Truckies fear new rules could backfire

Truckies fear new rules could backfire

Michael Lucas is among truck drivers worried about the implication of new rules for the trucking industry.
Michael Lucas is among truck drivers worried about the implication of new rules for the trucking industry.

A world-first ruling from the Road Safety Remuneration Tribunal will see owner-operator truck drivers across Australia paid a minimum national wage from April 4 this year.

The order, known as ‘safe rates’, is the culmination of almost three years of work for the tribunal and more than a decade of lobbying efforts from the Transport Workers Union (TWU).

TWU says ‘safe rates’ will ensure contracted drivers are not put under pressure to speed, drive long hours and skip maintenance on their trucks in order to meet unrealistic deadlines.

They draw a direct correlation between truck fatalities and drivers that are paid less than they are entitled to, hence working longer hours and cutting corners to make extra money.

TWU says across Australia this month alone, six truck drivers and six other drivers have died in road accidents involving trucks.

While the announcement seems like a win for the industry and particularly small trucking businesses, the announcement has been widely criticised by a growing number of individuals and groups that believes it will actually hurt those it is designed to protect.

In addition to that major concern, many have expressed dismay around the ambiguity of the ‘safe rates’ order, with everyone seemingly needing an answer to one simple question: what exactly does it all mean?

But it’s a question without a simple answer, according to Murray-Riverina NSW Business Chamber Regional Manager Ben Foley.

“The order itself is incredibly complex: there are more than 2,000 different hourly and kilometre rates in it, and working out whether the Order applies to your business and which rate applies to a particular trip is almost impossible. It’s just ridiculous,” said Mr Foley.

“The industry needs more time to come to terms with the order.”

Mr Foley says truck drivers desperately need answers but are not receiving them.

“We have heard reports of people calling the Fair Work Ombudsman looking for help, only to be told they were not aware of the order and referring them back to the Road Safety Remuneration Tribunal, only to be sent back to the Ombudsman again,” said Mr Foley.

“The Ombudsman has recently changed key information on a ‘checklist’ on its website, but there is a real concern that the revised information is actually wrong.”

Appearing on behalf of the NSW Business Chamber in the matter is workplace law firm ‘Australian Business Lawyers & Advisors’. The firm’s Chief Executive, Nigel Ward says tools promised to assist trucking businesses have not yet been delivered, and the industry is in a spin as the April 4 deadline looms.

“The Tribunal said that it would release an ‘online payments calculator’ to assist businesses to understand their obligations, but the calculator has still not been released, despite the rates coming into effect in less than 6 weeks,” said Mr Ward.

Michael Lucas of local family owned and operated trucking business Tumut Freight Service, says there’s no denying the new rulings are confusing.

“It’s very difficult and complex for everyone to understand,” said Mr Lucas.

“I’ve had a look at the website and tried to determine which category we fall into. I think because more than 50 per cent of our vehicles are driven by employee drivers [not family members], we are not classified as owner-operators.”

Mr Lucas says that while he doesn’t believe his business will be significantly impacted by the changes, he cannot be certain due to the impossible task of decoding the order.

“The only people that can understand the sorts of documents bureaucrats write are other bureaucrats. How can we be expected to abide by the new rules if it’s not even clear what they mean?” said Mr Lucas.

Regardless, he believes the changes do have the ability to seriously impact the industry as a whole.

“They’re trying to protect the owner drivers and smaller operators, like the dad and two sons with three trucks for example, but these are the exact group that stand to be affected,” said Mr Lucas.

“That’s the really ridiculous thing, the people hit hardest will be those they’re trying to protect.”

“I can certainly see why owner drivers would be a bit jittery and a bit concerned at this point,” added Mr Lucas.

Mr Lucas explains that, under the new laws, larger trucking companies will be required to pay subcontractors a set minimum wage, and if this wage turns out to be more than they are currently paying, they could opt to drop the subcontractor altogether.

“A good example is Border Express in Wodonga, who have a contract with the paper mill. Some of that work is completed by Border Express owned trucks and drivers, but some is done by trucking businesses that Border Express has subcontracted,” explains Mr Lucas.

“If the new laws state that the prime operator needs to pay the subcontractor more, they’re going to be thinking about the bottom line and considering the fact that it could be more viable for them to buy more of their own trucks and put more of their own drivers on.”

“If that’s the case, the owner-operators will be wiped out and the very people they are trying to protect will be affected. It could really backfire,” said Mr Lucas.

On the other side of the coin, Mr Lucas says if owner-operators are being paid well currently, they could also stand to lose out.

“What if the subcontractor was being paid well, and under the new wages actually gets paid less? The reality is we don’t know what the new wages will be, because there are so many variables to consider,” said Mr Lucas.

“Obviously the prime operator will not be paying the subcontractor any more than he needs to, he will just say, ‘well, this is the minimum national wage’, and will hide behind that. You can’t expect him to pay more than he is required to by law.”

Mr Lucas says that while some owner-operators may be getting undercut by the prime operators, some could be satisfied with their current business arrangements.

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“It could be that the single truck driver is happy with the rates he’s being paid, but now he is required to be paid more under law. A lot of problems could arise from that.”

He says that large supermarket chains like Coles and Woolworths have contracts with prime operators like Linfox and Ron Finemore transport, and those businesses often subcontract to smaller transport organisations during peak periods.

“They [the tribunal] are relying on the fact that a lot of prime contractors can’t physically meet the demands with their own number of vehicles, so as a result need to hire subcontractors,” said Mr Lucas.

“That’s usually how it works at the moment, but in the future, if pay rates go up, they will be deciding whether it’s financially viable for them to keep using the subcontractors; and they could well decide it’s not.”

Mr Lucas has an issue with the fact that only one segment of the trucking industry are being highlighted under the new order.

“It’s unfair from a business point of view for the owner-operator to be protected. Sure, he might be one guy with a truck, but he can still compete for the same work we can.

“They’re saying these guys [owner-operators] need protecting from the big guys, but at the end of the day they don’t need to work for them; they make the choice who to work for,” said Mr Lucas.

“If they’re going to protect owner-drivers, they should be protecting all subcontractors.”

The issues surrounding smaller operators being exploited by larger organisations, says Mr Lucas, can often come down to a lack of understanding about the many facets and costs associated with owning and operating trucks.

“Some people go into the industry wanting to own their own trucks but don’t understand the many costs that are involved,” explained Mr Lucas.

“They might think $60,000 for a truck and $20,000 for a trailer, and they’re in business, but they do need more money behind them to start out.”

He explains that the costs often start escalating before the money begins to roll in.

“If you do a job at the start of the month, the bill will be sent out at the end of the month, and then they have another month or more to pay. So you could be looking at around 60 days, even up to 90 days, before that money comes in,” said Mr Lucas.

“In the meantime, you have costs accruing; fuel payments, truck repayments, house repayments. People think it’s an industry that they can get into cheaply, but it’s about knowing all your costs.”

It is this lack of understanding that can land people in deep water and lead to tragic outcomes, says Mr Lucas.

“I can understand how people that are desperate for work will take less money; they’re going to take on jobs like that when they are losing money and are in a bad situation,” said Mr Lucas.

“There’s always going to be people out there that are unscrupulous, and the drivers will feel that they have to take anything they’re offered, and will push themselves into driving more just to bring in an income.”

Mr Lucas says Tumut Freight Service falls somewhere between the classification of a prime operator and subcontractor, as they deal directly with many businesses and customers, but do also subcontract services if the price is right.

“I have people calling me all the time [looking to subcontract] and I will give them a price based on what I know it costs me,” explains Mr Lucas.

“It might mean I get beaten, but I won’t drop my price just to get work on the truck.”

Mr Lucas says his business is well-established and has a good reputation and repeat customers. He says it can be a hard slog for owner-operators just starting out in the industry, which can lead to problems if they’re not careful.

Tony Mitchell is Tumut-based owner-operator truck driver who could be seriously impacted if the concerns around the new rules ring true. He admits he is also having issues understanding what the new rules will mean for him.

“I can’t really say what the changes will mean for me, so I’ll be attending an information session in Wagga on Thursday night to get a better idea,” said Mr Mitchell.

“But I know what everyone’s concerns are, about owner-operators being forced out, and that’s of definite concern to me.”

Mr Lucas will be attending the same information session on Wednesday to gain greater clarity about the changes.