The National Road Transport Association (NatRoad) has called on the Federal Government to address widespread sham contracting practices that are undermining road freight operators and eroding safety standards.
Speaking at a federal roundtable in Canberra, NatRoad CEO, Warren Clark, said the issue has become deeply entrenched, with some transport companies now openly advertising for ’employee drivers with ABNs’ on major job platforms.
“There is systemic manipulation in the road freight transport industry happening right now,” said Clark.
“By allowing illegal activity to flourish unchecked, we’ve created a system where lawbreakers prosper while compliant businesses are penalised for doing the right thing.”
Sham contracting occurs when drivers are incorrectly classified as independent contractors through Australian Business Numbers (ABNs), allowing employers to avoid payroll tax, superannuation, workers’ compensation and other legal obligations. The result, according to NatRoad, is an artificial cost advantage of up to 30 per cent for non-compliant operators.
NatRoad reports that some operators have established labour hire entities solely to convert employees into ABN-based contractors, while others have formed networks that share or rotate ABNs to avoid GST registration and tax obligations.
“The schemes are becoming increasingly sophisticated,” said Clark. “They can set up and shut down in a moment, with no accountability.”
Clark warned that the resulting cost pressures are distorting competition and pushing operators toward unsafe practices.
“Drivers end up trapped in low-paid contracts, while legitimate businesses are forced to cut rates to remain competitive,” he said.
Stronger government oversight is essential to address the problem according to NatRoad.
The association has cited a lack of enforcement, limited audit activity and insufficient penalties as key factors allowing the practice to persist.
“It’s like banning steroids at the Olympics but never testing anyone,” said Clark. “Once people realise they can get away with it, others follow.”
To restore fairness and compliance, NatRoad is urging the Federal Government to conduct comprehensive audits of non-compliant operators, impose personal liability on directors involved in illegal contracting schemes, and exclude those businesses from future government contracts.
The association has also called for the Shadow Economy Taskforce to be resourced and redirected to focus on the transport sector.
“Until this issue is treated as the systemic challenge it is, compliant operators will continue to be disadvantaged, workers will be exploited, and billions in public revenue will be lost,” said Clark. “Breaking the law should never be more profitable than following it.”
