On 16 July, the Commonwealth Attorney-General’s Department announced proposed reforms to strengthen Australia’s modern slavery laws.
Currently, the Modern Slavery Act 2018 (Cth) requires entities with annual turnover of AUD100 million or more to report annually on how they are addressing modern slavery risks in their operations and supply chains. These reports are published on the Australian Modern Slavery Statements Register.
There are currently no financial penalties for failing to report. The reporting regime instead encourages transparency and better practices for identifying, managing and addressing modern slavery risks.
Under the proposed changes:
- An entity with annual turnover of AUD100 million or more will commit a criminal offence if it fails to prevent modern slavery in its supply chains. However, a defence will apply if the entity can demonstrate that it took ‘reasonable steps’ to prevent modern slavery.
- Civil penalties and related enforcement powers will apply if an entity fails to comply with its modern slavery reporting obligations.
New guidance and education initiatives will help entities improve their ability to identify, manage and remediate modern slavery risks.
The Government is working with stakeholders to inform the design of the proposed legislative changes. No guidance has been issued on when an entity will be considered to have taken ‘reasonable steps’ to prevent modern slavery. This will be a key issue to look out for when the bill is introduced.
The first three-year review of the Modern Slavery Act 2018 (Cth), published in 2023, recommended, among other things:
- imposing penalties for non-compliance
- reducing the reporting entity threshold to AUD 50 million annual turnover
- mandating due diligence obligations.
It remains to be seen whether the Government will introduce other changes recommended in the 2023 review, and the degree to which it seeks to harmonise Australia’s laws with other countries.
While the legislative detail is developed, boards should review how they identify, assess and manage modern slavery risks across their operations and supply chains.
The proposed reforms come amid heightened international scrutiny of modern slavery practices, including the recent imposition of a 12.5% tariff by the US on many Australian exports (and the earlier allegations made by the United States Trade Representative that Australia (and the other 59 investigated nations) are not doing enough to prevent forced labour). Organisations that strengthen their governance and due diligence frameworks now will be better placed if the proposed reforms proceed.