Insurers and many inside the tow truck sector are calling for widespread reforms.
THE tow truck industry in Western Australia generates $43 million in annual revenue, employs more than 300 people, faces little or no regulation and is rotten to the core.
According to a report commissioned by the McGowan government and received in February, the industry is marred by “unsafe, unscrupulous, threatening, deceptive and unethical conduct”.
Links to organised crime are growing and competition for work is so fierce that some tow truck operators firebomb rival vehicles in tit-for-tat running battles.
“It’s difficult for ethical operators to compete,” the government report found.
“For example, the practice of towing operators securing jobs by making corrupt payments to public officers in exchange for accident information.”
The report, prepared by Consumer Protection, is the catalyst for long-awaited change, with Transport Minister Rita Saffioti promising strong legislation to bring the industry under control by licensing the drivers, capping fees and charges, and introducing criminal background checks on the business operators.
In 2019, when I highlighted corruption issues in the industry in other media, a senior officer from WA Police called me to warn there was a “credible threat” to my safety.
A telephone intercept picked up a tow truck company boss telling an underling to find my home address at the Electoral Commission office because he wanted to “pay the **** a visit”.
For the next three days, police patrolled my street, a private security guard sat off the property and I was advised to leave town with my family until detectives had dealt with the threat.
Since then, government promises to introduce tough new measures to weed out the cowboys and crooks have barely progressed.
Motorists and the insurance industry are at the mercy of a price-gouging racket, where towing a vehicle only 12 kilometres can result in an invoice of almost $5,000.
Compare that figure to the regulated maximum $360 a tow truck operator in NSW can charge for moving a vehicle up to 50km. In WA, the charges are simply plucked out of thin air and can include a so-called ‘hook fee’ of up to $2,500.
As the name implies, that is just the fee for hooking a car to the tow truck.
“It is conservatively estimated that these excessive fees may be costing insurers $4.45 million [annually] in accident towing fees above what would be considered reasonable in other jurisdictions,” the report said.
But if the insurance companies make a stand in WA (and refuse to pay exorbitant rates), retrieving a customer’s car from an operator’s holding yard would be impossible without police involvement.
Outlaw motorcycle gangs control several towing firms. Crash victims are often in a dazed and vulnerable state when tow truck drivers turn up and ask for a signature to secure the tow.
If it’s a dark and busy road, the motorist is unlikely to read the fine print or confirm the cost of moving their car.
“The Insurance Council of Australia is concerned about the potential impact of excessive towing fees on motor insurance premiums for WA motor vehicle insurance policyholders,” the ICA said in a statement to Business News.
“These are issues that the ICA has long called for reform on.”
The Royal Automobile Club of WA deals with about 55,000 vehicle crash claims a year, which works out to be 150 every day.
Members are encouraged to contact the insurer to arrange a tow, but all too often feel pressured into signing an authority to tow form with whichever operator turns up first and hassles them.
Subsequent invoices sent to the RAC regularly demand around $1,500 for towing as little as 3km.
Storage fees are routinely three times higher than what is considered acceptable in other mainland states.
The RAC told Business News the need for regulation was urgent and the government’s report provided more than enough reasons why.
Case studies showed the thousands of dollars individual motorists or insurers were forced to pay to secure the release of a towed vehicle from holding yards. Call it extortion.
Global industry research group IbisWorld has previously reported a view that WA had more than 250 tow truck businesses because the lack of regulations allowed them to charge what they want and make sizeable profits.
Perth even got a mention in a 2021 policy paper prepared by the Global Initiative Against Transnational Organised Crime and titled ‘Tow Truck Wars’.
The document laments how easy it is for criminal enterprise to co-exist with a legal activity.
“It is only when such criminal infiltration degenerates into a violent competition among criminal groups that a law enforcement or publicpolicy response is triggered,” the paper said.
Industry stakeholders were surveyed as part of the Consumer Protection report to government, with 88 per cent of respondents calling for government intervention.
The scrupulous players in the towing game want fees capped and the criminal element gone.
“I am ashamed to be branded with the same brush as these people, who call themselves tow truck operators and businessmen,” a 30-year industry veteran told the survey team.
In just one night of June 2021, five vehicles were firebombed and two men bashed in attacks police said were directly linked to a turf war in the sector.
“There are law abiding tow truck drivers doing the right thing, trying to earn a living,” detective sergeant Chris Turner said.
“They are being assaulted and threatened by other unscrupulous tow truck drivers.”
Ms Saffioti is fully aware of the lawlessness but can’t promise a quick fix because drafting legislation is likely to take the rest of this year.
“Western Australia and Tasmania are the two states with the least regulation of the towing industry,” she said.
“Regulation in WA is long overdue and is essential to ensure that consumers are properly protected whilst improving safety and confidence in the industry.”
Relying on a Productivity Commission report about the benefits of regulation in 2008, the review of the tow truck industry concluded licensing and accreditation was the best way forward.
In essence, WA needs to model its reform on a combination of Victorian and NSW legislation, with Victoria’s being the tougher.
Even the tow truck depots in Victoria must meet certain standards to justify accreditation.
There is also a roster system to control the number of trucks touting for crash business each day.
In 2014, ahead of changes to the industry in NSW, it was decided that “undesirable persons” needed to be kept out of the industry.
Easier said than done in WA, given the failure to act fast when confronted with damning evidence about criminal infiltration.
Three years ago, a WA Police operations centre employee pleaded guilty to receiving $16,000 in corrupt payments and quantities of drugs in return for tipping off a tow truck operator about crash locations and accessing confidential information from her police computer.
Every time the woman ran a name check on behalf of criminal associates, she would get a small quantity of methamphetamine.
A year before that case surfaced, one of the state’s largest operators, AAAC Towing, was sounding the alarm in a written submission to a parliamentary inquiry.
“Reputable towing operators are leaving the industry due to frustration following many years of unsuccessful discussions with various government departments whose jurisdiction does not really encompass the issues we seek to have remedied,” AAAC wrote.
All eyes are now on the Department of Transport to deliver the reforms needed to stop the rot.