CHAIR —The committee will resume. Our next witnesses are from Australian National Couriers and the Courier and Taxi Truck Association. The committee has before it your submissions. Are there any changes or additions to be made?

Mr Taylor —No, thank you.

CHAIR —I invite any or all of you to make a brief opening statement before we begin our questions. Mr Taylor.

Mr Taylor —Thank you for allowing us to appear before you today. The courier and taxi truck industry, in general, support the introduction of the IC bill. We have been, for a long time, dominated by independent contractors in our industry, and the industry welcomes this type of reform, recognising independent contractors. However, the courier and taxi truck industry do oppose the exclusion of owner-drivers from the IC bill. There are a number of reasons: we believe it creates a pseudo third class of worker that is not an independent contractor and not an employee; it creates a paradox in New South Wales and Victoria, in that courier and taxi truck independent contractors have their own businesses, yet have more industrial relations regulation than that of an employee.

The New South Wales and Victorian IR laws assume that they provide so-called protection for courier and taxi truck drivers. The New South Wales laws also suppress the true commercial rates that could be negotiated by courier and taxi truck contractors, and hence our rates are already at the bottom level. The Courier and Taxi Truck Association has conducted some 2,000-odd interviews in the past 24 months and the results show that the net earrings of courier and taxi truck contractors have not increased with the so-called minimum rates in place. The suppression of the reward, we believe, has accelerated the decline of the industry and accentuated the very problems that the IR regulations sought to rectify in New South Wales.

The New South Wales laws take away the ability for owner-drivers to negotiate and the protections that are there are presented as minimums but, in reality, they have become maximums. The result of this also compromises safety because it causes the principal contractors to load up the underperforming contractors beyond their ability to get them over these minimum so-called rates. We also believe that, with the minimum rates, the hourly minimums are discriminatory because they are averaged over an eight to nine-week period and it excludes people who only wish to work part time and not full time. In a skills shortage this is a serious problem for our industry and does not encourage flexibility.

The exclusion in New South Wales and Victoria also maintains—especially in New South Wales—the TWU monopoly on representation of courier and taxi truck independent contractors, and there is no freedom of association, no choice and no flexibility for them. The TWU also has the right of entry into all principal contractors for inspection of records, for all taxi truck independent contractors, regardless of union membership or not and, in the past, this power has been abused. The exclusion will also magnify the confusion that is currently in the industry. We have people that are their own businesses, yet they have employee type provisions. The exclusion also does not help for national consistency and it does not give them choice, as I have already implied.

The other point is that the New South Wales regulation is very costly to comply with. Australian National Couriers spend some $50,000 to $60,000 a year just in compliance. We do not have those sorts of costs in other states. The TWU representation of the courier and taxi truck independent contractors: with fuel being increased some 20 per cent in the last six months, the union has yet to make any application for an increase in rates in the New South Wales IR system, which shows that the remuneration and the rate of remuneration is very slow to apply.

Regarding the industry itself, we are often confused with the long-distance and heavy transport industry. The courier and taxi truck industry have short trips, we are on demand, we are multiple hire, we work in normal commercial hours and we do small loads in major metropolitan centres. We are often confused with, or lumped into the general transport and the long-distance transport sector. We do not have the same problems as the long-distance and heavy vehicle transport industry. We do not have the safety and fatigue issues; we do not have the same levels of bankruptcy or exploitation; our independent contractors go home at night; and they do not have the same types of borrowings as the heavy industry does.

There have been numerous investigations. The TWU commented in their submission about the numerous investigations into the transport industry since the 1960s. It should be noted that, without exception, all of these investigations and inquiries were focused on the heavy vehicle industry and the long-distance industry and there was very little comment about the courier and taxi truck industry.

It should also be noted that the courier and taxi truck determination in New South Wales is probably the most litigated of all of the determinations. The principal reason for that is because it does not work. The Courier and Taxi Association and Australian National Couriers would like to see all owner-drivers included in the bill. If the exclusion of owner-drivers was to remain then the choice for the courier and taxi truck independent contractors is to either remain under state jurisdiction or come under the federal IC bill giving them choice and flexibility. In addition, if the exclusion of owner-drivers was to remain, then a more sensible limitation of the TWU powers is for the right of entry for financial members only and not for all independent contractors, irrespective of membership. Thank you.

CHAIR —Thank you for that. Before I ask Senator Bernardi to ask some questions, are you aware that there is going to be a review of the state protection for your types of associations later this year and early next year?

Mr Taylor —Yes.

CHAIR —You would imagine that the government would hardly be going to replicate, in any consequence of that review, what exists at present; so long term, you can probably anticipate an improvement in the sorts of defects that you have already mentioned. Would you agree with that?

Mr Taylor —I think we are balanced on a bit of a knife edge. I think the courier and taxi truck industry have been roped into the problems associated with the long-distance industry and we tend to get buried in those sorts of discussions. I understand that the inquiry is coming up next year, but we are a small and fragmented voice.

CHAIR —I suspect that that is one of the reasons why your interests have been excluded from this particular legislation, so that the particular interests that you represent can be looked at in a very intensive way.

Mr Taylor —We would welcome that focus on the courier and taxi truck industry, yes.

CHAIR —That is good.

Senator BERNARDI —Mr Taylor, in your submission you talk about the TWU having the right of entry into New South Wales principal contractors, and has the sole right of entry. In your specific business, have you had that right of entry exercised and, if so, do you have an experience that you would care to relate to this committee?

Mr Taylor —Yes, Senator. We have had a number of inspections. In the last five years we have had, say, six inspections; three of them have been done by the New South Wales Department of Industrial Relations, because we hold a portion of the New South Wales state government courier contract. Part of that contract requires an audit process and we have had those audit processes occur over the period of the contract. From those audits we have had no significant issue or problem raised. We had one TWU inspection maybe three years ago, where they inspected some records, and there was no problem found at all.

More recently, we had a very extensive investigation, where we had TWU members in my office for more than three days. The level of aggression and the accusations that were fired at me were just astonishing. At one point, after a number of days, I asked the question, ‘Why is this occurring?’ and the response was, ‘In recognition of the IC bill coming up in the next 12 months.’ It was said that I had influence over the courier industry as president of the association, and I should influence my members to sign common law agreements with the union to allow them right of entry after the bill passed. If I did not do that, it would cost me hundreds of thousands of dollars in the Industrial Relations Commission.

Senator BERNARDI —Is part of these audits—whether it be by New South Wales Industrial Relations or the right of entry of the union—what your $50,000 compliance annual bill is referring to?

Mr Taylor —In one of those audits I had to provide a whole number of records. I supplied some 40,000 to 50,000 pages of documentation. Subsequently, we provided another 5,000 or 6,000 pages of documentation and, since that time, I have had not one letter, question, phone call or anything else saying that we had any form of breach whatsoever or that there were any problems with our records or payments to our contractors: not one thing in 12 to 18 months. So after supplying 50,000 pages of documentation, I have to query why it occurred. There was not one suggestion or comment at all.

Senator BERNARDI —Whilst you are an individual company, I will address this to you, but it may be equally pertinent for Ms Robertson or Mr Reichman to answer. Were the 2,000 interviews that you conducted both within your company and across the entire industry?

Mr Taylor —I think Kathy might be more suited to answer that, Senator.

Ms Robertson —During the last 18 months I have personally conducted face to face interviews with contract couriers and taxi truck owners throughout the spectrum—not just one company but a range of companies—to find out, in their own words, their costs and safety and how they are going. It has been across the board.

Senator BERNARDI —Are you based in New South Wales?

Ms Robertson —We have membership throughout Australia but our industrial relations registration is in New South Wales.

Senator BERNARDI —You are subject then to the New South Wales Industrial Relations Act, obviously.

Ms Robertson —That is correct: registered under the act.

Senator BERNARDI —We have heard that the state act provides enormous protections for the more vulnerable and also that it reduces complexity and is a very simple system to get across. I have received conflicting stories—that is my word—and I have sought an explanation as to the application of chapter 6 of the act to owner-drivers. I have received an indication that it applies in the greater metropolitan area of Sydney, within that radius, to taxis and limousines only. I have since had clarification from one of the other senators here. What is the impact of chapter 6 on your industry? Does it provide adequate protections? Is it simple and easily applied, as was maintained by the state government?

Ms Robertson —There is no way in the world that you could say that chapter 6 is a simple system. It is a very complex system and it has layer upon layer of complexity. These 2,000-plus contractors that I have interviewed would definitely tell you that their rates and conditions have in fact gone down significantly since the introduction of regulation in this industry. Initially, it was to be introduced in 1984 under the general carriers determination. That was appealed, and then it became its own determination, the Courier and Taxi Truck Contract Determination.

When we talk about complexities, ‘greater Sydney’ is not actually the terminology. The legislation provides for determination and contract agreements to be made right across New South Wales. However, the wording in the determinations is what controls the area, incidence and duration of such determinations: for example, it is ‘the County of Cumberland’, and if you do not think that that is complex enough, the next thing is ‘contracts of carriage within a 50-kilometre radius’. Perhaps the best way I can put it is, if you imagine a map of New South Wales with endless numbers of circles drawn, representing a radius of 50 kilometres and, wherever the radiuses are, at the point of commencement of a contract of carriage or a contract job you will find that that is also covered by the determination. So it is complex.

Then you have the contract agreements, which can be made with principal contractors of the union or the union and associations such as CTTA and the New South Wales Road Transport Association. You can have those covering specific industries or you can have them covering right across New South Wales. It is very complex.

Senator BERNARDI —I just want to confirm with you—because I am confused, quite frankly, by your answer—that it does apply, as has been represented, to trucks, semitrailers, prime movers, trailers as well as couriers?

Ms Robertson —Absolutely.

Senator BERNARDI —It does?

Ms Robertson —Yes, it does. But not just in the County of Cumberland, because of these radiuses that are layered on top of that.

Senator BERNARDI —To put it in layman’s terms, if I went to Dubbo, and I was a courier and picked up a package that had to be delivered—you said a 50-kilometre radius?

Ms Robertson —Yes.

Senator BERNARDI —If it had to be delivered 70 kilometres away, would I be covered under that award?

Ms Robertson —No, you would not; not for rates or for conditions.

Senator BERNARDI —But 49 kilometres I would be.

Ms Robertson —As a radius, yes.

Senator BERNARDI —Okay. How do you respond to the issue of improvement in road safety by having this exemption?

Ms Robertson —Perhaps the principal contractors would be better answering that.

Mr Taylor —The New South Wales contract determination has minimum hourly rates that are averaged over an eight- to nine-week period. The result is that, to get some contractors who do not wish to work all the time over those minimum hourly rates, the principals have to load them up with consignments. It may not be within their ability to perform those consignments, but the result is that with these minimum hourly rates, to get them over the hourly rates, you have to load them up with consignments, causing safety problems. When the consignments were placed on a flag fall and kilometre rate of reward, rather than an hourly rate of reward, we did not have that sort of problem. This problem has manifested itself in the last decade and, while it is a very emotive argument to say that the minimum rate should promote safety, it actually has the converse effect.

Ms Robertson —Absolutely.

Mr Taylor —You end up placing more pressure on the people that maybe do not have the ability to perform the work as fast, because not everyone is the same in the industry. You have people who are high achievers and people who are not so high achievers, like in any industry, in any employment situation or any contractor situation, so you have people with differing ability.

Senator BERNARDI —How is the minimal rate calculated?

Mr Taylor —Over the nine-week period?

Senator BERNARDI —Yes.

Mr Taylor —That is quite complicated. It begins when the first job is allocated and the contractor commences to travel to pick up the first job and it ceases on that day when the last job has been completed or the last job of the day has been picked up, and it might be being held overnight. Then you have to exclude breaks in the middle of the day and that sort of thing. If they go and get a wheel changed or if they go and have lunch or a break or whatever, you have to exclude those times. Then you have to average all of those times over a nine-week period and average them against the hourly rate, which for a one-tonne vehicle is $25 an hour. So it is very complicated.

Ms Robertson —Currently the CTTA has an application before the New South Wales Industrial Relations Commission. We have four parts to the application, three of which we have already succeeded in. The fourth part is to be heard next month in a four-day hearing, so it is not a simple thing, to give you an idea of the complexity, and that is just to find out what the starting time of the safety net is. As Mr Taylor said, you have the completion, and even that has an addition to it. It is not just the completion of the last contract of the day. In fact, since we have had the hourly rates—1998—the definition as described by Mr Taylor is that it is a two-step process.

I will put it to you this way: the courier company will allocate a job, say, at eight o’clock in the morning. The contractor does not move off straightway unless it is what is called a VIP job or an urgent job. They wait, naturally, so that they can get two, three, four or five jobs. That is where the multiple hiring factor comes in. This is the complexity of the courier determination at the moment, and for all of those years. If you allocate the first job at 8 am and the contractor decides to wait, as the company wishes them to, then there are four more jobs allocated between eight and 8.30 and now it is time to move, the last job that was allocated was the VIP, so it has to be picked up first because of the urgency. the time sensitivity. Then suppose that the route to be taken means that jobs 4, 3 and 2 are done before you commence to travel to the pick up of the first job that was allocated. Maybe it has taken an hour, so it is 9.30. The commencement time is the time at which the contractor actually starts to travel to pick up the first job.

Nowhere in the determination is there a requirement on the principal or the contractor to let the other know what time that is. So the starting of the safety net is unclear, to the point where a senior judicial member of the Industrial Relations Commission, in a decision on 28 March this year, said, ‘The hearings will be about establishing a mechanism to start the safety net, and the safety net is the sole method of payment.’ If that is not complex, I do not know what is.

Senator BERNARDI —Thank you. The TWU has indicated that this guaranteed minimum pricing applies to only a small number of people. Is that your experience?

Ms Robertson —Sorry, Senator?

Senator BERNARDI —The safety net, as you describe it—I have described it as ‘agreed price fixing’—applies to only a small number of people. How many people in your industry benefit from this guaranteed pricing?

Ms Robertson —No-one benefits from the guarantee or the minimum price fixing that is there, for which the government has trade practices exemption to price fix. In fact, what happens is that the people who are earning, say, above the current $25 just do not get increases and have not had increases for eight years. It does not assist them at all. As far as price fixing, I think I need to take the words of the legal representative Mr Charlie Heuston from the New South Wales branch of the union, who has told the commission on transcript that very few of the industry contractors would be covered by the minimum.

Senator BERNARDI —Thank you.

CHAIR —Senator Murray, you have some questions?

Senator MURRAY —Thank you. My apologies for this morning. I was downstairs with a petrol inquiry, and that is why I am late. My question is to both organisations. I have been lobbied for many years about the contractors issue, from both sides. Both of you have said that the TWU exclusion should be done away with and that they should fall under the provisions of the bill. Regardless of whether you are a supporter of or an antagonist to this bill, isn’t that simply a recognition that this area is so complex that the government believes it still has not got it right and it needs to adopt a precautionary principle and leave that sector of industry where it is? Isn’t it a sign that they feel that this legislation just will not cover off all the difficulties attached to the conflict about whether someone is an employee or a contractor?

Ms Robertson —In answer to that, a huge problem arises because our association was of the view that the owner-drivers would be covered by the bill. That is why both organisations have requested that the former intent of election promises and inquiry outcomes be kept. We do not know what was in the mind of people who made the exclusion, but surely there are many industries that would claim similar sorts of uniqueness. That is the first issue. We have created this third tier of worker. You have employees, you have independent contractors and then all of a sudden you have owner-drivers in New South Wales and Victoria. It just does not make sense.

Senator MURRAY —Whatever one might think of the government, it is composed of people who are intelligent and able and who will examine the issues. It seems to me that, if they recognise that the state regimes as they are at present provide protections and safeguards which, if they were put under this legislation they would lose—and they are convinced by the arguments to them that, despite their election promises, they should pay attention to that—that signals that this bill still does not have it right in terms of splitting out properly those who are genuine contractors and those who are not.

Ms Robertson —I think that is the politics of the bill. What we are saying is that they are independent contractors. The other thing we would make a strong point on is that the so-called vulnerability is really in relation to the heavy vehicles; the long-distance vehicles. That is where all of the inquiries since 1960 have been focused. They are certainly not focused on the lighter end of the industry, the courier and taxi truck operators—not at all. Hopefully, as the chairperson has already indicated, there is an inquiry to commence next year; indicated also by Minister Andrews. We would see that as an opportunity to put the other side of the case. Certainly the government has not heard the message from enough people who are going to be covered by the exclusion.

Senator MURRAY —I look at it a little differently. I am not inclined to believe it is politics, because this is a government that has shown great strength and determination in annoying as many Australians as it can, through Work Choices legislation and other things. They are not short of courage, so I do not think this is politics, and I ask you whether it in fact reflects a bigger problem, and that is that for genuine contractors themselves there are not sufficient protections at general law. I mean, for instance, with respect to regular hours. I mean with respect to pricing. We already know that the Trade Practices Act is weak and defective with respect to section 46 protections for small business, and small business is often a contractor.

I would suggest you actually cannot shift people out of the state regimes with their highly regulated, and sometimes complex, protections until such time as contractors at large have better in-built protections. I would suggest that is probably why the government has left owner-drivers under the New South Wales and Victorian legislation.

Ms Robertson —The only thing I can say in response is that, first of all, there is no established coverage or protection in Victoria yet. The act is a new act and it is not, as such, up to the level of New South Wales. New South Wales legislation was brought in under the Wran government because of the Razorback blockade, and that was to do with long-distance vehicles. The fact of the matter is that there are probably 10 contract determinations registered before the commission and they do not protect the contractors. They do not provide remuneration that covers their costs.

When costings are done and they are put before the commission, organisations such as the New South Wales Road Transport Association and ourselves will question those costings. It will take 12 months to get through the commission, and it is not done on the basis of the formula, it is done on the basis of a deal.

Senator MURRAY —Ms Robertson, I happen to agree with you that the protections provided for owner-driver operations, whether contractors or employees, are insufficient and inadequate; that if they were not, you would not have the terrible stories we all know about. But I ask you again, have you considered approaching this from a different angle and saying to yourself—and the gentleman sitting next to you can join in—that if you as an organisation want owner-drivers who are genuine contractors to be under a national contracting law, what else should be added to national law that would allow that to happen, with respect to occupational health and safety, guarantees towards their future such as the provision of superannuation, the regular hours issue and the fair trade/fair pay issue?

Ms Robertson —I think it is fair to say that Senator Hutchins knows of the Courier and Taxi Truck Association very well, and knows that we have long fought for safety issues and for the issues that you have raised. Are you asking, ‘Put owner-drivers back in the independent contractors bill but what do you put in place’?

Senator MURRAY —No, I am saying you cannot put them back in until you have those protections in place. My view is that at the national level—because it has not typically been a function of Commonwealth law—the protections that should be there are not there, and the government has recognised that. That is why they have left it in the state legislation.

Ms Robertson —The concerns regarding safety and road crashes et cetera are already entrenched in every state and territory law regarding the road rules—your Motor Traffic Act, your policing act. If we are having problems there, those acts are failing. It is not the fact that they are being paid or not paid pursuant to regulation.

Senator MURRAY —It seems to me that you have not argued your case sufficiently in your submissions—and I apologise for the fact that I might have missed your earlier representation—because you have simply argued that, because of a promise made by the coalition, owner-drivers should be under this legislation, without recognising that for the coalition to have changed its mind it must mean that it was persuaded of the case for leaving them in, and if it was persuaded of the case for leaving them in, it means there are greater protections and safeguards for those people under the existing regime.

What I am asking you is: if that is the case—and I am presuming it is the case, because I do not think it is just politics—then what should be added to the contractor law at large—not necessarily this specific bill—which would allow for owner-drivers to move across into a national scheme?

Ms Robertson —Again, I cannot answer you as to what made the government decide that an exclusion in two states—one for a law that is not up and operating and another one that is—should be made. Secondly, to presume that the regulation in New South Wales works is exactly that: a presumption. It does not. You did miss the fact that we have undertaken interviews face to face with over 2,000 contractors in the last 18 months, and if the regulation was supposed to provide reimbursement of rates and safety, then it certainly has failed miserably. We would be happy to provide you or the committee with any further documentation to further argue our case, as you put it.

Senator MURRAY —Thank you.

CHAIR —Yes, that would be helpful, thank you—perhaps not quite the 50,000 pages, Mr Taylor, that you were mentioning before, but a delineation of some of that would be very helpful.

Ms Robertson —Thank you, Senator.

Senator HUTCHINS —Have you seen the Allied Express submission to the inquiry?

Mr Taylor —Yes.

Ms Robertson —Yes.

Senator HUTCHINS —Is Allied Express a member of the association?

Mr Taylor —It is indeed.

Senator HUTCHINS —I quote from their submission and you may wish to comment:

it is poorly worded here—

One of your members does not agree with your position.

Mr Taylor —With all industry associations we do not have a complete consensus of view. Allied certainly would like to see the determination in New South Wales phased out over a period of time. Their concern is about a sudden and rapid change overnight, and that is a very sensible view to take.

Senator HUTCHINS —Would Allied be the biggest courier company in New South Wales?

Ms Robertson —It would be the largest independently owned courier company in Australia.

Mr Taylor —Yes, that would be correct.

Senator HUTCHINS —Is Toll a courier company in New South Wales?

Mr Taylor —They have Toll Express, which is a division, yes.

Senator HUTCHINS —They are not a member of the association?

Mr Taylor —They are not a member of the Courier and Taxi Truck Association.

Senator HUTCHINS —Are Yellow Express a member of the association?

Mr Taylor —Yes, Yellow Express are.

Senator HUTCHINS —They have an agreement with the union, don’t they?

Mr Taylor —Not that I am aware of, Senator.

Senator HUTCHINS —We can ask the union tomorrow. It is in the union’s submission that they do have an agreement.

Ms Robertson —They had an agreement with the union. The business was sold some four or five years ago and nothing has been redone under the new—

Senator HUTCHINS —We can ask the union that tomorrow.

Ms Robertson —Yes, please do.

Senator HUTCHINS —Mr Taylor, how many owner-drivers do you engage in your company?

Mr Taylor —In New South Wales we engage about 200.

Senator HUTCHINS —How many employee-drivers do you have?

Mr Taylor —One.

Senator HUTCHINS —What does he drive?

Mr Taylor —A standard one-tonne van, a HiAce van.

Senator HUTCHINS —In the $50,000 to $60,000 it costs you to comply, how do you pay your owner-drivers? Are there various rates? I think you were talking about the VIP.

Mr Taylor —Yes.

Senator HUTCHINS —Does the owner-driver get paid more to do a VIP job, like you do?

Mr Taylor —Yes. There are a number of structures. We have the averaged hourly rates over the nine-week period that we calculate, and we have an enormous amount of technology and computer systems to calculate that. As you can imagine, the number of transactions we are talking about is very large. Then, on top of that, we have an incentive based flag fall and kilometre rate, because under the contract determination we are allowed to pay any particular way we like, and we look at those two over the average nine-week period. We have different rates for different types of consignments.

Senator HUTCHINS —So you do have the flexibility that you are almost saying to us now you do not have?

Mr Taylor —No.

Senator HUTCHINS —What don’t you have in flexibility? What I understand, from what you are saying, is that the difficulty you have is making sure you comply with the minimum payments over that period.

Mr Taylor —Yes. It is complex, yes.

Senator HUTCHINS —Is that the crux of the concern?

Mr Taylor —No. It is just a matter of infrastructure. The more infrastructure you put towards it, you can calculate it, but it is expensive and it is very complex to do. It makes it almost impossible for a contractor to walk through my door and say, ‘Here are my earnings over the past nine weeks, and you owe me $100’—or $500 or $5,000—because it is so complex.

Senator HUTCHINS —If someone turns up in a vehicle, I assume they have to put your colours on their vehicle. Would that be correct?

Mr Taylor —No, they do not have to.

Senator HUTCHINS —How many do not? Of the 200, 60 do not, 70 do not?

Mr Taylor —We probably have about a 60 per cent take-up of the uniforms and signage.

Senator HUTCHINS —Do you give them the uniforms?

Mr Taylor —Yes.

Senator HUTCHINS —Do you paint their wagons?

Mr Taylor —Yes, we pay for all of that—and removal.

Senator HUTCHINS —And the removal?

Mr Taylor —Yes.

Senator HUTCHINS —I suppose they give the uniforms back, too, do they?

Mr Taylor —Sometimes.

Senator HUTCHINS —When you look in a Sydney newspaper, there are always advertisements for either people to deliver pizzas, or courier drivers. When they get interviewed by you, do you say to them, ‘I can guarantee you X amount of drops a day,’ or, ‘I can guarantee you $600 a week, irrespective of whether you turn a wheel’? Do you give them any undertakings at all?

Mr Taylor —No, we do not give them any guarantees whatsoever. We stand upon our reputation.

Senator HUTCHINS —That you can get work?

Mr Taylor —Yes. I suppose the biggest problem with the contract determination is that it is used by the industry as a maximum set of rates. I am not suggesting that is the way I approach it. I am just saying by the industry it is used as a maximum set of rates. You average these earnings across the nine-week period and, as you get towards the end of that nine-week period, if you have a contractor that on average is earning, say, $50 an hour and another one that is earning $15 an hour, you will shuffle work from the higher achiever. If a fellow is earning $15 an hour—and do not forget that it is averaged and they may only work half a day, two days a week—it might be because of ability. For instance, we have a one-armed courier driver, so you can imagine his ability to carry heavier loads is somewhat limited, so there is only a certain type of work that he can do. Some people are semi-retired. The determination discriminates against those people, unfortunately.

Senator HUTCHINS —How does it discriminate? As you said, you have flexibility in any of the schemes, whether it is via incentive or something else. I am sure none of your drivers are on an hourly rate, or are they?

Mr Taylor —Yes, quite a number of them are on hourly rates, depending on the consignment. For some consignments the pay is hourly based.

Senator HUTCHINS —Because that is the nature of your client.

Mr Taylor —That is the nature of that type of work.

Senator HUTCHINS —So, say, the state government work might be—

Mr Taylor —They might.

Senator HUTCHINS —You know how much work you are going to get out of them each day, roughly, and you can consign so many owner-drivers there.

Mr Taylor —No, we do not do it like that. It might be on a consignment basis. If I am a contractor, I might be moving this water jug from A to B and I might be paid a flag fall and kilometre rate for it, but also on the back I might have a box that the client is paying an hourly rate for and we are paying the contractor an hourly rate to move. There might be multiple hiring between hourly rates and incentive based rates.

Senator HUTCHINS —You have that system now. Is that correct?

Mr Taylor —Yes, we have that system now.

Senator HUTCHINS —And that seems to work for you, does it?

Mr Taylor —Yes, it does.

Senator HUTCHINS —Except when you have to do the nine-week—

Mr Taylor —The incentive based rates work for us, yes, absolutely.

Senator HUTCHINS —But that is not disputed in the determination. There is incentive based. You can do that, can’t you?

Ms Robertson —No, that is not how it is structured.

Mr Taylor —The only method of payment in the determination is hourly, averaged over nine weeks.

Ms Robertson —That is correct.

Senator HUTCHINS —But, provided you get agreement, you can do it by incentive, can’t you? There is flexibility in there, isn’t there?

Mr Taylor —As long as they get over the minimum. But you asked before about the discriminatory aspect of it: we have quite a number of contractors that I would describe as semi-retired people. They have left their professional work and they want to do something but they do not necessarily want to work full time. It is difficult for some of those people. They do not have, necessarily, the drive or the enthusiasm, or whatever it might be, and they are very selective about the work they choose, and it is difficult for them to be covered under the determination because they do not make the minimum.

Senator HUTCHINS —Would they be the 40 per cent that are not painted, mainly?

Mr Taylor —No, there would be a mixture. I could not tell you what the break-up would be there.

Senator HUTCHINS —But in the end, it is in your interest to make sure that they get full cost recovery, isn’t it, otherwise you have to find someone else to do that work tomorrow? Isn’t that where you are coming from, as well, in your point that you think they need full cost recovery but you are just not sure that this is the way to go?

Mr Taylor —The determination, and the quagmire of the industrial relations around it, results in confusion. The contractors do not know where they stand and a lot of principals do not know where they stand. My business has resources and I am sufficiently large enough to do that, but this is an industry that has a large number of people in it, and a lot of the businesses are small. When you have a piece of industrial relations stuff that is 45 pages thick and you have to be—

Senator HUTCHINS —Have you seen Work Choices?

Mr Taylor —I will not even go there, Senator. But it makes it very difficult. That is why the determination is so litigated. It fundamentally does not work.

Senator HUTCHINS —But don’t you think that that responds to the nature of the clients in the industry in which you work? If you are talking about, say, carting a document from A to B, and it is for Blake Dawson Waldron, going to BHP, you are probably going to get what you could demand for it. But if you are talking about getting, say, a toy delivered for a kid, from Canley Vale to Cronulla, they are not going to pay as much, are they? We may not agree on this, but it seems to me that the clients and the industry are dictating the terms of rates and pay and conditions, and you are just responding, and the determination is trying to respond, to the nature of the industry you are in. If you look at the concrete determination—which is based entirely on a different formula, as opposed to one that Mrs Robertson will recall where there used to be a tied tonnage rate for interstate vehicles that was declared illegal by the Trade Practices Commission, as I recall—it would seem to me that you have the flexibility that you are seeking already. We may not agree on that.

Mr Taylor —They are good points that you raise. The flexibility is not the flexibility that I seek; it is the flexibility that the contractors seek. They do not have that now because they are mired by this. They do not have a true commercial contract; it is not perceived as a true commercial contract. They have employee type provisions. If we were in a situation where the labour market was very free and there were lots of people available, then it would be a different situation. At the moment, we value contractors more than clients. I do not have problems getting clients, so the clients are not dictating rates. We regularly pump clients that we find difficult, who do not pay enough, or we cannot get the right rates out of them. That is the kind of market that we are in and have been in for a long time.

Senator HUTCHINS —Mr Reichman, in your company, how many employee-drivers do you have?

Mr Reichman —Four.

Senator HUTCHINS —How many lorry owner-drivers, couriers, do you have?

Mr Reichman —About 333 employed.

Senator HUTCHINS —Thank you. Ms Robertson, you mentioned the introduction of this legislation in 1978.

Ms Robertson —Yes, Senator.

Senator HUTCHINS —You have read the TWU’s submission, haven’t you?

Ms Robertson —Yes, I have.

Senator HUTCHINS —You have seen the submission where it talks about the section 88E and section 88F inquiries?

Ms Robertson —Yes.

Senator HUTCHINS —They were conducted in the 1960s. So this has been a matter that you have been aware of for a long time as well, isn’t it?

Ms Robertson —Absolutely.

Senator HUTCHINS —In most of the determinations and the inquiries, you have supported the TWU position on whole—

Ms Robertson —Yes, absolutely. In the past, that is what we have done. What has happened over the period is that, as soon as you go into an hourly rate and you make this individual, more like employee, provision—we have a system now where the industrial relations system is broken and it cannot be fixed, and I would suggest to you that a partner, if I could call it that, in previous years, also noted in the TWU submission, was the Road Transport Association. Basically, there were times when we would oppose the union, but it was always agreed between the TWU and the RTA. Even they have made a very significant turnaround on the 100 years of their being to now come out and say, ‘We’ve spoken to members. It’s broken. It doesn’t work. We need a commercial basis.’

Senator HUTCHINS —Except when they talk about the car carriers determination, which they are supporting an application for.

CHAIR —Senator Sterle.

Senator STERLE —Thank you, Chair, just very quickly: Ms Robertson, I would like to have asked you a number of questions about your submission, because I found it rather confusing. You mention that contractors enjoy the same entitlements as employees, so I was ready to put in my application in a few years time, should I need to, to come and work as a courier in New South Wales. But that is not the case; they do not receive all of that.

Ms Robertson —They do, Senator.

Senator STERLE —Holiday pay? Penalty rates? Sick leave?

Ms Robertson —Holiday pay; two hours of overtime a week is the—

Senator STERLE —What if they work five?

CHAIR —Senator Sterle, Ms Robertson is—

Senator STERLE —I am aware of this, Chair.

CHAIR —answering the question; if you would allow her to finish, please.

Senator STERLE —Sorry.

Ms Robertson —There are four weeks annual leave added into the costings for the determinations; there is a Picnic Day; long service leave pro rata. There is a redundancy application before the commission at the moment that is based entirely on the payments that would be applied to an employee being part and parcel of the owner-drivers. Sections 343 and 344 distinctly say, as we put in the submission, that where you see in chapter 6 ‘contract carrier’, read ‘employee’. When you see ‘principal contractor’, read ‘employer’.

Senator STERLE —I understand that from the basis of coming up with a minimum. But that was not the question, Chair.

CHAIR —You asked for one, Senator Sterle.

Senator STERLE —Yes, and I just made a comment. But I am going to ask this quick one because—

CHAIR —You will have to put another question on notice.

Senator STERLE —Ms Robertson, you said drivers over the minimum cannot get a wage rise. Why not?

CHAIR —I am sorry, Ms Robertson, we are out of time.

Senator STERLE —Why can’t your members just give them a wage rise?

CHAIR —Senator Sterle will put his question in writing. Could you return the answer to us, thanks.

Ms Robertson —I am happy to do that, Madam Chair. Apologies, Senator.

Senator STERLE —What a shame we ran out of time.

CHAIR —Thank you for your attendance here today.

[2.57 pm]