Australia’s largest retailers, manufacturers and mining companies will be forced to pay truck drivers more to compensate for spiralling fuel costs after the Fair Work Commission issued a landmark order that could add further pressure to inflation.
Truckies and their bosses, represented by the Transport Workers’ Union and the Australian Road Transport Industrial Organisation, had been pleading for action after weeks of absorbing soaring diesel prices because their contracts had been signed before war broke out in the Middle East.
The commission ruled that, from Tuesday, companies at the top of the supply chain will have to conduct fortnightly fuel price reviews and factor rising fuel prices into contracts they’ve already signed to transport their goods.
The order was handed down on Monday after a hastened legal process before the commission, which was expedited after the Albanese government issued an emergency determination under new laws that had been passed by parliament in recent weeks.
With the average bowser price of diesel stubbornly above $3.10 a litre, the commission’s orders come just in time for the logistics industry, which had warned of an April 21 cliff. That was the date after which trucking operators – many of which are small family businesses and single truckies – said they would have to shut because of a lag between when contracts were signed and how much fuel had increased since.
When lodging the applications, the unions had said the industry was at “breaking point”, and that many trucking operators were on the brink of collapse due to rising fuel costs. Several were reportedly hitting their limits on credit cards or refinancing their homes to fund their petrol bills.
In their decision, commission president Adam Hatcher and vice presidents Ingrid Asbury and Mark Gibian said the road transport contractual chain orders “will require adjustments to all existing rates in the industry to allow for recovery of the increased cost of fuel, but does not otherwise interfere with the way in which various types of road transport work… are paid for”.
AMP chief economist Shane Oliver said that while he understood the need to protect struggling truck businesses, the orders were likely to result in higher costs across the economy.
“I’m not saying it’s right or wrong, but it’s just the reality; it affects all businesses and ultimately we’re all going to have to pay for it,” he said.
Oliver said the order would feed through to underlying inflation, and that it would “compound the problem the Reserve Bank is facing” when determining settings such as interest rates.
“It is really hard for the RBA to ignore this when assessing the outlook for inflation,” he said.
TWU national secretary Michael Kaine said the order “puts obligations on the wealthy clients at the top of our supply chains to pay their fair share to the transport industry”.
“Over the last few weeks, drivers and transport businesses have outlined the dire circumstances they are facing with diesel costs, many already having to park up their trucks or rely on personal loans just to keep going. Many drivers in the industry are mum-and-dad operations currently being forced to subsidise fuel costs for the multibillion-dollar companies they are carting goods for,” Kaine said.
“Though there is still a hugely challenging period ahead for the industry, this order will be a lifeline to transport business and our national supply chains.”
ARTIO national secretary Peter Anderson said “if the trucks stop, the economy stops”. “This order ensures that all of the road transport industry has certainty in maintaining their services and that the additional extraordinary fuel costs will be recovered from their customers,” he said.
“This order won’t solve the fuel crisis entirely, but it will mean businesses can continue running with the knowledge that wherever price goes, they’ll be able to recover it.”
National Road Freighters Association national president Glyn Castanelli said the order had come at a critical time.
“Operators can have confidence that going forward, they’ll be able to recover those costs and keep the wheels turning, which is good news for both them and our national supply chains,” Castanelli said.
During the hearings, a range of Australia’s largest corporations fought against such an order, citing increasing costs, as well as the effort and logistics required to increase fuel price checks.
Australian Industry Group chief executive Innes Willox said the “radical new regulation” would confuse businesses and risk disturbing commercial arrangements already in motion.
“How can a business that engages the service of a trucking company sensibly assess that businesses’ fuel costs when they have no way of identifying or controlling matters such as what type of vehicle is used to undertake the work, what other freight is moved simultaneously or even what price has actually been paid for fuel?” Willox said.
He said the order would come as a shock to many businesses, including trucking companies, who would find it an “administrative burden and compliance nightmare”.
Workplace Relations Minister Amanda Rishworth said: “This order is about fairness. Truck drivers should not be left carrying the cost of global fuel shocks that are completely outside their control.”
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Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.
