Australia’s freight and logistics sector is one of the most dynamic and essential industries in the country.
It connects businesses, communities, and consumers, moving everything from groceries to medical supplies, construction materials to online orders.
But beneath this vital service lies a growing threat to its integrity and sustainability: sham contracting.
Sham contracting is a practice where workers are misclassified as independent contractors—often under an ABN—despite working under conditions that legally define them as employees.
This misclassification allows companies to avoid paying superannuation, leave entitlements, workers’ compensation, and taxes.
It’s a loophole that not only exploits workers but also undermines ethical operators who are doing the right thing.
The issue of sham contracting is complex and deeply embedded in the road transport sector, which is the fourth largest contributor to Australia’s black economy.
It is difficult to establish exact cases due to their unreportable nature and the exploitation of various visa schemes and categories.
These practices are decimating the transport industry by undercutting industry-standard labour rates, creating an anti-competitive environment that prevents fair competition.
To effectively combat sham contracting, we need a coordinated, multi-agency approach.
The Victorian Transport Association calls for the Department of Home Affairs, the Australian Taxation Office (ATO), and the Fair Work Commission (FWC) to work together and develop a unified strategy to identify, investigate, and prosecute these practices.
Enforcement alone cannot solve this issue—collaboration and coordination are essential.
Senator Glenn Sterle, a former truck driver and long-time champion of the transport industry, has repeatedly called out the ATO for its failure to act decisively on sham contracting.
He has urged the formation of a dedicated taskforce to investigate and prosecute sham contracting in road transport—a proposal the VTA strongly supports.
Senator Sterle’s advocacy is backed by industry bodies across the country; all of whom have seen firsthand how sham contracting distorts competition and damages the reputation of our industry.
Clients from large entities are increasingly demanding lower freight rates and encouraging transport companies to restructure their employment practices to engage drivers on ABNs.
This is not innovation, it’s exploitation.
The consequences of inaction are severe. Ethical operators are being squeezed out of contracts by competitors who exploit workers and dodge tax obligations.
Drivers are left without protections, often unaware of the risks they face. And the broader community suffers as the industry’s reputation is tarnished by stories of exploitation and unsafe practices.
The VTA believes that now is the time to escalate efforts to rid the freight industry of sham contracting, a practice that continues to undermine the integrity of the sector.
We urge the federal government to take decisive and coordinated action by establishing a national taskforce specifically focused on investigating sham contracting in transport.
This taskforce must be equipped with the authority to audit, enforce, and prosecute offenders across the industry.
In addition, it is critical to strengthen the legal definitions that distinguish employment from contractor relationships, closing loopholes that allow misclassification to persist.
A unified and collaborative approach is essential, involving key agencies such as the ATO, the FWC, and the Department of Home Affairs, to ensure consistent enforcement and oversight.
Education also plays a vital role—operators and workers must be informed about their rights, responsibilities, and the risks associated with sham contracting.
Finally, ethical businesses that uphold fair labour standards should be recognised and supported through targeted procurement policies, incentive programs, and public recognition initiatives that reward compliance and investment in people.
Transport is a labor-intensive industry. It’s not automated or remote—it’s boots on the ground, hands on the wheel, and people making things happen.
We must protect those people. We must protect the businesses that treat them fairly. And we must protect the future of freight in Australia.
The VTA stands united with all industry associations that support future investigations and efforts to close down sham contracting and the effects of the shadow economy in our industry.
Peter Anderson,
National Secretary, ARTIO
