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What’s happening with the RSRT?

What is the Contractor Driver Minimum Payments Road Safety Remuneration Order 2016, or CDMPO?

The Contractor Driver Minimum Payments Order (CDMPO) was a piece of legislation introduced by the Road Safety Remuneration Tribunal (RSRT) that came into law in April 2016. It was designed to provide support and protection to small independent owner-drivers and small family run businesses, who often have to travel back from loads for significantly less money than they make travelling in the other direction.

This process of “backloading” is a function of two key drivers:

  1. basic demand and supply dictating pricing – in this instance the lack of freight back to major capital cities from smaller cities and remote locations leads transport companies to charge less for their services to gain a share of what small portion of freight is available, and;
  2. small transport businesses and owner operators often don’t have any presence in cities other than their primary location or “home city”, meaning they either have to spend significant time and money to source freight at a higher rate, or discount their services in lieu of this to “get on the road back home”.

The CDMPO essentially dictated mandatory minimums of rates both per km travelled and per hour worked, similar to a minimum award wage for other industries.

M&S reviewed these rates and, overall, found that the rate required to pay subcontractor owner drivers was slightly less than the current rate paid outbound from major capital cities, but the commensurate rate back from smaller cities and regional centres was significantly higher than the current rates being paid.

It is simply not commercially viable to engage owner drivers in this environment, when other transport alternatives, including M&S company drivers, or large subcontractors whose owners do not drive the vehicles, but rather engage their own employees to drive, are available at the existing rate.

The CDMPO was designed to protect the owner driver and small family transport business, however, upon its introduction in April, the net effect was that it priced these groups out of the market overnight.

What happened ?

After much uproar and protest from the industry, the Turnbull government repealed the CDMPO, and the entire RSRT. From rsrt.gov.au “ On 21 April 2016, the Road Safety Remuneration Tribunal ceased to operate or perform any of the functions prescribed to it by the Road Safety Remuneration Act 2012 (Cth).

All road safety remuneration orders, including the Contractor Driver Minimum Payments Order, have also ceased to operate.”

Is M&S affected by the CDMPO ?

In our entire fleet, we had one subcontractor, who has been with us for over 30 years, who would have been affected by the order. His return loads are handled by other transport companies, and he reported major challenges with getting loads back. M&S had offered to provide loads for him if the situation worsened.

Will my rates increase?

No. Given M&S has almost no exposure to owner drivers, we were not exposed to cost increases, and as such rate rises would not have been necessary.

Resources

SMH – Truckies Driven to Despair Over Road Safety Remuneration Tribunal
SMH – Turnbull Government to Abolish Road Safety Remuneration Tribunal if Reelected