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Why these industry leaders are getting ready for bigger fines

August 13, 2015

Last week, the deadline passed for submissions on the National Transport Commission (NTC)’s ‘Primary Duties for Chain of Responsibility Parties and Executive Officers’ Discussion Paper.

As we’ve already hinted, the Discussion Paper marks a sea change in the way chain of responsibility duties will be worded, how compliance (and therefore liability) will be measured – and how parties that don’t measure up will be penalised.

Stiffer deterrence across the board

When it released the Discussion Paper last month, the NTC observed that the current maximum fines under the Heavy Vehicle National Law (HVNL) are considerably lower than those under the model Work Health and Safety Act (WHS Act).

And in much the same way it suggests that a WHS Act-style primary duty to ensure safety be introduced for operators, prime contractors and employers, it also says the penalties for parties who breach their new duties should be ramped up.

Currently, the maximum fine a court can impose on an individual under the HVNL is $20,000.

If the HVNL was changed tomorrow to match the WHS Act’s maximum penalties, that would become $300,000 or imprisonment for 5 years for an individual.

The maximum penalty for a corporation, meanwhile, would go up to $3 million.

Industry feedback

Influential stakeholders have been adamant that the CoR regime is due for change – the question is how to ensure that change is implemented fairly.

In the face of what will likely be higher penalties, industry welcome the NTC’s proposal to modify the HVNL’s stern provisions on the liability of executive officers.

Currently, it requires an executive officer charged with a CoR offence to disprove a presumption of individual criminal liability for an offence committed by his or her corporation.

In other words, it reverses the burden of proof which usually considers a defendant until proven guilty.

The NTC proposals, which have backing from Federal and State officials, would shift this burden back to the prosecution.

In a statement this month, the Australian Livestock and Rural Transporters Association (ALRTA) noted that this should also entail changes to the power of investigators, so that they don’t over-step the mark.

They also urged the NTC and officials to consider the impact of higher penalties on small and medium-sized businesses.

Meanwhile, the Australian Transport Association (ATA) affirmed that the prescriptive way CoR duties operate right now is preventing businesses from innovating and developing new approaches.

ATA’s National Manager of Government Relations and Policy, Bill McKinley, says the reforms are an opportunity to transform CoR compliance from a ‘tick-box’ exercise to a best practice model of safety regulation.

However, the Australian Logistics Council (ALC) has put forward the provocative point that legislative change may be an inferior substitute to better explaining the current legislation to industry, or appropriate guidelines and guidance for enforcement officers on what breaches to take action on.

Moreover, before CoR reforms are implemented, the ALC believes regulator guidance to industry must be prepared, and industry code regulation guidelines be developed so effective industry codes can be precede the introduction of a new scheme.

It also holds the view that relevant compliance with a registered industry code should be a defence to an allegation that a duty holder has failed to comply with a CoR duty.

It’s a waste to wait

Peak bodies are intent on making sure that any changes to CoR are effective. But even if there are practical challenges under the existing law, it’s not stopping businesses from implementing effective CoR strategies.

When it comes to understanding your CoR obligations and meeting them, there’s no point kicking the can down the road. Especially if it leaves you less time to comply with a regime of higher penalties.

To see how the compliance team at one major nationwide company has mastered CoR in a complex supply chain, check out our Industry Insights profile in this month’s CoR Adviser.

Click here to sign up for a free 30-day trial of CoR Adviser.

Until next time,

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Joseph Nunweek

Editor, CoR Bulletin