Urgent call to crack down on ‘rampant illegal practices’ crippling industry

The National Road Freight Transport Association (NatRoad) has issued an urgent call to federal government to crack down on rampant illegal employment practices that are crippling Australia’s legitimate road transport operators and compromising road safety.

NatRoad CEO Warren Clark revealed to a federal government roundtable today that sham contracting has become so widespread, transport companies are now openly advertising for “employee drivers with ABNs” on major job platforms like Seek – proving government enforcement is “essentially non-existent”.

“There is systemic manipulation in the road freight transport industry happening right now, not being detected by government agencies,” Clark said.

“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.”

The practice 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 said.

NatRoad has identified increasingly sophisticated structures designed to disguise employment relationships including:

Labour hire façades: “Agencies” set up solely to convert employees into ABN holders, with some managing 100-plus individuals who drive company trucks, follow company directions, and work set hours — yet are fraudulently classified as contractors.

ABN sharing rings: Individual drivers setting up as sole trader with an ABN then employs themselves or shares with multiple others, allowing them to avoid GST registration, skip tax returns, and evade superannuation obligations.

“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 said.

NatRoad said 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 said.

This comes as Australia faces a significant driver shortage and road incidents have increased over the past two years.

NatRoad said legitimate operators cannot compete against businesses operating with 20-30 per cent lower cost bases through illegal schemes.

“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,”  Clark said.

NatRoad identified multiple enforcement failures including:

• Audits rarely conducted, and easy to avoid.
• Penalties that fail to deter.
• Under-resourced agencies.
• Legitimate businesses are 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 said.

NatRoad is demanding the federal government immediately:

• Launch comprehensive industry audits targeting non-compliant operators.

• Impose personal liability on directors facilitating sham contracting schemes.

• Disqualify non-compliant companies from government contracts.

• Follow up on whistleblower reports.

• Realign and resource 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 said.

“The message right now is clear: breaking the law is more profitable than following it. That has to change.”