Mannkal Economic Education Foundation

Paul’s Perspective

Unions try to kill the trucking industry; and State taxation

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4 April 2016

Paul McCarthy

ON ANTI-COMPETITIVE BEHAVIOUR IN THE TRANSPORT INDUSTRY

Australia today faces one of its most blatant incidents of union sabotage of the last three decades. The Orwellian-named Road Safety Remuneration Tribunal has decreed new rates of pay within the trucking industry, but only for self-employed truck drivers. These new “minimum” rates far exceed the market rates and will price owner-operators out of the market, leaving it the sole preserve of large union-dominated truck companies.

Grace Collier in The Australian (here) tells the example of Joe, a trucker who does a run between Adelaide, Brisbane and Perth, for the market rate of $2,500. Under the Tribunal’s new rates, Joe must charge $6,000 – yet his competitors are allowed to undercut him and still charge the $2,500. Truck owner-operators around the country face going broke in the weeks ahead because, the Tribunal claims, it knows better than they do what they need to charge to operate “safely”.

In this case, as in many others, “Health and Safety” is being used as a union ruse to pressure small, independent, non-union operators out of the market. It should surprise no-one that the Road Safety Remuneration Tribunal was set up in 2012 by the union-beholden Prime Minister, Julia Gillard, after heavy lobbying by the Transport Workers Union.

A court today issued a stay against the order and even the usually economically-inept Senate crossbencher Glenn Lazarus is calling for the decision to be rescinded and the Tribunal to be abolished. He is right on both counts; if the order is abolished but the Tribunal remains intact, it will only try the same trick again at a later date. It is a mechanism deliberately set up by a union-beholden PM to benefit unions by bankrupting non-union competitors. If the trucking sector became 100% TWU-dominated, a strike could bring Australia to its knees. The Parliament must act to abolish both the order and the Tribunal.

ON STATE TAXATION

It is a shame that PM Turnbull’s plans for state-based taxation appear to have been still-born.  In The Australian (1 April 2016) economics correspondent David Uren claimed that states to raise income taxes would “produce extremely uneven returns to each state and would fail to deliver growth in revenue”, with lower returns to Tasmania and South Australia “reflecting lower incomes and workforce participation.”

From our perspective, this is a perfect reason to pursue these reforms. A “failure to deliver growth in revenue”, when translated from economists’ lingo, means that the government raises less tax – meaning more wealth stays in the hands of the productive people who earn it and out of the dead hand of Treasury.

Likewise, the “extremely uneven returns” caused by Tasmania’s and South Australia’s “lower incomes and workforce participation” will force these welfare states to either cut their spending or to create enough wealth (i.e. get a bloody job!) to cover their expenses. Either way, they will stop burdening the rest of the country, particularly productive states such as WA. Even better, competition may flourish between states as they seek to lower their tax rates to attract business and investment. The US has seen people and capital leave high-tax California for low-tax Texas and a subsequent economic boom in the latter. Be it at the level of the individual or an entire state, the principles of competition and self-sufficiency always drive better behaviour and overall results.

2 Responses to “Unions try to kill the trucking industry; and State taxation”

  1. Jordan Mittasch says:

    Great article Paul. My father was an owner-operator trucky for 17 years before retiring. Luckily he was in the business long before Gillard’s price floor on hard working self-employed truck drivers came into place. I hope economic common sense prevails and the minimum pay rate law is rescinded.

    • admin says:

      Thanks Jordan – great comment! I appreciate your first-hand perspective on this matter.