“It's about the passion”

From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

Truckies’ Act a dog that may bark again

Monday, May 16, 2016

The sleeping political lion that is the small business community is only occasionally truly woken. But the Road Safety Remuneration Act did just that, triggering high agitation that culminated in the act’s repeal on April 18.

The issue remains alive however given that Labor leader Bill Shorten has promised to reintroduce the act if Labor wins government at this year’s election.

What would now complicate a Shorten attempted reintroduction would be constitutional challenges waiting to be filed. The laws introduced in 2012 established a tribunal that set commercial rates for long-haul trucking that allegedly would ensure truckies drove “safely”.

After a long drawn out process the tribunal released its first order just before Christmas, 2015, to have application from April 4 this year. The order established a complex scale of commercial rates that had to be paid by users depending on the size of the truck, loads, distance travelled and more.

The tribunal order increased commercial charge rates by as much as four times. It took a while for the implications to sink in with the trucking industry. The “kicker” was that the order only applied to self-employed owner-drivers and not to trucking companies with employees.

The impact was immediate and obvious.

The small businesses of some 35,000 independent owner-drivers and their families were doomed. By government order, these small business people were made grossly uncompetitive against larger trucking companies. It imposed price fixing under commercial contracts. And, oddly, price fixing that would have created inflation, not contained inflation.

Shortly before its repeal the tribunal confronted a constitutional challenge. This was heard on April 15 before Chief Justice Robert French in a High Court directions hearing.

The relief sought was on the basis that the law breached section 92 of the Constitution. Initial submissions were that the tribunal orders offended the absolute freedom of interstate trade, enshrined s92.

It was not rejected by French who stated: “The constitutional case may be arguable.”

French referred the matter to the full bench of the Federal Court for further consideration on the facts. The action has of course fallen away given the act’s repeal.

What remains significant though is that the act as a model, gives an industrial relations tribunal power to fix prices of commercial contracts, in this case of owner-drivers.

This is a huge step beyond the accepted jurisdiction that industrial relations law covers employment contracts. This act extended an IR tribunal’s powers to commercial contracts. It’s akin to a federal IR tribunal dictating the price of bread.

Such price fixing of commercial contracts by the commonwealth last happened during WWII, a constitutional capacity of the commonwealth under wartime powers.

The commonwealth relinquished those powers in 1947. In 1972 the Whitlam Labor government, in an attempt to contain inflation, sought in a referendum commonwealth powers to control commercial prices. The referendum was solidly defeated.

On this basis at least a new Shorten Labor, Road Safety ­Remuneration Act, could predictably face additional constitutional challenge on the argument that the commonwealth doesn’t have the power to fix commercial contract prices.

Like the s92 challenge, a constitutional challenge could, with the leave of the court, lead to questioning whether commonwealth legislation can impose price fixing in the absence of any power to do so.

[First published in The Australian, May 2016]

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