Road Safety Remunderation Tribunal costs more than it saves

Political promises to abolish the truck industry regulator responsible for pricing drivers out of work won’t alleviate hardships felt today.

As horrendous as the road toll is for the families affected and the community at large, statistics show a trend decline in deaths from crashes involving heavy vehicles, including heavy rigid trucks, over the long term.

But these facts have been set aside with assertions the national truck industry pay regulator, the Road Safety Remuneration Tribunal (RSRT), needs to fix minimum pay rates for contract truck drivers to make our roads safer.

And factors unrelated to pay, such as better roads, enhanced vehicle safety technologies, and worker health, driver monitoring and other initiatives championed by industry itself, don’t get their due recognition either.

The first ever RSRT pay ruling is now taking effect, after a federal court delay was recently lifted, with massive implications for a nation heavily reliant upon road transport to haul goods over long distances.

Industry analysts have said the RSRT pay ruling would lift contract rates for independent truck drivers by as much as 30 per cent, and some drivers have indicated payment rates could be even higher for return routes with light freight loads.

The risk is that such a significant cost increase could lead to some drivers being informed their mandatory rates are uncompetitive, and that work is no longer available.

Fewer contract drivers in the market could dilute competitive pressures, enabling large companies with their own truck fleets to more easily raise freight charges over time.

That means, in the end, higher prices for everyday goods that people buy, potentially exacerbating concerns about general cost of living increases as a political issue.

For owner‑operators remaining in the transport sector managing the regulatory compliance costs of the RSRT order will be a constant struggle.

Certain transport industry associations are already telling their members to either adapt to the changing regulatory environment, or otherwise restructure their activities or operations to ensure they can attain viable work in future.

All of these effects are likely to add up to a significant burden upon the transport sector, subsequently flowing through to other industries.

An independent review commissioned by the government has indicated the net cost of regulatory orders made by the RSRT, including those relating to minimum payment times, dispute resolution procedures and other policies, would be in excess of $2 billion over a fifteen year period from 2012.

The review by PricewaterhouseCoopers not only found ‘abolition of the system would result in significant net benefit to the economy and community at large,’ but questioned the very need for a regulatory response forcing higher payment rates on safety grounds.

Another review that has been recently released, and it points to the archaic powers of price controls accorded to the RSRT which are incompatible with the general direction of economic reform in Australia and the OECD over the last three decades.

This study, by Jaguar Consulting, argues that improved safety performance by the trucking industry could be improved through far less prescriptive regulation which doesn’t risk consigning independent owner‑drivers onto the dole queues.

In any case it isn’t a foregone conclusion that higher pay dictated by the RSRT will necessarily reduce crash rates and fatalities, because the prospect of earning more pay may induce remaining drivers to drive longer, not shorter, hours.

All in all this fiasco, threatening the livelihoods of trucking families, not to mention sparking transport cost‑inflation for both state and national economies, could have been avoided if political inertia against reform hadn’t stood in the way.

Indeed, the RSRT is a useful case study illustrating that governments hastily take action to instigate damaging regulations and bureaucracies, but are painfully slow to unwind them even in the face of mounting problems.

The Coalition parties when in opposition voted against the provisions of the bill to establish the RSRT, but with a wafer‑thin majority the Gillard government managed to get parliamentary assent for its truck industry regulator.

At the 2013 election the Tony Abbott‑led Coalition promised to urgently review the RSRT reflecting a concern, contained in its election policy statement, that ‘there is no evidence that a separate additional tribunal or a further level of regulation is necessary.’

The Jaguar Consulting report was completed as early as April 2014, and the PwC study was finished in January this year, but it was only very recently that both reports were publicly released.

After all this time, and with the RSRT making its pay ruling in December last year, the Turnbull government only now announces a plan to delay the RSRT payments order until the beginning of next year, and to abolish the RSRT sooner.

But the success of this plan, of course, will crucially hinge upon whether the current Senate crossbench will agree with the plans, a very likely outcome but one which is not ordained.

Until a definitive political outcome is struck contract drivers in the trucking industry will lack the clarity they need to secure their economic future.