OWNER DRIVERS AND FORESTRY CONTRACTORS AMENDMENT BILL 2019
Mr PALLAS (Werribee) (10:44:22): I move: That this bill be now read a second time. I ask that my second reading speech be incorporated into Hansard.
The Bill amends the Owner Drivers and Forestry Contractors Act 2005 (the Act) to improve the protections available to small businesses, namely, owner drivers in the transport industry and harvesting and haulage contractors in the forestry industry. The amendments address changes that have occurred in the industry since 2005, and seek to improve the position of owner drivers and forestry contractors, by removing barriers that restrain these small businesses from achieving a fair and reasonable return for their labour and business investment.
The Bill will also deliver on a government commitment arising from the Government Response to the Victorian Inquiry into Labour Hire and insecure Work (Labour Hire Inquiry). Owner Drivers and Forestry Contractors Act The Act seeks to improve the financial and social position of owner drivers and forestry contractors, and to reduce the risk of business failure, financial hardship and insolvency. It does this by removing the market conditions and barriers that restrain small businesses from achieving a fair and reasonable return for their labour and business investment.
One of the key market failures the Act seeks to address is the lack of information for small business owner drivers and forestry contractors to understand their operating costs and the commercial relationship they are entering. Contractors entering the transport and forestry industries have large overhead costs and liabilities and often a limited understanding of their potential income as well as their legal rights and obligations. The Act establishes a framework for the regulation of contractual dealings between owner drivers and forestry contractors and their hirers.
The Act does not apply to employee drivers. The Act sets out legal requirements relating to the provision of information to assist owner drivers and forestry contractors improve their business skills and better understand their cost structures and contracts. Having this information before entering a contract helps contractors assess whether they should accept the rates being offered, and will also allow better informed negotiations. It also provides a framework for resolving disputes in a timely and cost-effective manner, through the Small Business Commission. Two of the key information requirements are for hirers to provide owner drivers and forestry contractors with a copy of the applicable rates and costs schedule for their vehicle class and an information booklet, three days before entering into a contract.
This requirement also applies to tender processes and to freight brokers. The rates and costs schedules do not set minimum rates of pay that must be paid. In this respect the status quo has been maintained. The rate and costs schedules provide owner drivers, forestry contractors and hirers with information about typical operating costs applying to the kind of vehicle or equipment provided under the contract. The rates and costs schedules also provide a base hourly rate that would apply for the driver’s own labour if they worked as an employee. The information booklet provides a comprehensive and convenient source of information to assist contractors to understand, how to operate a small business and sets out their legal rights and obligations to ensure they can operate their business safely and commercially. The Act requires that ongoing engagements must be in writing, and the contract must specify the minimum level of income or number of hours of work the rates to be paid. Requirements for contracts, and the provision of the information booklet and rates and costs schedule do not apply to ‘one off’ or short terms engagements.
The Act also establishes the Transport and Forestry Industry Councils, which are made up of members from industry and employee associations and government, and are responsible for making recommendations to the Minister for Industrial Relations on commercial practices affecting owner drivers and forestry contractors. Review of the Act and Regulations On 16 November 2016, the then Minister for Industrial Relations announced a review of the Act and the Owner Drivers and Forestry Contractors Regulations 2006. The review sought to identify whether any changes were needed to the Act and Regulations to improve the position of owner drivers and forestry contractors, while ensuring a competitive and fair operating environment for small businesses in Victoria.
The Review was undertaken on the basis that contractors operate as small businesses within a framework of commercial laws.
The Review also considered recommendations 30 and 31 of the Labour Hire Inquiry, which recommended changes to the Act to improve the position of tip truck owner drivers operating in the building and construction sector. Twenty-five confidential submissions were received, which proposed a range of legislative and non-legislative changes. Throughout the review process, consultation was undertaken with industry associations, unions, owner drivers and affected government bodies. The suite of proposals in this Bill are based on these discussions and the submissions received.
The Bill proposes the following reforms: Purpose of the Act
It is proposed that the purpose of the Act be amended to include the promotion of industry best practice, education and training. An associated amendment is proposed to the functions of the Transport and Forestry Industry Councils to specify that they can provide advice and make recommendations to the Minister on promoting industry best practice, education and training for owner drivers and forestry contractors.
Definition of freight broker
The Bill clarifies the definition of ‘freight broker’ to ensure contractors employed through third-party contracting platforms like Uber Freight which did not exist when the Act commenced operation are covered. This clarification seeks to ensure that the development of these types of modern business models does not result in contractors being denied the protections of the ODFC Act.
Provision of information tools
The Bill amends the Act to clarify that hirers can provide owner drivers and forestry contractors with information in an electronic form, including an Internet link.
Rates and costs schedules
The Bill amends the Act to require a hirer or freight broker to provide the rates and costs schedule annually if a contractor is engaged under more than one contract during the 12-month period. The Act already requires hirers and freight brokers to provide owner drivers and forestry contractors with a revised schedule as soon as practicable after the revision is published. Payment of invoices The Bill amends the contracting requirements of the Act to require the payment of invoices within 30 days of receipt of a correct invoice from the contractor, unless there is a dispute over the amount payable. The parties will also be able to agree on alternative arrangements that are fair to both parties.
The Bill amends the Act to include a provision that clarifies contractors have the option of being covered by the same terms and conditions of an existing regulated contract that has been jointly negotiated. This amendment ensures that contractors can benefit from jointly negotiated contracts, while at the same time retain the opportunity to negotiate their own contractual arrangements.
The Bill amends the disputes resolution procedure to specify that the Small Business Commission can arrange arbitration where the parties to the dispute agree. This provides scope for the parties to try and resolve the dispute through mediation, and if the matter cannot be resolved, the parties can agree they can proceed to arbitration at the Small Business Commission. This amendment aims to introduce a fast, low cost and confidential binding dispute resolution process for parties in dispute. The parties can still access the Victorian Civil and Administrative Tribunal (VCAT) if the Small Business Commission has certified in writing that alternative dispute resolution has failed, or is unlikely, to resolve the dispute. The Bill provides that the Commercial Arbitration Act 2011 does not apply to arbitration conducted under the Act.
Tip Truck Contractors
The Bill amends the Act to include a provision that will trigger the requirement for hirers to provide tip truck contractors with the information booklet and the applicable rates and costs schedules regardless of the period of time they are engaged. The Act currently applies where the owner driver or forestry contractors is engaged for a minimum of 30 days or 30 days within a three-month period. Tip truck owner drivers often do not meet this threshold requirements specified in the Act to receive these information tools. This amendment is limited to contractors who drive tip trucks in connection with excavation work in the building and construction industry. It is not intended to capture to tip truck contractors operating in the rural road transport sector. The change will deliver on recommendation 31 of the Labour Hire Inquiry, which was accepted by this government.
Compliance and enforcement mechanism
The Bill proposes the establishment of a compliance and enforcement framework, and the introduction of penalties for non-compliance with the mandatory requirements of the Act. There are currently no penalties for non-compliance with the mandatory provision of the Act. The review of the Act found non-compliance, particularly in the transport sector, with the mandatory provisions of the Act. Therefore, the Bill proposes penalties for non-compliance with the following mandatory provisions of the Act:
• failure to provide the Information Booklet;
• failure to provide the relevant rate and cost schedule;
• failure to provide a written contract; and
• failure to provide notice of termination or payment in lieu of notice.
The establishment of a compliance and enforcement framework and the introduction of penalties is considered a necessary and proportionate response to the evidence of limited compliance with these requirements of the Act within the transport sector. It will provide an economic and punitive incentive for hirers to comply with the requirements of the Act. The Bill provides for the Infringement Notices to be prescribed in the Regulations, with court imposed penalties set out in the Bill. The Bill empowers authorised officers to require that hirers produce documents relevant to an investigation. It also includes a power for authorised officers to enter premises with consent of the occupier. The Bill does not introduce of a coercive power to enter premises.
Benefits of the reforms
The key benefit that will result from these amendments is that they will increase compliance with the mandatory provisions of the Act. This will help ensure owner drivers and forestry contractors can accurately assess the overhead costs of operating their businesses which will mean they are better placed to determine whether an offer will fully cover their operating costs, provide a return for their own labour and a return on business investment. If owner drivers and forestry contractors can cover their operating costs and maintain their vehicles, this will result in greater safety for all road users. Drivers will not need to work additional hours to try and cover their operating costs. Tip truck owner drivers will also for the first time, benefit from the protections of the Act.
I commend the Bill to the house.