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Does Australian Modern Slavery legislation go far enough?

by Richard Welford  This email address is being protected from spambots. You need JavaScript enabled to view it. | 4 July 2018

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Last week, the Australian Government introduced a new Bill to Parliament, tackling modern slavery in supply chains supplying goods to Australian consumers. The Modern Slavery Act is likely to be passed into law in Australia within the year.

The new law will require companies to report on modern slavery. It will apply to all Australian companies, and foreign companies operating in Australia, with an annual consolidated turnover exceeding AUD100 million. That amounts to around 3000 entities. Reporting entities must publish a statement each year, detailing their actions to address modern slavery. The statements will be held on a public, centralized, government-run register where they can be accessed by the public. There is a desire to increase information available to consumers and investors by providing a practical, risk-based framework for transparency.

Some have criticized the fact that the Bill does not include financial penalties for companies that fail to report. But the intent behind the law is that scrutiny by stakeholders will be enough to “encourage” companies to report. The government argues that businesses abiding by proposed new laws to stamp out modern slavery in Australian supply chains will have a commercial edge over others.

Even some investors have doubted that this will be enough to get full transparency along supply chains with real risk assessments being undertaken. The new law does go further than its UK counterpart and includes mandatory reporting against specified criteria. The UK version simply suggests information that companies could report on.

But some stakeholders have expressed concerns about whether the law is going to drive transparency. Some investor groups have said that, without an accompanying list of reporting entities, its value is limited. Under the Australian proposals, there won’t actually be a public list of who must report. Without this information, if companies fail to report, this will remain hidden.

Others have argued that the law should include a requirement that companies subject to the legislation must comply to be eligible for participation in public tenders.

Advocacy groups have generally come out in support of the legislation but want to ensure it encompasses all types of modern slavery. They've also called for penalties for companies who fail to report or provide misleading information. Oxfam has suggested an independent commissioner to co-ordinate government action, educate companies and advocate on the issue.

The government has promised support and assistance for reporting entities through a dedicated Business Engagement Unit in the Department of Home Affairs. The Unit will also promote best-practice, administer the central repository and undertake awareness-raising and training. It will also draft guidance for business about the reporting requirements in consultation with business and civil society.

Key elements of the Modern Slavery Bill include:

  • It covers all Australian companies and foreign entities carrying on a business in Australia.
  • A reporting threshold of AUD100 million annual consolidated revenue.
  • Reporting entities to publish Modern Slavery Statements within six months from the end of their financial year.
  • Reporting on all modern slavery practices criminalized under Commonwealth law, including slavery, trafficking in persons, servitude, forced labour, forced marriage and the worst forms of child labour.  
  • A Government-run, public central repository of Modern Slavery Statements.
  • Mandatory reporting criteria on: corporate structure, operations and supply chains; potential modern slavery risks; actions taken to assess and address risks; and how they assess the effectiveness of their actions.