Multiple associations have joined forces at an industry roundtable with the federal government to raise the alarm about an illegal practice that is harming Australia’s trucking sector.
The National Road Freight Transport Association (NatRoad), alongside the Queensland Trucking Association (QTA), have both called on the federal government to urgently crack down on rampant illegal employment practices that are crippling Australia’s road transport operators.
NatRoad CEO Warren Clark told the government roundtable that sham contracting, a systemic illegal practice, has become so widespread that transport companies are now openly advertising for “employee drivers with ABNs” on major job platforms like Seek, labelling government enforcement as “essentially non-existent”.
He says widespread sham contracting is costing legitimate operators 20 to 30 per cent in competitive advantage while billions in tax revenue are lost.
“There is systemic manipulation in the road freight transport industry happening right now, not being detected by government agencies,” Clark says.
“By allowing widespread illegal activity to flourish unchecked, we’ve created a system where lawbreakers prosper while legitimate businesses are punished for doing the right thing.”
Sham contracting involves transport operators classifying employee drivers as independent contractors through Australian Business Numbers (ABNs), allowing them to evade employment law obligations, payroll tax, Superannuation payments, GST registration requirements and workers’ compensation insurance.
This creates an artificial cost advantage of 20-30 per cent over compliant operators, fundamentally distorting market competition.
“Multiple transport operators report being approached by drivers demanding ABN payment arrangements, openly admitting ‘this is how other transport companies operate’,” Clark says.
QTA CEO Gary Mahon emphasises the industry’s long-standing commitment to fairness, safety and excellence, underpinned by a tripartite compact between employers, unions and government.
However, he warns of the “perpetual rise of ABN-based employment”, where workers are treated as contractors, denying them basic entitlements and circumventing employee protections.
“This illegal activity not only erodes workers’ rights but destabilises the entire supply chain, creating a two-tier system that favours cost-cutting over safety and fairness,” he says.
NatRoad has identified increasingly sophisticated structures that are designed to disguise employment relationships, including labour hire façades or ‘agencies’ that are established solely to convert employees into ABN holders, with some managing more than 100 individuals who drive company trucks.
The structures also include ABN sharing rings where one driver then employs themselves or shares with others to avoid tax and GST registrations.
“They can set up and shut down in a moment. If you need immediate money, this is a great way to make a quick buck with no obligations to anyone,” Clark says.
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He says the cost-cutting pressure is forcing drivers into dangerous situations.
“Drivers end up being pushed into ‘contracts’ on low pay, or businesses must drop their contract prices so low to win work, they end up breaking the rules to make up for the shortfall,” Clark says.
“Sham contracting is bringing the road freight transport industry into disrepute and results in legitimate hard-working people losing their livelihood, taking all their skill and experience out of the industry when we desperately need them.”
Mahon is urging all fleets to take proactive steps to combat this illegal practice.
“Fleets can help eradicate sham contracting by undertaking thorough due diligence with the subcontractors they engage and by questioning how those subcontractors are engaging their workers,” he says.
He also underscores the illegality of businesses supplying trucks and equipment while using contractors for labour only.
Mahon is calling for urgent action to address weaknesses in the Closing the Loopholes Amendments, particularly concerning the “Barn Door size” loophole in the reasonable belief defence within the Fair Work Act 2009.
He says the supply chain faces unprecedented strain, with rising costs, insolvencies and legal evasions threatening safety and industry stability.
“Fleets that survive will simply be those who can weather bad terms and unfair practices the longest,” Mahon says.
NatRoad has identified multiple enforcements failures, including a lack of audits being conducted, penalties failing to deter, under-resourced agencies and legitimate business facing more scrutiny than fraudulent operators.
“This is like telling an Olympic team steroids aren’t allowed then never testing them. Once a couple of people know they can get away with it, many more start following,” Clark says.
NatRoad is demanding the government to immediately launch industry audits, impose personal liability on directors facilitating these schemes, disqualify non-compliant companies from government contracts, follow up on whistleblower reports and realign the Shadow Economy Taskforce to focus on transport.
“Until government treats this as the systemic problem it is, compliant businesses will continue to be disadvantaged, workers will be exploited, and billions in public revenue will be stolen by those who know how to work the system,” Clark says.
“The message right now is clear: breaking the law is more profitable than following it. That has to change.”
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