who can set the record straight on this degrading practice and what we can do about it.
It would appear that the practice is not uncommon, however I would hesitate before throwing stones at pilots who work under such arrangements. Not everybody has the luxury of being able to pick and choose between opportunities, nor are many employees (or contractors) able to dictate their own terms and conditions. Especially in the current economic circumstances.
As to what can we do about it.........well it is clearly the operators who are at fault here, but you can forget trying to get CASA to do anything. My understanding is that their enforcement powers are strictly limited to the CAR's.
Regarding the ATO, well I know of someone in a similar situation who spoke with the ATO, and they treatened to prosecute the taxpayer/employee/contractor, not the operator/employer. Obviously the ATO also prefer soft targets.
If you are aware of someone in these circumstances, perhaps the best help you can provide is to alert them to other (better) opportunities.