Tow Truck Industry Amendment Bill 2007

Debate resumed from 17 October 2007.

Mr THOMAS GEORGE (Lismore) [7.44 p.m.]: I lead for the Opposition on the Tow Truck Industry Amendment Bill. The Opposition does not oppose the bill, which was introduced last week. The bill implements the outstanding recommendations of the 2004 review of the tow truck industry. The key features of the bill include the establishment of the Roads and Traffic Authority as the tow truck industry regulator, the dissolution of the Tow Truck Authority, the Tow Truck Authority Board and the industry advisory council, and the repeal of provisions relating to the job allocation scheme.

The Opposition does not oppose those amendments and notes that the Tow Truck Authority, the Tow Truck Authority Board, the NSW Police Force and the Roads and Traffic Authority have indicated their support for the bill. However, concerns have been expressed about new costs to tow truck drivers under the Tow Truck Authority. Towing charges have increased from $187 to $205. However, of most concern to tow truck drivers is that from 1 September 2007 a book of five authorisation forms cost $100 and a book of 20 authorisation forms cost $400—$20 each—whereas previously a book of 50 authorisation forms cost $38 or 70¢ each. That is a significant increase.

I discussed this increase with Des and Scott Walker of Walker Towing of Casino when the matter was first mooted. Their company has three trucks, each of which previously carried a $38 book of 50 forms. A book of 20 forms now costs $400 per truck. Drivers cannot operate with only four or five forms remaining because if they get two or three jobs on a busy Friday afternoon they will not have enough forms left for the weekend. Therefore, each truck must have a spare book, which means the total cost is $800 per truck. That is an additional burden on top of other increases.

Local tow truck operators have approached Opposition members highlighting their difficulty in meeting the increased costs. They have expressed concern that no compensation will be paid if the books are stolen and have to be replaced. One tow truck operator suggested that they could have registered plates similar to taxis. He said that many problems in the industry result from people paying the start-up costs and commencing operations. Genuine tow truck drivers do a tremendous job throughout the State and they are the ones who have expressed concern about the additional charges, which could increase further. I ask the Parliamentary Secretary at the table, the member for Maroubra, whether tow truck drivers could face further increases in costs.? We hope that they will not, as the tow truck industry is vital to the community, especially in rural and regional areas, and current charges involved with the industry are already substantial.

The Opposition will not oppose the bill but we wish to place on record our concerns about the costs to the industry, particularly the exorbitant increase in the cost of authorisation forms. As I said, tow truck drivers almost need to have two books in each truck, at a cost of $800. It is difficult to accept that a government could justify an increase from $38 for a book of 50 authorisation forms to a charge of $800 for a book of 40 authorisation forms. As I said, tow truck drivers have one book in the truck but they need to have a second book to use as a safeguard for when they get low on authorisation forms, for example, if they have a busy weekend. I reiterate that the Opposition does not oppose the Tow Truck Industry Amendment Bill 2007.

Mr ALAN ASHTON (East Hills) [7.51 p.m.]: I thank the Opposition for its support for the Tow Truck Industry Amendment Bill 2007. I acknowledge the arguments raised by the member for Lismore in leading for the Opposition. I am sure the Parliamentary Secretary will make a note of his arguments and perhaps respond to them. The bill is about improving the management and regulation of the tow truck industry. Its main objective is to transfer the functions of the Tow Truck Authority to the Roads and Traffic Authority. This follows a statutory review of the Tow Truck Industry Act, undertaken in 2005, which made a range of recommendations.

I am pleased to note that the New South Wales Government has already progressed the majority of the review's recommendations. The bill will implement the remainder of the key recommendations stemming from the review. This will result in improved governance, management and regulatory arrangements for the tow truck industry. Over the years concerns have been expressed about the tow truck industry and about the performance of the Tow Truck Authority. Indeed, when I was first elected to this Parliament in 1999, along with the member for Lismore, I recall that there was quite a bit of debate about the tow truck industry and how it was being managed, and about the role of the Tow Truck Authority. That debate continued until the review was undertaken, and following that review a series of recommendations were made.

The most important aspect of the bill, I believe, is the transfer of regulatory functions from the Tow Truck Authority to the Roads and Traffic Authority. The bill will pave the way for improved efficiencies, as well as enhanced services provided to the industry. Extensive consultation is being undertaken with regard to the bill's proposals. The bill has the support of the Tow Truck Authority, the Tow Truck Authority board, the New South Wales Police Force, the Roads and Traffic Authority and the Ministry of Transport. In addition, consultation with other industry groups and stakeholders, including the Motor Trades Association, the NRMA, the Insurance Council of Australia and other insurance groups, was undertaken during the course of the statutory review. So hardly a stakeholder has not had active input into the amendments provided in the bill.

The Roads and Traffic Authority has a greater pool of resources to drive industry reform, and this will allow for the provision of better services to the industry. For example, the Tow Truck Authority has only 14 staff, based at one metropolitan location, with a limited regulatory presence in regional areas. In comparison, the Roads and Traffic Authority is a large, well-resourced organisation. As the member for Lismore would appreciate, the Roads and Traffic Authority will have a presence in many parts of the State, including in many regional areas, to take account of what needs to be done to regulate the tow truck industry.

Members would be aware also, as I alluded to earlier, that a statutory review of the Act was undertaken, and at the time concerns were expressed about the tow truck industry. Members would be aware that concerns had been expressed about some of the people involved in the tow truck industry. It has also been the wish of those operating tow trucks to improve the standing they have in the community, to ensure that the industry's reputation is as good as it can be. The industry has not always had a good reputation, but it is certainly a lot better than it was when I was elected to this place in 1999.

In terms of compliance and enforcement, the Roads and Traffic Authority will have a statewide presence. This will enhance the operations of the tow truck industry. The bill creates the potential to enhance regulation of the industry throughout the State, particularly in regional areas. Integrating the functions of the Tow Truck Authority into the Roads and Traffic Authority will allow Tow Truck Authority staff to focus on more strategic matters. The current statutory Tow Truck Industry Advisory Council has not met since 2002 and it is not representative of the industry. As part of the new arrangements, the Government will assist industry to form a new, more effective industry body. This approach reflects the preference of the industry. In place of the Tow Truck Industry Advisory Council, an interim consultative committee will be established to determine the composition of a new body which will more effectively represent the views of industry to the Government.

The removal of the job allocation scheme will not change current operating conditions. I am aware that tow truck operators in all areas of the State were never quite happy with the job allocation scheme, and this led to much debate between the insurance industry and tow truck operators. I think most of us feel that the scheme was not the best system. I note that the scheme was trialled in 2003 but that it has never been fully implemented. I am glad about that, as I am sure most members are. An evaluation of the trial found that the scheme did not produce improved customer service levels, and that response times were slower than expected resulting in delays in clearing accident scenes.

The scheme failed to eliminate corrupt payments, or drop fees as they are called, and there were very high establishment and recurrent running costs. As I said, the scheme was also quite unpopular with tow truck operators, given the extra of red tape that was involved. People who had run very successful tow truck businesses found themselves in a position where they had to be allocated a job, and if they could not do the job they would give it to someone else who could perhaps do it. Whilst the job allocation scheme was an attempt by the Tow Truck Authority to bring some degree of order to the industry—six or eight tow trucks would turn up at an accident scene and at times there were almost fisticuffs as drivers worked out which driver would get the job—I do not think anyone made a full commitment to introducing the scheme. In that sense the removal of the scheme is a win for all of us who had concerns about it, including both Government and Opposition members.

Significant progress has already been made with respect to the conduct of the industry. While provisions in the Act relating to the job allocation scheme will be removed, the requirement to obtain a towing authorisation for accident towing will be retained, which is appropriate. The bill will facilitate increased protection for consumers and allow for improved services for the industry. It will also provide improved representation for the industry, and will allow industry members to participate in the shaping of the industry's future. The bill allows the New South Wales Government to take the next important steps towards enhancing the regulation of tow truck activities. I commend the bill to the House and thank the Opposition for its in-principle support for it.

Mr MICHAEL RICHARDSON (Castle Hill) [7.59 p.m.]: The Tow Truck Industry Amendment Bill is a response to the Ministry of Transport's review of the Tow Truck Industry Act, which was completed two years ago. Its key provisions are to dissolve the Tow Truck Authority and the Tow Truck Industry Advisory Council, to transfer their responsibilities to the Roads and Traffic Authority and to repeal the provisions of the Jjob Aallocation Sscheme.

The Tow Truck Authority was established by this Government in 1998. Like so many other things the Government has done, the authority has proved to be an abject failure. Chief amongst its problems has been that it is not financially sustainable, given its very narrow revenue base of tow truck operator and driver licensing fees. The bill seeks to fold the Tow Truck Authority into the Roads and Traffic Authority, together with its four staff. The question to be asked is: Why will this improve the situation? Unless the Roads and Traffic Authority seconds extra staff, we will have the same situation obtaining as at present. In analysing whether this is a positive or a negative move, we need to look at why the Tow Truck Authority was set up in the first place.

In the early 1990s there were widespread complaints raised by both insurers and the community relating to exorbitant fees for towing and storage of accident damaged vehicles; drop fees, or commissions, paid by repairers to drivers and operators for delivering accident-damaged vehicles to their workshops; and standover tactics by tow truck drivers to ensure they managed to tow the damaged vehicle to a repairer who paid drop fees. I am sure members would be aware of this situation as a result of the considerable publicity surrounding it. There were even fights between drivers at accidents. In addition, tow trucks were being vandalised—this also received significant publicityand tow trucks were racing through suburban streets to be first at the accident scene. That very dangerous practice could have caused another accidentor perhaps they were trying to drum up business for themselves. All of these things are undesirable.

Although the Tow Truck Authority has been in existence for nine years, many of these problems, or variations of them, still exist. Repairers still pay drop fees to drivers, as I understand it. Insurers now have business arrangements with some operators. The tow trucks carry the insurer's logo as if to say, "If you are insured with our insurer you must come with us." I ask members to put themselves in the position of an accident victim whose car has been badly damaged. The person may have been slightly injured, but not sufficiently to require an ambulance. The person is in a vulnerable position. Some unscrupulous tow truck drivers will still arrive at an accident late, use their insurer's logo to convince the victim to ring their insurer and seek instructions from them. Because of the arrangement that exists between the tow truck operator and the insurer, the insurer will persuade the victim to revoke his or her already signed towing authorisation and sign up with the insurance preferred operator, who then takes the vehicle to his chosen repairer and collects his commission.

This is likely to continue to happen, despite the Minister's assertion in his agreement in principle speech that the Government's new towing authorisation will stamp out unconscionable activities. The new towing authorisation that the Minister has lauded lists three insurers's names and phone numbers at the bottom. For example, the NRMA tow truck operator whose truck is decorated with the NRMA badge will look at the towing authorisation and say, "Look, the NRMA is down here as an approved insurer so you can come with me." He then takes the vehicle to his repairer and gets his drop fee. Other tow truck drivers may say the accident has occurred after hours, the vehicle needs to be towed to a holding yard and then taken to the smash repairer in the morning. Of course, there are considerable holding charges associated with that action.

The bill also abolishes the job allocation scheme. This scheme was trialled briefly in 2003 but did not progress. Why did it not progress? Because the Government could not even get this right, —like everything else, it would seem to me, associated with the tow truck industry. The job allocation scheme was not a true accident allocation process; it was more a glorified roster or directive process. The Tow Truck Industry Advisory Council, which dreamed up the scheme, was largely comprised of academics who had little knowledge of the industry. Its outcomes were based on selected views from self-interested parties. A handful of towing companies were put on the roster. What eventuated was more a way of getting cars to the repairers than a better way of removing accident-damaged vehicles and, most importantly, allowing consumer choice.

Lest it be thought that it is impossible to put together a job allocation scheme that works, a job allocation scheme has operated, as I understand it, in Victoria for the last 17 or 18 years and in South Australia for 5 years. In Victoria the areas are based on electoral boundaries. The operator will buy a licence for that area and he must meet agreed standards. If he does not meet those agreed standards, much the same as if a bus company does not meet agreed standards, he will lose the right to operate in that area. A tow truck operator might have the rights to operate in 10 areas and he might have paid $150,000 for each one of those areas, so he stands to lose a very substantial investment if he does not do the right thing.

I wonder why these States could get it right and New South Wales got it so hopelessly wrong? The scheme was trialled for just six months in 2003. It was an abject disaster. The bill abolishes this scheme, but it has not really existed. The bill essentially abolishes something that does not exist. There is no allocation system and, apart from this clayton's approach in 2003, there never has been. Finally, I refer to costs. I am not surprised to find that the Government is going to significantly raise the charges for tow truck authorisation books and towing charges. In fact, the member for Lismore tells me that those charges have already gone up.

Mr Thomas George: Yes, they went up on 1 September 2007.

Mr MICHAEL RICHARDSON: Why am I not surprised about this? It has been a tried and proven technique of this Government that whenever it needs money, instead of trying to do things more efficiently, it will raise the charges to the public. I will inform the House as to how much the charges have gone up. The former charge for tow truck authorisation books of 50 forms was $38; the new cost will be $100 for a book of five forms. That is $20 per form, which is a very significant increase. Towing charges are now $187, and I understand they are going up to well over $200. Lest it be thought that the tow truck operator will absorb these costs, ultimately these costs will be passed on to the consumer. In that respect, it is no different from the section 94 contributions that the Premier announced were going to be significantly reduced in Sydney—I can still hear him on the radio saying there is going to be $25,000 straight off the bottom line for new homebuyers. There will not be. Community centres, roads and other facilities are still going to have to be provided and, ultimately, the consumer will pick up the tab.

The consumer will pick up these new charges, whether through increased insurance premiums or the cost of towing when the car is collected after the accident. Historically, the greatest obstacle the Tow Truck Authority has faced has been lack of resources. As soon as the authority is moved into the Roads and Traffic Authority its revenue base will go up. One might ask why the revenue base could not have been raised so the authority could have done the job properly in the first place. The Tow Truck Authority was simply under-resourced, like so many other agencies within this Government, and could not do its job properly. The Opposition does not oppose the bill. However, if the Government thinks this bill will solve all the problems of the tow truck industry it is sorely deluding itself.

Mr MICHAEL DALEY (Maroubra—Parliamentary Secretary) [8.09 p.m.], in reply: I thank the Opposition for its support of the Tow Truck Industry Amendment Bill, a simple but important bill. I thank the members for Lismore, East Hills and Castle Hill for their contributions. One of the salient points that has been raised during this debate is the issue of costs. The member for Lismore raised the pertinent question as to why the cost of tows will increase as a result of this bill. The simple answer for the modest increase is because the Tow Truck Authority has previously been subsidised by government but is now moving to a user-pay system.

From 1 September the Tow Truck Authority increased the protection it provides and shifted to a user-pay system. Also from 1 September the schedule of maximum fees, which is updated in line with the consumer price index, now sets a cap on storage fees for the first time. At the same time a new towing authority form came into use. The form containshas consumer advice and provides an audit trail for the authority, if required. Operators are being charged $18 plus GST for these forms. The maximum tow has gone up by this amount plus CPI, so that operators can recoup the cost. That means the cost is truly and effectively passed on to consumers. That is appropriate. It is the user, not the taxpayer, who pays for the service.

I will briefly address some other provisions in the bill. The bill will allow the New South Wales Government to take the next steps to enhance regulation of tow truck activities in New South Wales. It will provide further protection to road users and those who use tow truck services. It will result in improved services for the tow truck industry. It will also give a stronger voice to industry, particularly in the shaping of the industry's future. The matters addressed in the bill have arisen primarily from a statutory review of the Tow Truck Industry Act. The review recommended that the Tow Truck Authority and the board of the Tow Truck Authority be dissolved and that the Roads and Traffic Authority be established as the tow truck industry regulator. It also recommended that the Tow Truck Industry Advisory Council be abolished and the job allocation scheme provisions within the Act be repealed.

The initiatives in this bill will enhance the regulatory environment in which the tow truck industry operates. It will improve the efficiency of the delivery of services to both the tow truck industry and those who rely on tow truck services. It should be noted that extensive consultation has been undertaken in respect to this bill. In particular, consultation has been undertaken with the key stakeholders, including the Motor Traders Association, the NRMA, the Insurance Council of Australia and the New South Wales Police Force. It makes sense to transfer the functions of the Tow Truck Authority to the Roads and Traffic Authority. The capacity, support and knowledge base of the Roads and Traffic Authority will improve services to industry and strengthen the way the industry is governed.

The establishment of the Roads and Traffic Authority as the industry regulator will strengthen compliance and enforcement in the industry. The Roads and Traffic Authority, in turn, will draw on the expertise of the Tow Truck Authority staff to refine its enforcement programs and improve compliance within the industry. The Roads and Traffic Authority has effective processes and procedures, which will produce more efficient, streamlined customer identification and enrolment procedures for the tow truck industry. The important enforcement work the Tow Truck Authority has been undertaking with the support of the New South Wales Police Force will be continued and enhanced by the Roads and Traffic Authority.

Joint compliance operations targeting tow truck hotspot areas have already been successful and will be even more effective under the new arrangements. The Roads and Traffic Authority's resources, including the network of registries, will be used to educate road users on their rights and responsibilities and the obligations of tow truck drivers. I wish to acknowledge that since the Tow Truck Authority was established in 1998 it has implemented a range of reforms. These reforms have delivered a more effective regulatory system for the tow truck industry. The reforms have also improved the industry's professional standards, as well as the standard of service provided to the tow truck industry. This bill will build on the success of the wide-ranging reforms already implemented by the Tow Truck Authority and will provide the foundations to drive further tow truck industry reforms. Once again, I thank the members who participated in this debate and for their support of this bill, which I commend to the House.

Question—That this bill be now agreed to in principle—put and resolved in the affirmative.

Motion agreed to.

Bill agreed to in principle.


Bill declared passed and transmitted to the Legislative Council with a message seeking its concurrence in the bill.