Bills Digest no. 109,
2015–16
PDF version [640KB]
WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Paula Pyburne
Law and Bills Digest Section
19 April 2016
Contents
Purpose
of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Concluding comments
Date introduced: 18
April 2016
House: House of
Representatives
Portfolio: Employment
Commencement: as set
out in the body of the Bills Digest.
Links: The links to the Bills,
their Explanatory Memoranda and second reading speeches can be found on the
homepages for the Road
Safety Remuneration Repeal Bill 2016 and the Road
Safety Remuneration Amendment (Protecting Owner Drivers) Bill 2016 or
through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the Federal
Register of Legislation website.
All hyperlinks in this Bills Digest are correct as at
April 2016.
Purpose of
the Bill
This Bills Digests deals with two Bills.
The purpose of the Road Safety Remuneration Repeal Bill
2016 (Repeal Bill) is to repeal the Road Safety
Remuneration Act 2012 and to make consequential amendments to other
statutes to reflect that repeal.
The purpose of the Road Safety Remuneration Amendment
(Protecting Owner Drivers) Bill 2016 (Order Bill) is to suspend the operation
of the Contractor
Driver Minimum Payments Order 2016 (the Order) and any subsequent orders
that may be made by the Road Safety Remuneration Tribunal (the Tribunal) until
1 January 2017 and to allow the Minister to make rules dealing with
transitional and other matters. According to the Minister for Industry,
Innovation and Science, Christopher Pyne, the Government’s preferred option is
the passage of the Repeal Bill. The Order Bill was introduced to ensure that,
if the Repeal Bill is not passed, the Order will not have any immediate effect
on owner drivers.[1]
Background
RSR Act
The Road Safety Remuneration Act was enacted in 2012
and commenced on 1 July 2012.[2]
2000—Managing fatigue in transport
Previous Parliamentary reports raised concerns with aspects
of the road transport sector. The House of Representatives Standing Committee
on Communications, Transport and the Arts (the Committee) conducted an inquiry
into fatigue in transport in 2000.[3] The Committee’s report, entitled Beyond the Midnight Oil: Managing Fatigue
in Transport, found that the Australian road transport industry had reduced
its freight rates (charges to consumers for delivery) as a result of
competition, but that this had come at a price:
... the combination of low freight rates and the increasing
cost of overheads (such as fuel and tyres) means that many operators are being
forced to driver longer, faster and further in order to make even a small
profit. As one long distance truck driver told (the Committee), he has 'never
ever worked harder to try and make nothing'.[4]
The Committee also found that there was an increased need to
raise utilisation levels of equipment, which, when tied to low freight rates,
created pressure to drive long hours to make ends meet. Pressure on transport
companies to remain competitive is one of the most prominent causes of driver fatigue.[5] Nevertheless, the Committee concluded that there was little governments could
do to intervene in commercial matters in respect of setting freight rates.[6]
2008—National Transport Commission research
As part of the ongoing concern about the pressures on
drivers to drive for long hours in return for low pay, in 2008 the National Transport
Commission (NTC) was asked to identify and assess options for implementing a
system of safe rates for both employees and owner-drivers, recognising the
special vulnerabilities of independent contractors in the transport industry.[7]
The NTC report, entitled Safe Payments—Addressing the Underlying
Causes of Unsafe Practices in the Road Transport Industry, concluded that
there was ‘sufficient evidence which points to a link between rates and methods
of payments and a variety of on-road behaviours’ including speeding, working long
hours and using illicit substances, ‘which are acknowledged contributors to
truck crashes’.[8]
As part of its report, the NTC considered a number of
options for regulatory reform including a national framework for employee and
owner-drivers.[9] It proposed a specialised body under federal transport legislation to:
- establish and maintain enforceable safe payments for employees
- establish and maintain enforceable safe payments for
owner-drivers
- settle disputes in a low-cost, accessible manner
- consider and, if necessary, impose obligations regarding safe
payments on parties in the transport supply chain, and
- consider and, if necessary, impose obligations with respect to
enforcement of safe payments.[10]
The Regulation Impact Statement which accompanied the
originating Bill was prepared by PricewaterhouseCoopers (PwC) at the request of
the then Department of Education, Employment and Workplace Relations.[11] It was commissioned to assist the Government to formulate its response to the
2008 National Transport Commission research.[12] PwC explored three possible options, the third of which was to establish the
Road Safety Remuneration Tribunal. It was considered:
There are valid economic grounds for establishing a tribunal,
which is expected to cost about $5 million per annum. The tribunal’s approach
to setting pay and pay related conditions would be research focused and
evidence based. The tribunal would have discretion to set rates of pay and/or
pay related conditions for drivers operating in sectors of the road transport
industry, if there was evidence these rates and/or conditions would improve
safety outcomes.[13]
Amongst other things the Road Safety Remuneration Act:
- establishes the Tribunal
- empowers the Full Bench of the Tribunal to make road safety
remuneration orders
- sets out the method to be followed by the Tribunal for making an
order, including industry consultation and
- provides that the Road Safety Remuneration Act is a
workplace law under the Fair Work Act 2009.[14]
The Road
Safety Remuneration Act was intended to apply to:
… all employee and contractor drivers in the road transport
industry, to the fullest extent possible under the Constitution. The road
transport industry is defined by reference to the coverage of the existing 4
modern awards that apply in the industry. [The Act] will allow for the Tribunal
to make [road safety remuneration orders] for the benefit of all drivers. These
[road safety remuneration orders] will apply to employers and hirers of
drivers, as well as other parties in the road transport supply chain.[15]
Link to the Fair Work Act
The Road Safety Remuneration Act interacts with other
instruments that are made under the Fair Work Act.[16] It provides that road safety remuneration orders must be made by a Full
Bench of the Tribunal.[17] The Full Bench is to consist of either:
- three members of the Tribunal, being the President, one dual Fair
Work Commission member and one industry member or
- five members of the Tribunal, being the President, two dual Fair
Work Commission members and two industry members.[18]
Under the Road Safety
Remuneration Act industry members must have knowledge of, or experience in,
one or more of the following fields:
- transport and logistics
- driving in the road transport industry
- business, industry or commerce
- work health and safety in the road transport industry.[19]
Contractor
Driver Minimum Payments Safety Remuneration Order
Consistent with its statutory functions, the Tribunal made
the Order which was published on 18 December 2015 and was to commence on 4
April 2016.[20]
Who the Order applies to
Clause 4 of the Order sets out its application as follows:
… subject to subclause 4.3, this order applies to
a contractor driver engaged in:
(a) the
road transport and distribution industry within the meaning of the Road
Transport and Distribution Award 2010 as in force on 1 July 2012, in
respect of the provision by the contractor driver of a road transport service
wholly or substantially in relation to goods, wares, merchandise, material or
anything whatsoever destined for sale or hire by a supermarket chain; or
(b) long
distance operations in the private transport industry within the meaning of the Road Transport (Long Distance Operations) Award 2010 as in force on 1
July 2012.
The Order therefore applies to contractor drivers either engaged in the transport of retail goods and other material destined for
sale or hire by a supermarket chain (a business operating five or more
supermarkets) or in long distance operations, defined as interstate journeys
exceeding 200km or return journeys exceeding 500km.[21]
Subclause 4.3 of the Order sets out exceptions, providing
that it does not apply to contractor drivers engaged in:
- the cash in transit industry (within the meaning of the Transport
(Cash in Transit) Award 2010)
- the waste management industry (within the meaning of the Waste
Management Award 2010)
- the sector of the road transport industry directly related to
wharf and port container work and
- the oil, fuel and gas sectors of the road transport industry.
Meaning of
contractor driver
Contractor driver is defined in the Order as a road transport driver who is an independent contractor.
Under the Order, an independent contractor is not confined to an
individual.[22] A road transport driver is defined as:
a) an individual who engages in the
road transport industry by driving a vehicle to transport things by road,
providing the individual does so:
i. as an employee of a constitutional
corporation, the Commonwealth, a Commonwealth authority, a Territory or
Territory authority
ii. under a road transport contract
the other party to which is a constitutional corporation, the Commonwealth, a
Commonwealth authority, a Territory or Territory authority
iii. under a contract entered into in a
Territory
iv. under a contract at least one of
the parties to which is an individual who is resident in, or a body corporate
that has its principal place of business in, a Territory
v. for the purposes of the
Commonwealth, a Commonwealth authority, a Territory or a Territory authority
vi. in the course of or in relation to
constitutional trade or commerce or
vii. under a road transport contract
the other party to which is a corporation that has entered into the contract
for the purposes of the business of that corporation or
b) a constitutional corporation that
engages in the road transport industry by transporting things by road using one
or more vehicles supplied by the corporation or related individual, where each
vehicle is mainly driven by a director of the corporation, a member of the
immediate family of a director, an individual with a controlling interest in the
corporation or a member of the immediate family of such individual.[23]
What the Order does
The Order creates obligations for hirers and certain
participants in the supply chain in relation to contractor drivers.
Specifically, it does the following:
- specifies minimum payments for drivers involved in
‘distribution operations’ (Schedule
A) and ‘long distance operations’ (Schedule
B)—these will automatically increase by two percent per year commencing on
4 April 2017
- requires the prescribed hourly rate to be paid ‘for each hour or
part thereof that a contractor driver necessarily spends in providing road
transport services’,[24] which includes time spent while the contractor is required by the hirer to be
at its disposal or direction,[25] during each 30 minute rest break (as required by law)[26] and for activities including loading and unloading, cleaning, refuelling and
inspecting or attending to a load on a vehicle or trailer[27]
- requires hirers to permit a contractor driver to take up to four
weeks of unpaid leave, if engaged over a 12 month period[28] and
- requires participants in a supply chain, including consignors,
consignees, intermediaries and operators of premises for loading or unloading,
to take all reasonable steps to ensure that any contract they have with another
party in the supply chain does not prevent or impede compliance by a hirer with
the requirements imposed by the Order.[29]
Comment
It is clear that the Order was originally intended to
apply broadly. However, its drafting has led to concerns by stakeholders about
who is covered and who is not.
The application provision of the Order provides that it
applies to a contractor driver who is engaged in certain activities. The Order
defines a contractor driver as a road transport driver who is an independent
contractor.
The definition of road transport driver is
set out in two parts, a) and b). Part b) of the definition clearly captures
owner-drivers where their business venture is a constitutional corporation.
What is unclear to many stakeholders is the breadth of the
application of part a) of the definition. According to the Fair Work Ombudsman
the Order:
… affects contractor (owner) drivers, hirers and supply chain
participants. It has effect from 4.15 pm on 7 April 2016 and expires on 3 April
2020. Given ongoing confusion and concern surrounding the introduction of the
2016 Order, we will not be seeking enforcement outcomes to early contraventions
that may be identified.[30]
Given the confusion which the Fair Work Ombudsman
acknowledges, the Tribunal would need to issue guidance on the practical
effects of the Order within a range of scenarios.
Consistent with the requirements of the Road Safety
Remuneration Act, the Order was the subject of extensive consultation
before it was made.[31]
On 26 August 2015 the Tribunal issued the draft Contractor
Driver Minimum Payments Road Safety Remuneration Order 2016 (draft Order) and
accompanying Statement.[32] Importantly the accompanying statement contains the following information:
The draft Payments RSRO applies to a road transport driver employed
or engaged in:
(a) the
road transport and distribution industry within the meaning of the Road
Transport and Distribution Award 2010 as in force on 1 July 2012, in
respect of the provision by the road transport driver of a road transport
service wholly or substantially in relation to goods, wares, merchandise,
material or anything whatsoever destined for sale or hire by a supermarket
chain; or
(b) long
distance operations in the private transport industry within the meaning of the Road Transport (Long Distance Operations) Award 2010 as in force on 1
July 2012.[33] [emphasis added]
Extensive submissions were received.[34] The Tribunal issued amended Directions on 23 November
2015 and provided the opportunity for further written submissions to
be made in relation to the value that should be given to the individual inputs
in the KPMG
cost model and/or particular rates, if any, that the Tribunal should order
as minimum payments for those covered by the draft Order.[35]
When the final form of the Order was published in December
2015, its application was narrowed to contractor drivers—being a
road contractor driver who was an independent contractor.
Court action
In the weeks leading up to the proposed commencement of the
Order (that is, 4 April 2016), the Tribunal received submissions from
stakeholders seeking a variation of the Order so that it did not commence until
1 January 2017.[36] This was based on concerns that ‘the industry had not had sufficient time to
prepare for the Order’ and ‘significant concern and confusion about the impacts
of the order, particularly on the viability and livelihoods of owner-drivers
and small road transport businesses’.[37]
When the Tribunal did not agree to such a variation, an
application was brought to the Federal Court to stay the Order.[38] Whilst that action was successful at first instance,[39] the Transport Workers Union lodged an appeal against the stay and the Full
Court of the Federal Court declined to extend the stay.[40] As a result the Order has effect from 4.15 pm on 7 April 2016.
On the same day it was reported that a High Court
challenge would be prepared against the Road Safety Remuneration Tribunal by
Independent Contractors Australia on the grounds that the order is
unconstitutional because it amounts to price fixing.[41]
Reviews of the Tribunal
Prior to the proposed commencement of the Order, on 1 April
2016 the Minister for Employment, Michaelia Cash, released the report of two
reviews which had been conducted into the operation of the Tribunal.[42]
The 2014 review stated:
… the Review has instead focused on attempting to assess the likely
future impact of the Road Safety Remuneration System in terms of the
imposition of regulatory and economic burdens on the industry and the economy
more generally. While it has not been possible to quantify these expected
future burdens in any meaningful sense, the Review concludes that they are
substantial in size. At a fundamental level, this reflects the potential
for the Tribunal to exercise its powers to undertake minimum price-setting and
give rise to significant economic distortions if mandatory minimum rates are set
at inappropriate levels. The difficulties involved in setting rates at or near
socially optimal levels in a large and multi-faceted industry are necessarily
substantial, as numerous stakeholder submissions have underlined. The removal
of previous price regulation regimes in this industry in numerous OECD
countries arguably reflects recognition of this problem, as well as the general
move away from the use of price regulation in market economies in recent
decades. Thus, the potential regulatory and economic burden resulting from
the continuation of the Road Safety Remuneration System is significant.[43] [emphasis added]
The 2016 review concluded that:
… our analysis of the costs and benefits of the System
suggest that there will be a significant cost to the economy when both Road
Safety Remuneration Orders are in effect, with any potential safety benefits
significantly outweighed by the associated costs.
Consistent with the direction set out in the Government’s
Guide to Regulation it is hard to see how any system that results in a net cost
to the economy could be aligned with government priorities and policies.[44]
Discussion paper
Given the unfavourable comments made, Ms Cash circulated a
discussion paper seeking public comments about possible options for reform.
These include limiting the functions of the Tribunal and abolishing the Road
Safety Remuneration Act.[45]
However, the Repeal Bill and the Order Bill now render this
consultation process nugatory.
Committee
consideration
Selection of Bills Committee
At the time of writing this Bills Digest, neither of the Bills
had been referred to Committee for inquiry and report.
Senate Standing Committee for the
Scrutiny of Bills
At the time of writing this Bills Digest, the Standing
Committee for the Scrutiny of Bills had not published comments in relation to
either of the Bills.
Policy
position of non-government parties/independents
Australian Labor Party
Australian Labor Party (ALP) Shadow Minister, Jim Chalmers
has stated:
We do support the independent Tribunal. We think this is
fundamentally about road safety. There is a link that has been established,
independently, by experts, between remuneration for truck drivers and safety on
our roads. We need to prevent people from cutting corners, from taking
unnecessary risks -- whether it be with maintenance, whether it be with hours
worked and the like.[46]
ALP Senator, Doug Cameron has stated:
I think these truckies have been misled. I think the truckies
need to understand that what Labor is saying is that we will sit down and look
at that decision. We will look at the decision in the context of how it can be
implemented effectively and if there are problems with it, deal with those
problems
The other issue that we are very concerned about is obviously
road safety and it’s not just an issue for the safety of the truck drivers it’s
the issue of safety for the Australian public. I drive up and down the Hume
Highway every time I come to Parliament and you have always got to worry about
how long some of these truckies have been on the road, whether some of them are
fit and capable of doing their job.[47]
Australian Greens
Australian Greens (the Greens) Industrial Relations
spokesperson Adam Bandt has stated that ‘the Greens will fight the government’s
moves to override a Road Safety Remuneration Tribunal ruling on pay for truck
drivers’.[48]
Independents
Independent Senator John Madigan has stated that he is ‘leaning
towards supporting the move to abolish the RSRT, however, I still hold genuine
concerns surrounding the capabilities of the existing bodies and whether those
bodies are well equipped and well resourced to support the road transport
industry’.[49] To that end he arranged a private meeting with stakeholders for 16 April 2016
to ‘to examine whether we can go beyond simply abolishing the Road Safety
Remuneration Tribunal’.[50]
Australia Motoring Enthusiast Party Senator Ricky Muir has
stated:
Given that Fair Work appears to not be ready, the fact that
the industry is not ready, and the amount of industry uncertainty and public
concern around this Order, I will be supporting legislation to delay its date
of effect. This will hopefully provide the time necessary for all parties to
address the issues and concerns raised, especially the situation that allows
for owner-drivers to be priced out of the various road transport markets. I
would encourage all those who have issues with the Order to continue to provide
submissions to have it varied. This includes those in farming and rural communities
who it seems are particularly impacted.[51]
Position of
major interest groups
For the Order
The Transport Workers’ Union is strongly in favour of the Order on the
grounds that it sets out the minimum payments to owner drivers which are likely
to be more than they are currently paid.[52]
Against the Order
The Australian Industry Group argued initially for the Order
to be delayed to give small-business owners more time to adapt to the change.[53]
Australian Livestock and Rural Transporters Association has reportedly
lobbied Mr Turnbull to ‘abolish the Road Safety Remuneration Tribunal’. The
National Road Transport Association has also said ‘the tribunal should be
scrapped’ and warned its minimum rates order, applying to owner-drivers, would
prevent them giving upfront quotes to potential customers.[54]
Financial
implications
According to the Explanatory Memorandum for the Repeal
Bill ‘any savings arising from the abolition of the Road Safety Remuneration
Tribunal will be redirected to the National Heavy Vehicle Regulator’.[55] It has been reported that ‘the Australian Government has expended $13.4 million
over three years (2012-13 to 2014-15)’ on the Road Safety Remuneration
System.[56]
There will be nil financial impact from the Order Bill.[57]
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bills’ compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bills are compatible.[58]
Parliamentary Joint Committee on
Human Rights
At the time of writing this Bills Digest, the Parliamentary
Joint Committee on Human Rights had not published comments in relation to
either of the Bills.
Key issues
and provisions
Repeal Bill
Commencement
The Repeal Bill commences two days after Royal Assent.
Provisions
Item 1 of the Repeal Bill repeals the whole of the Road
Safety Remuneration Act.
Item 2 of the Repeal Bill provides that the
Minister may, by legislative instrument make rules prescribing matters of a
transitional nature relating to the repeals or amendment made by the Road
Safety Remuneration Repeal Act 2016. According to the Explanatory Memorandum
for the Repeal Bill, the rules could be used to ‘preserve the whole or part of
the operation of the Road Transport and Distribution and Long Distance Operations Road
Safety Remuneration Order 2014’.[59]
The rules would be disallowable instruments under the Legislation Act
2003, and so would be subject to the rules set out in that Act about
publication on the Federal Register of Legislation[60] and tabling in both Houses of the Parliament.[61]
Order Bill
Commencement
The Order Bill commences on the day after Royal Assent.
Provisions
Item 2 of the Order Bill suspends the operation of
the Order for the period starting on the commencement of the Road Safety
Remuneration Amendment (Protecting Owner Drivers) Act 2016 and ending on 31
December 2016. This is called the suspension period.
In addition, item 3 of the Order Bill provides that
any Order made by the Tribunal after the Contractor Driver Minimum Payments
Safety Remuneration Order 2016 was made has no effect during the suspension
period. According to the Explanatory Memorandum for the Order Bill,
‘this item has no Road Transport and Distribution and Long Distance Operations
Road Safety Remuneration Order 2014’.[62]
Item 4 of the Order Bill empowers the Minister, by
legislative instrument, to make rules prescribing matters required or permitted by the Act to be prescribed by the rules or necessary
or convenient to be prescribed for carrying out or giving effect to the Act.
This includes matters of a transitional nature relating to the Order or a later
order. Subitem 4(3) may be considered to be a ‘Henry VIII clause’ as it
allows the Minister to make rules which modify the effect of the Road Safety
Remuneration Act.
Concluding comments
What is clear from the above is that the publication of
the Order in December 2015 has been met by confusion and concern amongst many
of the stakeholders who are, or may be, subject to it. What is not clear is
whether the dire predictions of other stakeholders about the effect of the
Order on their businesses are based on fact or conjecture.
Whatever the case, the death knell for the Tribunal was
delivered in the two review reports which were published by the Minister for
Employment in April 2016. At a time when every statutory body must give value
for money, it appears that the costs of the Tribunal have been found to
outweigh its public benefit.
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