Chapter 2 Road Safety Remuneration System
Background to the legislation
As noted in paragraph 1.2, the bills implement a national Road Safety
Remuneration System for drivers in the road transport industry. The stated
purpose of the Road Safety Remuneration System is ‘ … to tackle speed, fatigue
and dangerous work practices in the trucking industry—to make Australia’s roads
safer for all drivers.’
The bills were introduced into the House of Representatives by Minister
Albanese. In the conclusion of his second reading speech, the Minister noted
This bill is the government’s response to the report of the
National Transport Commission that I commissioned when I became the transport
minister, but it is also in response to numerous reports over many years,
including the Burning the midnight oil report, which was done by the
House of Representatives committee, chaired by the member for Hinkler, who is
in the chamber today. This has been an issue which has been talked about for a
long time, but not acted upon until today.
The 2008 NTC Safe Payments report, referred to by Minister
Albanese in his second reading speech, was commissioned by the Australian
Transport Council (now known as the Standing Council on Transport and
Infrastructure), to provide an evaluation, with recommendations, for the
improvement of truck driver payment methods, working conditions and career
structures to address safety issues.
The Safe Payments report provided a conclusive statement as to
the existence of the link between rates and methods of remuneration and poor
safety outcomes, and further stated that, for the first time, the incentives behind
safety issues would be addressed when targeting on-road behaviour.
The report concluded that safe payments are an important step for the future of
the road transport industry.
The NTC recommended the development of a national framework for the
establishment and maintenance of safe payments for employees and owner drivers.
In response to the Safe Payments report, and in order to build on
the recommendations made in it, DEEWR sought to consult with road transport
industry stakeholders to develop possible models for reform.
As part of this process, the Safe Rates Advisory Group (SRAG) was established
to provide expert road transport industry advice to DEEWR on policy options for
This advice resulted in the Safe Rates, Safe Roads Directions
Paper, which examined the recommendations of the Safe Payments report
and outlined options for national legislation covering employees’ and
independent contractors’ work, considering impacts on safety, productivity,
efficiency and employment levels in the road transport industry.
The Safe Rates, Safe Roads Directions Paper proposed options for
models of a national tribunal, all with the power to make orders regarding safe
rates and related terms in the road transport industry.
The Department sought public comment on its Safe Rates, Safe Roads Directions
Paper, and received submissions from 45 parties using and affected by the road
Of the 45 submissions, 21 supported the establishment of a tribunal with
power to set remuneration rates and related conditions for employees, owner
drivers and the supply chain, a form of which is
proposed in the bill. Fourteen submissions preferred a status quo approach, and
ten submissions supported the introduction of a voluntary system of payments
for owner drivers and chain of responsibility arrangements.
Issues and opinions arising from the public consultation included:
n that current and
proposed regulatory regimes should be given a chance to work before a new
system is introduced;
n support for the
enforcement and development of current regulatory regimes;
n that it must be made
clear how any new system would interact with current and proposed regimes;
n that there must be no
duplication of regulation;
n suggestions for how a
tribunal should calculate safe rates, incorporating all fixed and variable
n issues that a
tribunal should address, such as unpaid waiting times, ‘backloading’ rates,
payment terms and driver cost recovery;
n concern about the
impact increased rates might have across the road transport industry, including
decreases in market demand for smaller rural transport operators, and increases
in compliance costs;
n that the legislation
should bind all industry participants, including those in the supply chain;
n that independent
contractors should be governed by commercial law and employees by industrial
n that modern Awards
and contract determinations already address minimum rates of pay in the
industry, and the Independent Contractors Act addresses safe rates for owner
n alternative ways of
improving safety to a safe payments system, such as making demurrage payments
mandatory, an enforceable code of practice, licensing systems, and mandatory
safe driving plans; and
n requests for
continuing consultation in the development of any proposed national safe
payments system, including in the drafting of the legislation.
Support for a tribunal approach came from unions such as the Australian
Council of Trade Unions (ACTU) and the Transport Workers’ Union of Australia
(TWUA), individual drivers and driver groups, including the Australian Road
Transport Industrial Organisation (ARTIO).
Preference for a status quo approach came from industry groups and
employer representatives, including the Australian Chamber of Commerce and
Industry (ACCI), the Australian Trucking Association and the South Australian
Road Transport Association.
Support for the introduction of a voluntary system came from the Australian
Industry Group (AIG) and the Australian Logistics Council (ALC).
The state governments expressed different views. The New South Wales
Government and South Australian Government (represented by SafeWork SA)
supported a mandatory tribunal approach, the Western Australian Government
supported the introduction of a voluntary system, and the Queensland Government
withheld its support for any option pending further economic analysis.
The SRAG was recalled in October 2011 to assist the Federal Government
with finalising its response to the Safe Rates, Safe Roads Directions
Paper and the feedback received, resulting in the Road Safety Remuneration
System and consequent legislation.
Issues arising in the inquiry
Several issues of concern to the industry which had arisen during the
public consultation process for the Safe Rates, Safe Roads Directions
Paper resurfaced in submissions provided to this inquiry, and at the public
hearing. These are reflected in the main issues that arose throughout the
inquiry, as follows:
n the link between
remuneration and road transport safety;
n the jurisdiction and
interaction with other laws and initiatives in the road transport industry; and
n the challenges of a
safe rates system.
The submissions overall took one of two approaches, the first being to
comment on road safety in the road transport industry and how it should be
improved, the second being to comment on the bill and make suggested changes.
Some submissions combined the two approaches.
A common theme that emerged from the submissions and evidence received
at the public hearing was the paramount importance of safety in the road
transport industry. The methods by which safety could be improved, including by
the introduction of the bills, were the contested elements of the inquiry.
The general view that arose in opposition to the bill was that the
Tribunal would add an unnecessary layer of regulation, when other measures and
laws were already adequately placed to improve safety.
The general view that arose in support of the bill was that the Tribunal
was needed to improve safety in the industry, most notably through increasing
The Department discussed the intention of the bill as being to
complement the range of other measures the Federal Government was taking, and
... what this bill does is address an element of this
industry which is not necessarily addressed by those other mechanisms, and that
is the linkage between remuneration and safety practices in the road transport
The ACTU agreed with this statement by saying that ‘ … the Bill
represents the only initiative that is specifically targeted at the industry’s
economic factors that influence and incentivise drivers to take risks.’
Of all the issues raised in evidence, the link between remuneration and
safety was undoubtedly the most prominent.
The link between remuneration and safety
The bill is premised on the assumption that there is a proven causal
connection between remuneration and safety. There are mixed views on whether
this link has been definitively established.
Many submitters supported this link, including Professor Michael
Quinlan, School of Organisation and Management, University of New South Wales.
Professor Quinlan has been involved in research into occupational health and
safety (OHS) for over 30 years, with his research focusing on how work
organisation affects OHS. Professor Quinlan has published research on OHS in
the trucking industry since 1997, including a number of reports commenting on
the link between remuneration and safety. Professor Quinlan is
strongly supportive of the legislation and the establishment of the Tribunal as
it ‘ … most clearly addresses the issues
raised by the connection between remuneration and safety and provides an
entirely workable mechanism for remedying these problems … ‘
As stated by Mr Michael Kaine, National Assistant Secretary of the TWUA,
in his evidence to the inquiry: ‘There is not a dearth of evidence; there is an
avalanche of evidence in support of this bill.’
The TWUA stated, in its supplementary submission, that ‘ … there is
empirical evidence (Belzer et al.) that an increase in rates to driver will
result in lowering of crash rates and a reduction in the time a driver will
choose to spend on the road … ’
Professor Michael Belzer, from the Department of Economics, Wayne State
University in the United States, is a former professional truck driver, and a
scholar with expertise in researching and writing reports on issues associated
with trucking operations and truck driver OHS in the United States. Professor Belzer
provided a submission to the inquiry, in which he said that:
My research supports the hypothesis that economic
deregulation led to heightened competition in the trucking industry, and that
while this has resulted in some economic efficiencies, it also has resulted in
a substantial decline in truck driver compensation. The increased competition
has put substantial stress on commercial motor vehicle operators, and this
stress is associated with greater crash risk … Our research has shown that the
lower compensation levels caused by this competition also is associated with
greater crash risk. This suggests that while higher pay and lower driver stress
leads to safety, the inability of motor carriers to maintain high levels of
compensation continues to lead to negative safety and health outcomes. This is
evidence of a market failure.
The Regulatory Impact Statement (RIS), prepared for DEEWR and presented
with the bill, refers to the international evidence supporting the link between
remuneration and safety:
There is some research to suggest that the remuneration for
drivers is a factor in safety outcomes, however data at this point in time is
limited and being definitive around the causal link between rates and safety is
difficult. International research has found a correlation between remuneration
and safety performance, particularly where very low levels of remuneration are
concerned (Rodriguez et al 2006, Nafuko et al 2007 and Belzer et al 2002). An
Australian study found that drivers paid by a ‘payment-by-results’ method were
twice as likely to report being fatigued on at least half of their trips than
drivers paid an hourly rate (Williamson et al 2001).
The link between remuneration and safety was not supported by some
inquiry participants, including the ALC and the AIG. The ALC stated in its
submission that the RIS did not support a definitive link between remuneration
levels and safety outcomes, and said that the Tribunal should not be
established until that link could be proven. When questioned at the
hearing as to whether the ALC had done any of its own research on the link
between road accidents and causes of accidents, Mr Michael Kilgariff, Managing
Director, confirmed that it had not.
The AIG similarly based its objection on a statement made in the RIS (as
reproduced above). When questioned at the hearing on its position held prior to
the introduction of the bill, and therefore the production of the RIS, Mr Brent
Ferguson, Senior Advisor Workplace Relations at AIG stated that:
I think we take the view that the causes of unsafe outcomes
in the road transport industry are probably multifaceted. I think we have
already heard this afternoon discussion about the fact that, in many instances,
incidents of unsatisfactory road safety outcomes may be the fault of the driver
of a car rather than a trucking operator. What we have taken issue with is that
we do not believe that altering remuneration or remuneration-related conditions
can satisfactorily rectify all of those road safety outcomes.
Mr Ferguson further stated that:
… if the Tribunal
results in increased remuneration then arguably drivers may wish to work longer
hours in order to gain the benefits of that remuneration. Alternatively they
may continue on with whatever unsafe practices they are currently engaging in
and simply reap greater rewards … 
The National Road Transport Operators Association (NatRoad) commented
that the Tribunal was being established under circumstances in which the extent
of any link between remuneration and safety had not been conclusively proven.
Independent Contractors Australia also rejected the link between pay rates and
road transport safety. The ACCI continued to:
… express its concern that the underpinning premise of the
legislative proposals is that community safety outcomes, such as reduced
injuries and fatalities on Australian roads, can be enhanced through better
remuneration and conditions for drivers.
The Australian Trucking Association of NSW suggested a full and
comprehensive RIS be made to fully establish any link between remuneration and
safety and the full impact on the supply chain including the broader community,
as a way to deliver enhanced safety and fairness across the road transport
The Committee considers that there is sufficient evidence to establish
the link between remuneration and safety. In addition, the Tribunal will have
the power to investigate into the issues that are brought before it, and will
have done so prior to preparing its annual work program. The Tribunal will also,
if it wishes, have the power to investigate whether or not there is a clearly
identifiable or provable link between remuneration and safety in relation to
specific issues before it.
Jurisdiction and interaction with other laws and initiatives in the road
Drivers covered by the bill
Questions arose throughout the inquiry as to the extent of the bill’s
coverage. The bill applies to all employed and self-employed drivers in the
road transport industry. The Department noted that, due to constitutional
limitations, it will initially cover approximately 80% of employees and 60% of
owner drivers, with the Federal Government intending to expand coverage by
exploring the possibility of referrals of power from state governments.
The ALC described the extension of the bill to couriers and cash in
transit industries as a ‘jurisdictional creep’.
When asked at the hearing as to why couriers should be excluded from the ambit
of the bill, Mr Kilgariff explained that:
… the deliberations of the safe rates working group and also
the work that was undertaken by the National Transport Commission did not cover
courier drivers. It was basically restricted to long-haul drivers. Now under
the legislation it is quite clear that the scope of the tribunal could go right
to the services provided by courier drivers, which in our view has never been
part of the debate to date.
The Civil Contractors Federation (CCF) commented that the jurisdictional
extension to owner drivers was an undesirable policy development.
NatRoad suggested that the Tribunal should not seek to establish minimum
remuneration rates for sub-contract drivers. The Post Office Agents
Association Limited (POAAL) stated that it was unlikely that the bill would
improve road safety for mail contractors.
The AIG submitted that employee drivers should not be subject to the
bill as they are already protected under the Fair Work Act.
Some parties suggested that state-based legislation dealing with the
same issues as the bill be repealed. The ALC took the view that the bill should
be amended so that it dealt, so far as constitutionally possible, with
remuneration issues relating to heavy vehicle drivers, to the exclusion of
state laws currently in place.
In support of the broad coverage of the bill in relation to all types of
drivers in the road transport industry, Mr Tony Sheldon, National Secretary of
the TWUA, stated that:
… the essence of the bill goes to the entire transport
sector and includes a number of areas of the transport sector that apply,
whether it is long distance or short haul. There are inquiries and statements
about both of those sectors and there are inquiries that we are able to furnish
regarding the cash in transit industry … 
The Committee understands the concerns of inquiry participants as to the
intent of the bill to eventually cover all drivers in the industry. The
Committee is concerned, however, that partial coverage may cause confusion in
the industry as to which drivers will be under the jurisdiction of the
Tribunal. The Committee acknowledges the Department’s intention to consult with
state and territory governments with a view to making arrangements for referral
of powers as soon as possible, so as to limit any confusion amongst industry
Interaction with other laws and initiatives
Mr Kovacic, Deputy Secretary, DEEWR, described the intent of the bill as
being complementary to the range of other measures the Federal Government is
The National Heavy Vehicle Regulator is one of those
initiatives but there is a range of other factors. Investment in roads and
those sorts of issues, the changes to the work health and safety laws, the
establishment of harmonised laws—they are all factors which collectively can
impact on safety in the road transport industry as well as in some other
industries. But clearly what this bill does is address an element of this
industry which is not necessarily addressed by those other mechanisms, and that
is the linkage between remuneration and safety practices in the road transport
industry ... Indeed we were very conscious of ensuring that the provisions of
this bill very much complemented all of those other sorts of measures. The
National Heavy Vehicle Regulator was a particular area of focus in terms of
ensuring that complementarity.
The ACCI was concerned that the bill would create significant overlap
with existing laws, and further that:
… the Government has proceeded by introducing the
legislative measures without the co-operation of states and territories and
without awaiting the commencement of a range of agreed national industry
specific initiatives and strategies.
The clearly stated intention of the bill is that it will work
concurrently with other laws and safety initiatives in the industry and that
the Tribunal will take these into account when carrying out its duties. The
Department confirmed that any decisions made by the Tribunal are intended to
complement other laws and initiatives in the road transport industry.
Challenges of a safe rates system
In the course of its inquiry, the Committee heard different views on the
implications of a safe rates system across the industry. Some inquiry
participants proposed alternative safety initiatives, and concerns about the
complexity of the new safe rates system were discussed.
Application across the industry
A common view expressed by small transport operators and owner drivers
was that other measures would be more valuable to them than imposing a safe
rates system across the industry.
Mr Russ Martin, a transport operator based in Queensland and a delegate
of the National Road Freighters Association (NRFA), submitted that it would be
‘nigh on impossible’ to set a safe rate, as the transport industry has so many
varied operations. Mr Martin observed that
a maximum 14 day payment period and paid waiting time to unload would be
most valuable. Mr Martin further said
that there is a need for regulation of some type in the long haul subcontract
Mrs Terrie Bradley, an owner operator and Secretary of the NRFA from
Queensland, did not support a safe rates system across the industry, and stated
that the implementation of a safe rate would only serve to disadvantage those
who ‘work for the right rates now’. Mrs Bradley further
stated that it would be ‘nearly impossible to make a “safe rate” across the
board as there are so many different facets of our industry’.
Mr Ricky Finning, Vice President of the NRFA, had a similar view to
Mrs Bradley, in that all transport businesses who kept their freight rates
at a sustainable viable rate would have trouble doing so when the safe rates
scheme is introduced.
The Long Haul Drivers Association suggested that there was no future in
regulating rates for owner drivers who did not have the skills to successfully
operate a small business.
The ALC stated that the Tribunal was ‘ … an unnecessary extra layer of
regulation, when there are already a range of regulatory and non-regulatory
schemes in place that adequately deal with driver safety.’
The Committee understands that the Tribunal will make decisions and
RSROs that are applicable to different parts of the industry, and that relate
to different issues that arise in the industry. This will depend on the issues
it has identified in its work program, or issues that are raised in application
to the Tribunal by relevant parties.
Whilst the Committee understands the concerns of some submitters that a
‘safe rate’ could not be set across the industry, and that the rates set might
not be sustainable, the Committee is satisfied that the legislation allows the
Tribunal to be cognisant of these and other issues raised for its
consideration. The Committee understands that the legislation will allow the
Tribunal to consider, in the making of a RSRO, supporting evidence, and the
effects it may have on all participating, and potentially affected, parties,
whether in or outside the industry.
Alternative safety initiatives and complexity
Alternative ways to improve safety in the road transport industry were
raised in submissions. Many echoed those raised in the consultation process
with DEEWR prior to the introduction of the bills.
The ALC suggested that:
… if there were to be changes made to the heavy vehicle
national law that is currently being developed, we believe that the safety
issues that are proposed to be covered by this law should be picked up by the
National Heavy Vehicle Regulator.
The ACCI similarly argued that the Federal Government should progress
safety enhancing objectives through agreed national initiatives, including the
National Heavy Vehicle laws, and other industry-specific occupational health
and safety laws and codes of practice.
The ALC, noting its opposition to the bill, observed that the NHVR will
come into effect from 1 January 2013. Mr Kilgariff claimed that the
regulator ‘will bring a greater national focus to key safety initiatives such
as the chain of responsibility and fatigue management.’ Mr Kilgariff further
stated that the laws ‘need to be given time to be implemented and bedded down.’
The AIG adopted a similar view to the ALC. Mr Michael Mead, the National
Manager, Advocacy & Policy, described the safe rates system, as proposed in
the bill, as ‘counterproductive’ to a range of other new measures, including
the NHVR. Mr Mead stated that:
Ai Group supports the regulatory impact statement’s
assessment that such laws are currently being bedded down, so further
improvements in safety can be expected. These initiatives should be given time
to work and their effectiveness assessed before an entirely different approach,
as contemplated in the bill, is introduced. The system delivered by the bill
will distract government and industry attention away from measures which are
directly targeted at improving safety.
Mr Ferguson supported Mr Mead’s opening remarks:
We would say that in order to come to the conclusion that it
is not working, the new laws that have been relatively recently introduced
which could have an impact on safety, such as the chain of responsibility laws
as they are implemented in various jurisdictions around Australia, should be
bedded down and given an opportunity to work.
In response to a question on notice from the Committee regarding a
definition of ‘bedding down’, the AIG stated that those subject to the laws
needed a sufficient period of time to enable them to come to terms with such
provisions and to implement associated changes in their practices, and further
It is difficult in precise terms to articulate the length of
time that should be given for the ‘bedding down’ of such laws before their
effectiveness is considered given that, as outlined above, there are numerous
new regulatory responses to addressing safety. Further, the necessary time
frame would also be subject to variables such as the level of government
support for educating and enforcing these schemes. It would also be somewhat
premature to state a time given that the enactment of some of these laws is
still being finalised.
The new harmonised Workplace Health & Safety laws are
only partly in place … COAG has recommended that a review of the laws take
place after they have been in operation for five years … At the very least, any
review of the effects of the existing laws should not occur prior to 2018. This
will allow any COAG review of the nationally harmonised Workplace Health and
Safety laws to occur, and provide a period of five years for the National Heavy
Vehicle Law to operate.
The POAAL suggested the need for better contracts to address penalties
for unreasonable waiting times, and that an industry code of conduct could
address the contract negotiation issues.
The Queensland Government reiterated its argument made in its submission
to the Safe Rates, Safe Roads Directions Paper, saying that safety in
the road transport industry is ‘multi-factorial’ and should be addressed with a
number of intervention strategies, and it did not believe that safe rates were
likely to encourage safe work practices.
The CCF noted that ‘ … improving road safety requires a holistic
approach rather than being based on a narrow focus upon the method and quantum
Mr Noel Porter, the owner of Porter Haulage Pty Ltd from Victoria,
suggested that uniform regulation across state borders needed to be addressed
Different sectors of the industry were concerned about the likelihood
that the bill would introduce further complexity and cost into an industry that
was already heavily regulated. The CCF stated that the RIS should provide a
proper analysis of the additional compliance and administrative burden imposed
by the legislation, and that further elaboration of a number of statements made
in the RIS would be helpful.
Mr Ken Wilkie has been an owner operator since 1974 and is a Queensland
delegate of the NRFA. In his submission, Mr Wilkie stated that:
… a major cost to small operators is the complicated
compliance requirements currently demanded by government and its agencies …
I object to having an outside entity directing what that
entity considers to be a safe return on my effort. The costs of operation
within the industry vary considerably between types of operation.
In his submission, Mr Ross Ingram, a Director of Bonaccord Freight Lines
from Victoria, observed that ‘industry needs one set of rules to comply with,
not seven and it needs to be simple to understand and written in language that
is easy to interpret.’