Brisbane to Melbourne it will cost at least $3,300 with an owner/driver and maybe $40 with a large transport company. That’s not competition.

The choice for customers is a simple one: go big.

It gets worse as there are other onerous tasks foisted on the owner/driver and their customers. Owner drivers have to write a new travel plan every time they change the route of their journey. If a farmer calls and asks that livestock be picked up while they are driving past their property, the owner/driver has to stop and write up a whole new travel plan.

The new laws set by the tribunal require each owner/driver customer to agree to a written contract and safe driving plan prior to any work being undertaken. These are not required when customers use larger companies with employee drivers. If you want a package sent to Melbourne as part of a backload, you – the customer – will have to sign a safe driving plan as well as pay a higher price.

These changes get more complicated as the rules are also determined by distance, transport routes and truck size. These complications add to the confusion.

The Australian Livestock and Rural Transporters Association (ALRTA), National Farmers Federation (NFF) and Council of Small Business Australia (COSBOA) have jointly written to the Road Safety Remuneration Tribunal to request a six-month delay for the start date of the Contractor Driver Minimum Payments Road Safety Remuneration Order 2016, which is due to commence next month.

These associations represent hundreds of thousands of Australian businesses that will be directly or indirectly affected by the order.

The whole situation remains confusing with less than one month remaining until the commencement of the tribunal’s order. Until last week, parties negotiating new transport contracts couldn’t even access the online rates calculator.

This delay is necessary to allow time for the order to be satisfactorily explained and for affected businesses to adjust to the new requirements.

We would all prefer this ridiculous interference by government be totally removed and the government instead confront the main reason this mish-mash of regulation was created.

It is extraordinary and disturbing that a government tribunal could be set up that will discriminate so blatantly against small businesses.

Is this tribunal deliberately seeking to extend the reach of unions and industrial relations laws into independent contracting businesses? Or is it just poor policy development? Either way the laws will force a structural shift in the transport sector towards larger fleets and a unionised workforce.

Why is this intense interference happening? As always one doesn’t have to look much beyond the supermarket industry and its larger players, Wesfarmers (Coles) and Woolworths, to find the reason.

Contracts imposed in the industry are so onerous that it is assumed some drivers have had to exceed speed limits, drive longer than necessary or overload their trucks to make ends meet. This has created safety issues and must be fixed. Safety won’t be created by forcing owner drivers off the road or forcing them to disregard these new impositions. That is punishing the victims.

How can the initial problem be fixed? Make the supermarkets pay minimum rates no matter what size of the transport business. Or let the Fair Work Ombudsman and the Australian Securities and Investments Commission better monitor the contracts from the duopoly. Or better still, divest this market structure and let true competition once again exist in the Australian business community.

Peter Strong is chief executive of the Council of Small Business of Australia and Matthew Munro is executive director of the Australian Livestock and Rural Transporters Association.