Race to the bottom

Race to the bottom

Bimagey Bernard Corden – inspired by our recent article The Human Race…..

Everybody knows that the boat is leaking, everybody knows that the captain lied

Leonard Cohen

Race to the bottom is a socioeconomic condition, which occurs when nations, states and corporations sacrifice safety, regulations and wages via deregulation and diminution of labour standards in order to retain or attract economic activity in the respective jurisdiction. This gained traction in the United States during the 1930s, following the great depression. It operates ingeniously and circumvents the legislative framework using several mechanisms, which include regulatory capture and contingent employment via the gig economy. The enforcement of regulations and labour standards becomes less vigorous with escalating violations. This has become increasingly prevalent with the resurgence of rampant and unfettered neoliberalism since the 1980s. It is evident across Australia, particularly in the aviation services, retail, agricultural, resources, construction and horticultural sectors.

Neoliberalism

Neoliberalism encourages the value of free market competition and reflects the unilateral doctrine of laissez faire economics promoted by the profits of cents, Ludwig von Mises, Friedrich Hayek and Milton Friedman. It advocates free trade polices with an unrestricted transfer of international capital, which was embraced by many major global conservative political parties during the 1980s and promoted as trickle-down economics.

Its relentless pursuit of power and profit is even supported by many socialist or democratic governments. Symptoms include privatisation, deregulation, contracting and competition in public services, diminution of trade unions and massive tax cuts for many corporations, their wealthy executives and investors. Policies were imposed without democratic consent by the World Bank, International Monetary Fund or the World Trade Organisation. It promotes freedom and choice using a paradoxical slogan, which was often reiterated by the late Margaret Tina Thatcher……There is no alternative. This creates immense inequality with a malevolent freedom to harm, which endangers the environment and increases the risk of industrial diseases and psychosocial disorders. Meanwhile, corporate behemoths take the profits and the state endures the risk. It eventually results in increased taxes and a deterioration of public health infrastructure and many other community services. 97104

The cost of work related injury and disease

Work related injury and disease undermines Australia’s economic performance with a commensurate adverse impact on living standards. It imposes substantial direct and indirect costs on employers, employees and the community and its severity has a significant influence on who bears the cost. This was quite evident at many of the regional public hearings during the Queensland parliamentary inquiry into coal workers’ pneumoconiosis. The direct costs include workers’ compensation premiums and subsequent payments to incapacitated employees. Indirect costs consist of reduced productivity, provision of social welfare programs, loss of current and future earnings and lost potential output.

Over recent years there has been a significant resurgence of black lung amongst coal miners in the United States and Australia. This follows systemic government and industry failures, which include a laissez faire safety philosophy and pluralistic ignorance with a diffusion of responsibilities. It is compounded by unrealistic productivity demands that force miners to work extended shifts and longer rosters. Furthermore, cutting equipment is now more powerful and efficient and is used in coal seams containing quartz or sandstone, which increases exposure to respirable crystalline silica. Since 1970, the United States government and its coal mining industry has paid out more than $45 billion in compensation to black lung victims.

In 1992-3, the cost of work related injury and disease in Australia exceeded $20 billion and it was uniformly distributed between employers (40%), employees (30%) and the community (30%). The allocation of cost to specific agents is quite complex and extremely dependent on the outcome severity. It significantly increases for individuals, their dependents and the community if the consequences involve traumatic fatalities or serious injuries.

More recent estimates put the cost at $62 billion per year with a staggering redistribution amongst employers (5%), employees (77%) and the community (18%). This variation, despite a steady decrease in fatalities and serious injuries, is partly attributed to significant increases in average weekly earnings. However, descriptive statistics often conceal more than they reveal and correlation does not imply causation. Additional exogenous factors, which include rampant neoliberalism with its laissez faire doctrine, the gig economy and an unabashed worship of profit may be significant weapons in Abaddon’s arsenal.

Regulatory capture

If voting changed anything they would make it illegal

Emma Goldman

Rampant and unfettered neoliberalism or casino capitalism has seen an alarming increase in regulatory capture and its symptoms are evident amongst several federal and state legislative authorities. It involves government oversight or ineptitude and occurs when a statutory agency or authority advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating.

A perception evolves where businesses receive preferences or benefits at the expense of the crown or public interest and the liaison appears unethical. Its tentacles extend far beyond the boundaries of government. Penetrating capture via intense lobbying has infiltrated the media, industry associations and most independent peak representative bodies. It is also termed client politics and the majority of costs are invariably borne by the government, which cascade onto taxpayers and the community, whilst an elite cabal of powerbrokers, lobbyists, public serpents and career politicians reap the benefits.

Following the great financial crisis, hardly a week elapses without an exclusive expose of malfeasance, turpitude or noncompliance with good governance and the principles of corporate social responsibility. The miasma is evident across countless commercial and industrial sectors including aged care, energy markets, financial services, franchising, mining and mineral resources, retail, telecommunications, transport and waste recycling.

The risk increases when regulators adopt conciliatory and cooperative approaches via persuasion and negotiation in preference to adversarial and punitive enforcement. Conflict of interest also arises if the government agency has a fundamental responsibility for the productivity and economic success of the regulated industry. This was raised during the public inquiry into the 1988 Piper Alpha oil rig disaster. The Cullen report recommended statutory responsibility for offshore safety legislation be transferred to the Health and Safety Executive. This would reduce the risk of regulatory capture and curtail the production versus protection dichotomy. Occidental, the rig operator was found guilty of having inadequate maintenance and safety procedures but no criminal charges were ever brought against the company.

Several recent high profile incidents in the United States have raised significant concern regarding performance of federal and state regulatory authorities and their unhealthy relationship with regulated entities. In 2010, following the Upper Big Branch underground coalmine explosion in West Virginia, the state governor requested an independent investigation into the disaster. The report revealed the US Department of Labor Mine Safety and Health Administration failed to use its legislative power to ensure compliance with federal laws. Furthermore, the role of the state regulatory authority was repeatedly undermined and demoralised by the influence of Massey Energy through its tyrannical and intimidating chief executive officer, Don Blankenship.

The BP Deepwater Horizon catastrophe resulted in multiple fatalities and the release of over 200 million gallons of oil into the Gulf of Mexico. The statutory agency provided select corporations with blanket exemptions for environmental impact statements and allowed many companies to drill without statutory permits. Industry lobbyists dismissed the disaster as an aberration and despite significant environmental risks, the regulator continued to issue exploration and drilling permits. It appears the agency had abandoned any pretense of regulating the industry and was complicit in the circumvention of legislation. The former BP executive Tony Hayward, is now chairman with Glencore, a mining conglomerate.

Regulatory capture is prevalent throughout Alberta in Canada, which has vast oil and gas reserves and is the residential province of a former neoliberal prime minister. It is evident across Australia and was identified during recent federal and state parliamentary inquiries into the resurgence of coal workers’ pneumoconiosis.

It occurs across every government structural level and creates a distortion gap. Major corporations capture federal authorities to oppose or block state policies whereas smaller businesses capture state governments and use federal delegates as its industry voice. It involves financial and cognitive capture and an ostensible risk emerges when statutory officials develop cordial relationships with its regulated entities. It is extremely difficult to prove, especially without a precise definition of public interest. The risk significantly increases in rural and remote regions, where agency inspectors and their families share community services, sporting and social facilities and can develop close personal relationships with industry employees.

Financial capture

This is referred to as materialist capture and is tantamount to political corruption and often financially motivated. It is normally employed by larger corporations through bartering of their vast resources. The regulator’s logic is predominantly self-serving and often involves conflict of interest resulting in bribery with political donations and undisclosed gifts. It can also encompass employer sponsorship or funding of regulatory activities, which provides preferential access to policy making. This may occur due to insufficient government funding or when departmental budgets are ruthlessly slashed.

A well lubricated revolving door prevails with the frequent transfer of employees between statutory authorities and regulated entities. This was identified during the corrupt birth of coal seam gas projects in Queensland and in the parliamentary inquiry into coal workers’ pneumoconiosis. Many regulatory authority inspectors were previously employed by major mining conglomerates, which included senior management roles or statutory positions such as site senior executives or open cut examiners. They are often aware of skeletons in the closet and know where all the bodies are buried. Unless dismissal was acrimonious, the disclosure of any irregularities would be extremely unlikely, especially if they were sanctioned during their tenure as a mining company employee.

In the United Kingdom, Health and Safety Executive board members are required to disclose conflicts of interest, which are published on its website. The risk of regulatory capture within the European Agency for Safety and Health at Work is quite low because its role does not include regulation, enforcement or inspection. However, a formal policy defines conflict of interest and establishes a robust framework to ensure it is managed effectively. It is supplemented by a breach of trust procedure. The agency director and executive team leaders must disclose declarations of interest and provide a summary of their resumes, which are readily available for public scrutiny.

In Australia, there is little evidence covering declarations of interest on regulatory authority websites or in its annual reports. Indeed, a Workplace Health and Safety Queensland board member is the managing director of a large industrial consulting group. It supplies an extensive range of engineering services to the Queensland resources sector across regional and remote areas using interstate contingent labour hire.

Cognitive capture

This is also termed non-materialist capture and the regulator often embraces similar concepts to its regulated entities. It is more subtle than financial capture and involves capturing hearts and minds and extends much deeper to include the media, industry associations and peak representative bodies. This is favoured by many smaller businesses with the use of propaganda, underdog rhetoric and indoctrination tactics to promulgate a narrative of culpability, which advocates the careless worker myth.

Major corporations engage skilful media liaison officers to sanitise the release of information following significant incidents. Pecksniffian and irreverent campaigns focus on injury management, rehabilitation and often feature grieving dependents. It diverts attention and transfers duty of care onto victims to disguise or absolve employer negligence and protect its corporate image. The outcome is merely ephemeral and it has resurrected atavistic accident theory, promoted zero harm and created a sinister revival of behavioural safety.

The Safety Institute of Australia is the national association for the health and safety profession. It advocates making a superior contribution to its vision for safe and healthy workers in productive workplaces, which is accomplished by providing expert advice and being a voice for the unique perspectives of its profession. It failed, somewhat miserably, to provide any submissions to the Queensland parliament coal workers’ pneumoconiosis inquiry or the extended terms of reference covering other occupational respirable dusts. Meanwhile, several of its representatives managed to attend the recent World Congress on Safety and Health in Singapore to promote and embrace the concept of Vision Zero.

The shameful response to coal workers’ pneumoconiosis by the Safety Institute of Australia was discussed with its chief executive officer and raised at a Queensland branch meeting during the launch of its strategic plan. The proffered excuse was insufficient technical expertise, which hardly reflects or aligns with its policy agenda, vision or mission statement. This extraordinary explanation was most ironic given it operates a scheme for certification of safety professionals and its chairman was head of safety for a global mining and mineral resources behemoth. However, the revolving doors keep turning and a current senior executive role with a major energy company is supplemented with a sinecure as a director on the board of Work Health and Safety Queensland.

The Safety Institute of Australia Queensland branch celebrated the 25th anniversary of its Visions safety conference in Toowoomba and not one presentation covered coal workers’ pneumoconiosis. Indeed, there was no official representation at any of the Queensland parliamentary inquiry public hearings, which were held regularly throughout 2016-17. The silence and inertia from its careerist zombies on this significant issue and material risk resonates. It is not a voice for the unique perspectives of its profession, it is censorship by omission and redolent of cognitive regulatory capture……The opposite for courage is not cowardice, it is conformity. Even a dead fish can go with the flow.

Mechanisms and prevention

Regulatory capture is a byzantine calumny that is simple to identify and categorise but quite difficult to prove. It is easily repudiated, elusive and rarely leads to any significant punitive action unless blatant political corruption is evident. It occurs via a labyrinth of complex processes, which include substantive legislation to favour specific business interests and self-serving biases with ideological motivated behaviour. Other damaging mechanisms, which can significantly increase the risk include insufficient government funding, ruthless budget cuts or legislative ossification.

The simple solution is deregulation, which is a radical response and lets the competitive market act as the regulatory barometer. This laissez faire tactic is unhealthy and can easily degenerate into anarchy. Its Nihilistic ideology is somewhat analogous with sanctioning the use of performance enhancing drugs in sport………If you can’t beat em, join em. It is critical that existing legislation be regularly reviewed to ensure it remains current, practical and effective………If you have ten thousand regulations on the statute, you destroy all respect for law. The dilemma of responsive regulation and whether to punish or reward is discussed by Kolieb, who advocates a compliance and aspirational approach. More recent developments include nudge theory, which promotes libertarian paternalism.

Modified work practices can reduce the risk and involve astute supervisory surveillance, staff rotation policies and consistent reporting of activities. Additional strategies include contract confidentiality clauses, non-competing agreements, declaration of interests and reinforcing agency values using effective communication protocols. This is critical in rural and remote regions, where the risk is much more significant.

Regulatory capture is insidious because a captured agency wields the power and authority of government. Its pathogenic and symbiotic symptoms can remain undetected for prolonged periods. Disclosure is unlikely because it benefits statutory officials and the regulated entity. It is best addressed by anticipatory tactics, which promote principle based leadership and emphasise the responsibility and integrity of executives and senior managers. An extensive review of regulatory capture and preventive strategies is provided by Croley and the Administrative Conference of the United States and further precautionary guidance is offered by the Australian National Audit Office.

A question of balance

Effective regulation is a critical component of a functional and sustainable economy and can be defined as any rule endorsed by government, where there may be an expectation of compliance. It must be designed to protect public interest without imposing unnecessary costs on its regulated entities or the broader community. Regulation is an important tool for achieving the social, economic and environmental policy objectives of governments. It attempts to influence or compel an acceptable standard of behaviour by business or society, which often requires a collaborative response. Depending on the context and nature of the risks the regulatory scope can range from an enforcement regime to a self-regulatory approach, which is significantly influenced by the incumbent government.

The 1972 Robens report advocated self-regulation but failed to provide a precise definition or expand on the concept. In Australia the global intensification of neoliberal ideology has influenced its regulatory regime and since the late 1990s it has steadily deteriorated into deregulation. In 2013 the federal government advocated a commitment to regulatory reform with the aim of reducing the burden of regulation, boosting productivity and enhancing competitiveness, which was a smokescreen for deregulation. It coincided with the resources boom and stimulated a race to the bottom with a laissez faire doctrine. It favoured production over protection and is creating a kleptocracy with a substantial impact on work related injury and disease. Since 1993 the allocation of costs endured by employees has increased by a staggering 157% with a corresponding decrease of 88% for employers. This unhealthy alliance of state and corporate interests is a moral abrogation of responsibility and may also be a significant contributory factor in the resurgence of coal workers’ pneumoconiosis.

The gig economy

Work keeps away those three great evils: boredom, vice and poverty – Voltaire

Over recent years traditional employment relationships have changed considerably with a dramatic increase in contingent or precarious arrangements. The embryonic gig economy and use of a disillusioned labour hire resource from an inchoate precariat is noticeable across Australia and overseas. It is prevalent throughout most industrial and commercial sectors with the exploitation of vulnerable migrant workers under indentured servitude or peonage. It shows no signs of abating and is polarising society. Engagement often consists of an impassive and loose tripartite agreement between the host employer, the labour hiring agency and the employee, who is effectively a ragged trousered philanthropist.

The precariat

The gig economy has created an incipient social class known as precariats, the Epsilons of Huxley’s Brave New World. It is a condition of existence without predictability or security. Incomes no longer provide additional benefits such as sick pay or leave entitlements and fluctuate erratically. The symptoms include anxiety through insecurity and anomie from despair, which generates alienation and then anger with an intolerance towards strangers. It is an emerging political force and a feature of rampant neoliberalism. San Francisco was once a milieu of radical activists but it is now a polarised and vainglorious clique of careerist zombies with a disproportionate mass of misanthropic precariats. Governments must resolve this escalating inequality and heed the comments from the late eminent logician Bertrand Russell….The road to happiness and prosperity lies in an organised diminution of work.

Indentured servitude and peonage

Contingent labour hire has revolutionised employment arrangements and has been furtively marketed by corporations and recruitment companies as a fashionable, amenable and flexible accord. The reality is somewhat different and the entire concept is underpinned by exploitation and insecurity with vague terms and conditions of employment. It portends a dystopian future of a disenfranchised workforce hunting for the next gig, to make a minimum payment on maxed out Visa or Master cards and buy takeaway pizzas on credit, which are prepared and delivered by subjugated associates.

The socioeconomic repercussions of the gig economy are rather ominous and it is creating a society where the unfortunate many are toiling for a privileged few with a premonition of indentured servitude and peonage. An indentured servant or peon is provided with money and placed under debt. The person receiving the money or an equivalent benefit contracts a legal obligation fortified with criminal penalties to settle the debt by providing labour to the original money master or nominated delegates. The servants invariably borrow more money to meet monthly expenses and become entrapped in a quagmire of cyclical debt. In 1863 Abraham Lincoln delivered his infamous Gettysburg address, which promoted the concept of representative democracy. This was followed by the thirteenth amendment of the American constitution, which abolished slavery and involuntary servitude.

However, following the union and intensification of corporate and state power, especially since the late 1970s, a gig economy has emerged and representative democracy is merely a fallacy. It has degenerated into an elective dictatorship and become government versus the people. In 2015 the State Government of Victoria announced an inquiry into contingent employment arrangements and the labour hire industry. Additional covert investigations by the Australian Broadcasting Corporation and Fairfax Media have exposed widespread exploitation and irregularities throughout many industrial and commercial sectors.

The Forsyth inquiry

There are almost 6000 agencies providing contract labour hire across Australia and it is often a legitimate and convenient mechanism for engaging workers. However, the process has been manipulated by many rogue operators to circumvent legislative requirements and eviscerate labour standards. This involves exploitation of vulnerable employees, especially migrants on temporary visas and includes systemic noncompliance with statutory work health and safety requirements.

Franchising with the use of contingent labour is widespread across Australia. It is particularly evident amongst the agricultural, contract cleaning, horticultural, meat processing and retail sectors and has a significant impact on the Australian economy. Several recent high profile examples include the embezzlement of 7-Eleven, Domino’s Pizza and Retail Food Group employees, subjugation of migrant fruit pickers, exploitation of Aerocare ground support staff and the manipulation of Tip Top bakery delivery drivers.

A Good Call

It was our silver wedding anniversary and like a true Montsalvat chardonnay socialist, I celebrated in style and took my partner to a place that was really expensive and stayed open quite late. It was undoubtedly a Good Call™ and just a short romantic moonlit stroll to a suburban 7-Eleven store.

However, a recent joint media investigation into Australia’s largest convenience store chain has unearthed a rotten culture of exploitation and embezzlement throughout its empire. This includes systemic underpayment of wages and falsification of payroll records. The blame dichotomy was almost immediate with the myopic corporate head office condemning rogue franchisees. Its business franchising model is effectively indentured servitude and peonage, which systemically manipulates vulnerable migrants on student working visas and the deception is widespread across its many outlets throughout Australia.

Experienced conspirators are often engaged as mentors for recently appointed franchisees and reveal fraudulent payroll tactics using creative accounting techniques from its corporate bag of tricks. The organisation is an American-Japanese conglomerate with headquarters in the United States. Its Australian corporate office operates over 600 outlets, which generates $3.6 billion of sales each year with profits of $1.44 million and is complicit in the extortion of its contingent workforce.

A former employee worked under four franchisees at three different outlets throughout the Gold Coast hinterland in Queensland. The work often involved extended shifts without a break. In addition to serving customers, activities included cleaning, stacking shelves and surveillance of petrol pumps. If a customer drove off without paying for fuel, the amount was deducted from his wages. The additional working hours provide franchisees with significant power, hubris and leverage via a threat of deportation for breaching student visa working conditions. In the space of 18 hours, the employee faced two successive armed robberies and was threatened by a drug induced intruder wearing a balaclava and wielding a serrated hunting knife. Following the ordeal, he was berated by the store manager for allowing the intruder to escape with the store proceeds and failing to offer any resistance or restrain the armed assailant. Similar incidents involving extortion of employees and armed robberies have been reported throughout several of its outlets in Victoria.

The founder and chairman, Russell George Withers, shared the bounty with his late sister Beverley Ruth Barlow and the fortune amounts to approximately $1.5 billion. This consists of the Starbucks chain, several hundred Mobil service station stores and almost $450 million worth of property including many 7-Eleven outlets, which are leased to gullible franchisees. The opulence extends to a sprawling Yarra Valley estate worth over $10 million and a $2.2 million Raytheon Hawker 800XP business jet. In May 2015, Beverley Ruth Barlow smashed the record for a residential property sale in Melbourne’s affluent suburb of Brighton with the purchase of a palatial bay side mansion for $20 million. Another extravagant waterfront property is up for sale with a price tag of $3.4 million. It consists of four bedrooms, three bathrooms and a three-car garage at Noosa Waters on Queensland’s Sunshine Coast.

Russell George Withers and Beverley Ruth Barlow did not respond to any questions from investigative journalists. Allan Fels, a former chairman of the Australian Competition and Consumer Commission, described Russell George Withers as a forceful businessman. Its franchising scheme was considered one of the toughest, inequitable and coercive business models ever encountered. Meanwhile, the organisation has restructured its executive leadership team. The founder and chairman, Russell George Withers and its chief executive officer Warren Wilmot recently resigned. A reimbursement plan has refunded almost $30 million to more than 800 employees and many others have applied for compensation that may exceed $100 million. The company also proposed a hardship relief program with an offer of subsidies for struggling franchises and an equitable profit sharing scheme.

The Fair Work Ombudsman conducted an investigation into the systemic wage fraud and found the corporate office antagonised problems by failing to use systems and processes to detect or address intentional exploitation of employees. The entire saga prompted the coalition government through its Department of Employment to provide sufficient resources and reinforce regulatory power using a migrant workers taskforce. Legislation will be enacted to ensure franchisors are held accountable for any exploitation or wage fraud involving vulnerable employees. It will have a profound impact on the $170 billion franchise industry. Despite the many bright lights, ostentatious advertising, opulence and corporate decadence a ruthless heart of darkness prevailed. This was underpinned by corporate impiety and perfidy with a contemptuous disregard for Australian workplace laws.

Making a crust

The shares in Domino Pizza Enterprises Limited have surged more than 2500% since listing on the Australian Stock Exchange almost twelve years ago. In 2016, the organisation recorded a net profit after tax of almost $90 million and is acclaimed as a phenomenal success story throughout the franchising sector. However, a recent Fairfax Media investigation reveals more turpitude and corporate impiety. The nation’s largest pizza chain persistently extorts its franchisees who subsequently exploit a vulnerable migrant workforce, whilst investors reap substantial dividends. It is yet another example of a race to the bottom and callous casino capitalism with its winner take all philosophy.

The investigation revealed widespread underpayment of wages, illegal transactions involving working visas and a delivery driver scam to circumvent penalty rates. Its dictatorial corporate office exerts relentless pressure on franchisees to expand sales whilst stores are bartered on generated turnover not profit. It receives royalties from each sale as Australians chomp through one million of its pizzas every week and rather ironically some are even bought by construction site managers to celebrate a project’s achievement of zero harm.

After visiting many outlets across the country, investigative journalists found franchisees were often distressed and many struggled to make ends meet. Some were haemorrhaging thousands of dollars and the exploitation of its vulnerable migrant workforce was essential to remain afloat. Blind Freddy on a galloping horse can easily envisage this trajectory and predict the repercussions of embezzlement, escalating psychosocial risks, drug and alcohol abuse, domestic violence, increasing divorce rates and suicide.

In 2016, Don Meij the Domino Enterprises Limited chief executive officer, claimed more than $21 million in salary, benefits and shares, which is almost $11000 an hour or 20% of net profit. Its delivery workers received $19 an hour and were recently expected to embrace pay cuts of $2 per hour and relinquish penalty rates for weekends and shift work. Its chairman and major shareholder is the fast food mogul, Jack Cowin with an ascribed wealth of $1.8 billion. He is the founder and director of Competitive Foods Australia and recently declared penalty rates were……a thing of the past. However, whilst evading the taxman, it must have escaped his meticulous attention to detail that Abe Lincoln abolished slavery way back in 1865 and indentured servitude, peonage or blackbirding are illegal in Australia.

Racketeering, fraud and greed

The Retail Food Group based in Queensland’s Gold Coast operates the largest food franchise network in Australia with a market capitalisation of $800 million. The iconic brands include Donut King, Brumby’s, Gloria Jean’s, Pizza Capers, Crust Gourmet Pizzas and Michel’s Patisserie with over 2500 outlets across the country. Its proven business models, which have been perfected over several decades are supplemented by a highly skilled support network to ensure the success of its franchise systems. However, a recent Fairfax Media investigation paints a slightly different picture and provides further substantive evidence of a disturbing trend throughout the retail sector.

After visiting many outlets across Queensland, New South Wales and Victoria reports confirm widespread underpayment of wages and relinquished penalty rates. Franchisees are struggling to survive and rely heavily on the benevolence of families and close friends. Much of the malaise is attributed to a brutal business model and relentless corporate pressure with crippling fees, excessive royalties, rising labour costs, increasing rents and escalating food taxes. Many outlets are for sale and during the past year hundreds of stores have closed and franchisees have walked away with nothing but misery and a mountain of debt. 420422

Its chthonic chief executive officer and managing director, Tony Alford was once described as the richest executive on Queensland’s Gold Coast with a fortune worth $147 million. Following almost two decades with the company he recently stepped down, along with Alicia Atkinson, his partner and business associate and their byzantine commercial interests remain somewhat mysterious. Reports suggest the couple are diversifying assets with the recent purchase of a $6.4 million trophy home in Port Douglas and a $5.5 million opulent manor at Tamborine Mountain in the Gold Coast hinterland. Additional property, consisting of prime beachfront development blocks at Byron Bay, is up for sale and expected to raise almost $40 million. Racketeering, fraud and greed are not leadership attributes and in a climate of casino capitalism, profit and amassed wealth are the only benchmarks of success. It has left a trail of despair amongst many franchisees, which includes decimated savings, broken marriages and destitution. Statements of good corporate governance or zero harm are merely superficial hogwash and resemble the excessive froth on tepid dishwater that is purveyed as flat white coffee at many Starbucks or Retail Food Group outlets.

Grapes of wrath

Temporary migrants under the working holiday visa scheme contribute almost $3.5 billion to the Australian economy each year and its agricultural and horticultural industrial sectors are especially dependent on seasonal workers. However, the exploitation of itinerant workers in Queensland’s Wide Bay region using contingent labour hire is well documented. A young German backpacker died whilst working for Barbera Farms on a tomato plantation near Childers in December 2009. The cause of death was not released but following an extensive investigation and regulatory authority prosecution, the company pleaded guilty to breaching work health and safety legislation. It operated a labour intensive and contingent workforce but failed to supply drinking water for its employees and control the risk of dehydration and heat stress. More recently in November 2017, a Belgian tourist collapsed on a farm near Ayr in North Queensland whilst picking watermelons. The victim was transported to hospital and died the following morning from suspected heat stroke.

In March 2015 the Australian government voted against a broad ranging senate inquiry into exploitation of migrant workers. It was dismissed by our current harridan employment minister as being politically motivated. However, the Forsyth report into contingent labour hire in Victoria details extensive misdemeanours involving itinerant fruit pickers across the Murray basin. This was substantiated by a covert media investigation, which disclosed embezzlement, racism, intimidation, extortion, precarious safety practices, sexual assault and many other anomalies. It revealed widespread systemic abuse of temporary working visa arrangements with the circumvention of legislative requirements and labour standards by many rogue recruitment organisations.

Most itinerants are engaged for seasonal harvesting and are occasionally required to work up to eighteen hours a day. Reports confirm one female employee received just $3.95 an hour, whilst contingent labour hire organisations manipulate the scheme to reap substantial profits and much of the produce ends up at major food retail outlets. The suppliers are subject to rigorous food safety and quality audits and must meet defined specification criteria or the contract is cancelled. However, the Dickensian conditions endured by itinerant labourers are conveniently disregarded by supermarket chains and state governments and the response from regulatory authorities is invariably reactive.

Covino Farms is a principal supplier to many leading supermarkets. Over recent years the organisation received numerous provisional improvement notices relating to work health and safety misdemeanours and a significant fine following breaches of environmental legislation. In 2013 despite its mediocre performance, the company secured a $1.5 million grant from the State Government of Victoria, which was sanctioned by Denis Napthine, another neoliberal premier and acolyte of trickle-down economics.

The entire saga is reminiscent of John Steinbeck’s, The Grapes of Wrath with its descriptive exploitation of migrant sharecroppers fleeing the Oklahoma dustbowl during the great depression in the 1930s. The novel excoriates the financial services sector and depicts the appalling conditions, callous treatment and the frugal existence endured by itinerant Okies during their search for employment in the Kern County fruit orchards of California. It was banned in many countries and received harsh criticism from the Association of Farmers in California because of its socialist nuances. Australian folklore claims the book was restricted by its Queensland government because of an evocative and pornographic paragraph on the last page. However, in 1962 the Nobel Prize in Literature was awarded to John Steinbeck for his realistic and imaginative writings, which displayed a sympathetic humour with a keen sense of social perception. The spectre of Tom Joad must be haunting the boardrooms of many companies across the agricultural and horticultural sectors, especially throughout Queensland, Victoria and South Australia.

Most of the vulnerable itinerant labourers in these industries often experience rule by fear and are victims of harassment, intimidation and blatant racism, which is no better than the oldest profession. This supresses the reporting of safety concerns with an increasing risk of workplace injuries, illness, disease and psychosocial disorders. Moreover, state and federal government departments have failed to resolve this exploitation and hold the unethical and unconscionable contingent labour hire organisations accountable. The problem persists and it demands a coordinated effort from the Fair Work Ombudsman, Department of Immigration and state work health and safety regulatory authorities. It also requires legitimate assistance from the major supermarket chains. Meanwhile, the distortion gap widens as an affluent syndicate of colourful racing identities reap the profits whilst indentured servants, governments and the broader community endure the risk.

Pie in the sky

Aerocare, which is owned by the private equity firm Archer Capital, provides ground handling services and safety checks for many major airlines across Australia. It proclaims to be the most trusted outsourced flight support organisation in Australia and New Zealand. However, this declaration is rather inconsistent with a recent Fair Work Commission ruling, which rejected its latest enterprise bargaining agreement. It failed the better off overall test which evaluates penalty rates, working conditions and shift rosters. The agreement predictably and somewhat conveniently excluded Aerocare’s extensive contingent workforce and the decision was corroborated by a recent ABC television undercover investigation. It disclosed primitive conditions of underpaid casual labourers, catnapping between split shifts on makeshift beds adjacent to baggage carousels underneath airport terminals.

In November 2014 a cargo handling supervisor was inadvertently locked inside the hold of a Boeing 737 shortly before its departure from Brisbane international airport. The incident was handled internally and not reported to the Australian Transport Safety Bureau. In the same month, the cargo door on a Tiger Air A320 aircraft was left wide open as it prepared for departure from Brisbane domestic airport. It was detected by the flight crew and air traffic control, who aborted the take-off. Aerocare proudly claims its safety record is impeccable and the incidents did not endanger the public.

In an industry with a business model that leases its aircraft from Boeing or Airbus and buys fuel on credit, Aerocare recorded a profit of $13.5 million, which was a 20% increase on the previous year. The four key airports across Australia posted profits of $1.8 billion. Qantas a major client of Aerocare produced an outstanding performance during the 2016 financial year. It recorded an extraordinary profit of $1.53 billion, a 57% increase on the previous year, which was unmatched in its prodigious corporate history. The epicene chief executive officer, who frequently uses artificial corporate social responsibility to promote equality, received a staggering $25 million salary and donated $1 million to the same sex marriage campaign. Meanwhile, Aerocare’s contingent labourers eke out an existence on subsistence wages and attempt to catch forty winks on soiled mattresses with grubby bed linen beneath airport terminals across Australia. Many of these indentured servants may not share his enigmatic, sybaritic and egalitarian beliefs.

Breadwinners

During the 1950s bread, cream and milk deliveries were categorised as an essential community service and enacted legislation to secure supply has since ossified and effectively deregulated the supply chain. A recent report prepared by Pricewaterhouse Coopers identified a causal nexus between road safety and driver remuneration. However, the Road Safety Remuneration Tribunal, which established minimum pay rates for drivers, was abolished by the federal government. Meanwhile, media investigations have revealed widespread and systemic exploitation of many owner drivers.

Tip Top is a subsidiary of Associated British Foods group. It operates the Aldi supermarket supply chain in Australia and the challenging market conditions required a reconfiguration of its operations. Its owner drivers are now categorised as independent contractors and the introduction of low cost contracts with escalating overheads has significantly increased work health and safety risks. Following the dissolution of the road safety tribunal contract rates and payments have been ruthlessly slashed. It has an incalculable impact on fatigue management and vehicle roadworthiness and generates penury with escalating psychosocial risks. In abolishing the Road Safety Remuneration Tribunal the neoliberal government is merely protecting the interests of major corporations at the expense of beleaguered owner drivers and their impoverished families.

A recent survey from Macquarie University into the logistics and supply chain sector indicates 80% of truck drivers work more than 50 hours per week and 10% work over 80 hours. The pressure on owner drivers to falsify vehicle log books is well established but rarely disclosed because of fear and intimidation. SafeWork Australia confirms many employers acknowledge that unsafe acts and risk taking results in high levels of injuries and fatalities throughout the supply chain sector. It also suggests the design of work requires extensive analysis to understand why such practices persist and establish how they can be eliminated or reduced. Escalating overheads will inevitably curtail essential maintenance on delivery vehicles and compromise their roadworthiness. This was corroborated following a recent raid at a Tip Top logistics depot in western Sydney during early December 2017. Regulatory authority inspectors from the Roads and Maritime Services examined 46 trucks and issued 25 defect notices.

The Australian Securities and Investments Commission, indicates supply chain operators have an inordinate insolvency rate and the smaller businesses with five full time employees or less are most likely to go bankrupt. The psychosocial impact is rather predictable and is substantiated in a recent Deakin University study, which revealed 323 truck drivers committed suicide between 2001 and 2010.

The Tip Top delivery drivers are working extreme hours with insufficient rest and their rates have been slashed by up to $1000 per week. Meanwhile the parent company, Associated British Foods, is expected to announce a profit of over $2 billion, which is an increase of 25% from the previous year. Even our vixen employment minister could do the math and establish who the real breadwinners are in this casino capitalism arrangement.

Responsibilities, supervision and consultation

Responsibilities with contingent labour hire are often fragmented and confusion abounds as to whether arrangements are a contract of service or a contract for service. This generates legal and organisational uncertainty. The networks are quite intricate and courts adopt a multi factorial approach to confirm precise contractual relationships, which evaluates the degree of control, level of integration and the totality of interdependence.

Labour hiring agencies experience extreme difficulty in the supervision of its employees, especially across multiple sites, with host organisations more than willing to relay or transfer the associated risks. It becomes increasingly complex to synchronise activities, manage risks and coordinate decisions. Agency employees are often unfamiliar with the host site and its workforce, which significantly increases work health and safety risks.

Consultation mechanisms are also compromised through deliberate or inadvertent exclusion of agency employees from the host health and safety committee meetings. It creates a fertile environment for reactive accident theory. Moreover, many of its Dickensian symptoms, which include blame, fear and retribution, evolve and flourish accordingly.

The uncertainty and legal complexities generated by the gig economy and its malevolent precariat creates negative behaviour patterns with increasing injury rates, escalating psychosocial risks and chronic health problems. This may be a significant contributory factor in the resurgence of coal workers’ pneumoconiosis throughout Appalachia in the United States and across the Bowen basin in Queensland, Australia.

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