What does abolishment of Road Safety Remuneration Tribunal mean?

FOLLOWING the vote in the Senate on April 18, the Road Safety Remuneration Tribunal (RSRT) will be abolished and the Road Safety Remuneration Act 2012 (Cth) repealed.

Legal specialists in the transport industry, Cooper Grace Ward, have reported the Bill abolishing the RSRT and repealing the Act is expected to receive Royal Assent on April 19, which means the RSRT and all orders of the RSRT will cease to take effect from the start of April 21, 2016. 

Cooper Grace Ward have provided the following background brief on this complex issue in  the transport industry:

The Contractor Driver Minimum Payments Road Safety Remuneration Order 2016

On December 18, 2015, the Road Safety Remuneration Tribunal (Tribunal) published its Contractor Driver Minimum Payments Order (2016 RSRO). The 2016 RSRO was to commence on April 4 2016 for a term of four years. It requires the payment of minimum hourly and kilometre payments for contractor drivers involved in the provision of distribution or long distance transport services. The term ‘contractor driver’ includes individual owner drivers and small companies where all vehicles are driven by family members of directors or shareholders. The 2016 RSRO also imposes compliance and audit obligations on parties in the supply chain.

Full details of the 2016 RSRO are discussed in Cooper Grace Ward’s legal alert dated February 4, 2016.

Applications to vary the Order

In March 2016, the Tribunal received 38 applications to vary the 2016 RSRO on various grounds including that:

• parts of the 2016 RSRO are ambiguous and not adequately defined;
• businesses would be unable to comply with the 2016 RSRO by April 4, 2016; and
• a delay in the commencement of the 2016 RSRO and the inclusion of transitional minimum rates would give the transport industry time to interpret, understand and comply with the Order.

On March 15 2016, the Tribunal heard the applications to the extent that they sought to vary the commencement date or to include transitional provisions in respect of its minimum payments. Consistent with the Road Safety Remuneration Act 2012 (RSR Act), the Tribunal prepared a draft variation of the 2016 RSRO for consultation. The draft variation included provisions:

• delaying the commencement date until January 1 2017; and
• allowing hirers to pay owner drivers ‘transitional amounts’ that periodically increase 12 months, 24 months and 36 months after the commencement date of the 2016 RSRO.

The Tribunal gave interested parties until March 21 2016 to make written submissions on the draft variation of the 2016 RSRO.

Altogether the Tribunal received approximately 800 submissions from owner drivers, hirers and industry associations, the majority of which supported delaying the commencement date of the 2016 RSRO until January 1 2017. The Tribunal scheduled three days of hearings over the Easter long-weekend.

Just days before the hearing, the Tribunal issued orders to more than 30 people requiring them to produce documents and attend the hearing in order to respond to questions arising from their submissions. The Transport Workers’ Union also required various witnesses to be available for cross‑examination.

Over three days of the Easter weekend, various applicants participated in the hearing and those who received summons were cross-examined in relation to those submissions. Cooper Grace Ward represented the National Road Transport Association (NatRoad), which was one of the applicants.

At the conclusion of the hearing, the Tribunal sought final submissions on a compromise position proposed by some of the applicants and reserved its decision in respect of the draft variation to the 2016 RSRO.

The decision

On April 1 2016, the Tribunal handed down its decision not to vary the 2016 RSRO. The 2016 RSRO would commence on April 4, 2016, as originally planned.

The Tribunal asserted that there was "significant support" for the making of the 2016 RSRO and suggested that there are a number of myths surrounding its application and operation. The Tribunal acknowledged that this confusion and uncertainty was in part due to the Fair Work Ombudsman inadequately performing its duties, but suggested that certain bodies and individuals had sought to "create and perpetuate myths" about the 2016 RSRO.

In deciding not to vary the commencement date, the Tribunal emphasised that the road transport industry has already benefitted from the three and a half month period between the making of the 2016 RSRO and its commencement date. This period provided affected parties with an opportunity to obtain sound advice and education about the 2016 RSRO.

The Tribunal also decided against adding transitional provisions to phase in its minimum payments clauses, arguing that this would only increase the compliance burden and complexity, making the 2016 RSRO less simple and easy to understand.

Stay

On Friday evening, April 1, 2016, following an application by NatRoad, the Federal Court in Brisbane handed down an Order in the following terms:

1.         Pursuant to section 39B of the Judiciary Act 1993 (Cth):

• (a) the order of the Road Safety Remuneration Tribunal of 18 December 2015 entitled ‘Contractor Driver Minimum Road Safety Remuneration Order 2016’; and
• (b) the order of the Road Safety Remuneration Tribunal of 1 April 2016, being the refusal to vary the order of 18 December 2015,
  be stayed until further order of the Court.

2.         All affected parties have liberty to apply to the Court on two days’ notice in writing.

3.         Costs be reserved.

4.         The matter be reviewed by the Court on a date to be fixed.

Other developments

On April 1, 2016, the Department of Employment released two independent reviews of the Road Safety Remuneration System, as well as its own discussion paper with options for reform.

The first review report, completed by Rex Deighton-Smith of Jaguar Consulting in April 2014, concludes that the Tribunal should "not continue in its current form".

The second review report, prepared by PricewaterhouseCoopers in January 2016, estimated that the two orders made by the Tribunal to date will have a net cost to the economy of $2.3 billion by 2027, even with safety gains factored in. The report concludes that there would be a significant net benefit to the economy and community if the Tribunal were abolished.

Both reviews found there is substantial regulatory overlap with work health and safety laws and other road safety regulation, and that the level of regulation is not justified based on the limited evidence as to the link between remuneration and road safety in the road transport industry.

ends