The approaching Modern Slavery Act in Australia – what can we expect?

  • Published: 28 February 2018
  • Author: Mabel Wong

Since the UK passed the Modern Slavery Act in 2015, France has also followed suit with their ‘Duty of Vigilance’ law 2017. There has even been discussions for a similar Act in Hong Kong. More recently, the Australian Parliament joined this movement with the launch of an inquiry into establishing a Modern Slavery Act in Australia. Findings from this inquiry were published in the report titled ‘Hidden in Plain Sight’, December 2017.

The Committee undertaking the inquiry recommends that the Australian Government prescribe the following specific areas for reporting under the proposed Modern Slavery Act, taking into account the outcomes of the Australian Government’s consultation process, best practice in international jurisdictions and the suggested areas outlined in section 54(5) of the UK Modern Slavery Act 2015, being:

  • The organisation’s structure, its business and its supply chains;
  • Its policies in relation to modern slavery;
  • Its due diligence and remediation processes in relation to modern slavery in its business and supply chains;
  • The parts of its business and supply chains where there is a risk of modern slavery taking place, and the steps it has taken to assess and manage that risk;
  • Its effectiveness in ensuring that modern slavery is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate;
  • The training about modern slavery available to its management and staff; and
  • Any other actions taken.

In addition, the Committee recommends modern slavery to be defined in the proposed Modern Slavery Act as a non-legal umbrella term, to include but not be limited to:

  • Modern slavery crimes outlined in Division 270 and 271 of the Criminal Code Act 1995 including slavery, servitude, forced labour, trafficking in persons, forced marriage, child trafficking, debt bondage and other slavery-like practices;
  • Child labour and the worst forms of child labour, consistent with UNICEF’s definition of child labour and the International Labour Organisation’s ‘Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, 1999 (No. 182)’;
  • Child exploitation including in residential institutions and through orphanage trafficking; and
  • Other slavery-like practices.

Following the Inquiry Committee’s positive recommendations for a Modern Slavery Act in Australia, some are reporting that a Modern Slavery Act might be introduced in Australia sooner than expected, and several businesses operating in Australia want to know what to expect and how to prepare accordingly. To address some of these “frequently asked questions”, I had the opportunity to speak with Carolyn and Fuzz Kitto, Directors of STOP THE TRAFFIK Australia – one of Australia’s foremost advocates in the fight against modern slavery.

When can we expect this legislation to pass and which key recommendations are we expecting to be passed into law? Minister Hawke (Home Affairs) has promised legislation in front of parliament before June this year and legislation before the end of the year. It is hard to know for sure what the government will want to include, but civil society groups are asking for the following:

  1. Transparency in supply chain legislation and regulation for all entities over a certain threshold.
  2. Penalties for non-compliance and for mis-reporting.
  3. An Independent Anti-Slavery Commissioner to oversee the Act and associated regulation.
  4. A Compensation Scheme for victims in Australia.

Who is required to comply? Again, it is hard to guess what will eventuate, but The Minister has said all legal entities over a certain threshold will need to comply. That means companies, businesses, governments, partnerships, universities, organisations incorporating religious groups, not for profits and associations can fall within this requirement. For ‘groups of entities’, the threshold for reporting would be their aggregate revenue. In terms of what the threshold may be:

  1. We understand the Coalition Cabinet initially supported AUD$100 million. This would see around 3,000 businesses reporting. Whether this changes in the light of the Inquiry report and civil society pressure remains to be seen.
  2. The Labor Party is supporting the Inquiry Committee’s recommendation of AUD$50 million. This is approximately the same as the UK reporting threshold.
  3. The Greens and civil society are backing a threshold of AUD$25 million, which is the definition of a large company in the Australian Corporations Act.

Several of the larger Australian companies already produce UK Modern Slavery Act statements, will they need to do more? The UK Act is defined as a “light-touch” Act. Frameworks for reporting are weak and only a guide. Australia has learnt from this and its Act will most likely have a far more robust reporting mechanism. So, depending on your company structure what is reported on for Australia will suffice for the UK. The UK wants to know what the UK base of the company is doing in the UK and the Australian in Australia, so depending on how internationally integrated these processes are in your business, you may be able to use the same report.

Are there penalties for non-compliance? This is currently a matter for discussion. Civil society groups, the opposition Labor party and the Greens are all supporting penalties. The Inquiry report also supports penalties. The current government’s (under the Coalition) position is unclear. However, whether or not there are financial penalties, the greater risk to business is likely to be the reputational risk where organisations may be named in Parliament as non-compliant or called out by civil society and consumer groups.

Who needs to be involved? Is it Procurement, Senior Management, the Board, Legal Counsel, Sustainability, Human Resources? It is proposed that the Modern Slavery Act Statement for Australia will require sign-off by a Director, making this a Board responsibility. However, given the different cross-functions that will require oversight, it is best to involve the different internal stakeholders in your business in the preparation for this Act and to work with them on their understanding of Modern Slavery. This is a huge risk to business and how business addresses it is a product of the culture of the business and the value it places on the people in its business and its supply chain.

STOP THE TRAFFIK’s experience in working with businesses is that there is usually a process that businesses go through.

  • Denial – the response is often “Maybe it is in other industries but not in our industry!”
  • Recognition – “Well, it may be in our industry but not in our business.”
  • Acknowledgement – “Maybe it will be in our business but we don’t know and we need to look.”
  • Concession – “We are pretty sure it is in our business BUT we can deal with it, just leave us alone.”
  • Complexity – “Wow, this is more difficult than we thought, maybe we need help.”
  • Collaboration – “To address this we need to collaborate and learn with others in our business sector and we need to understand and partner with people who have worked with businesses in addressing this before.”

At the conclusion of our interview, Carolyn Kitto remarked “… the reality is this crime is so pervasive, it is highly likely to be somewhere in everyone’s supply chains. We don’t see it because we don’t look or we don’t want to see it. Audits alone will not address this crime. Our advice would be to work with a cross sector of subject matter experts, including relevant NGOs, consultants and industry peers who have knowledge on the process through which human trafficking occurs. They can help you better understand your risks in your supply chains beyond tier one, and recognise the necessary business culture changes needed to effectively align with the approaching Modern Slavery Act. A multi-stakeholder transparent collaboration approach is needed if we are to move the needle on modern slavery.”

As well as conversations focused on understanding what is needed to prepare for the approaching Act, follow-on discussions have also arisen from growing legislation globally and the spotlight on modern slavery and supply chains, such as:

  • Do we need more legislation? Is this all about compliance? Will this become another check-box exercise?
  • For most legislation, only business need to report. What about the supply chain practices of multilateral agencies, government and large not-for profits?
  • If the most at-risk places where modern slavery is largely occurring are in the supply chains of smaller unknown brands – would a Modern Slavery Act that mostly covers larger organisations be all that effective in helping address modern slavery?
  • Is it effective? Has legislation reduced incidences of modern slavery? How do we know? What is the impact?
  • Do the majority of consumers really care? What is the role of technology, blockchain, and other innovative solutions to illuminate modern slavery in supply chains?

We invite you to be a part of this dialogue at an open debate with industry peers, business, government and civil society to discuss these questions at our first ELEVATE Leadership Series in Sydney on 22nd March in partnership with STOP THE TRAFFIK. Learn more about the event and register here.

This article is a follow-up from last week’s piece on the migrant labour situation in Australia. Together, these articles explore some of the issues and solutions for business that will be discussed at The ELEVATE Leadership Series 2018, in partnership with STOP THE TRAFFIK Australia, to be held 22 March in Sydney, Australia. Registration is still open, limited spaces available.

A huge thanks to Carolyn Kitto and Fuzz Kitto of STOP THE TRAFFIK, Australia for kindly contributing to this article.

About STOP THE TRAFFIK (STT) and their long-standing support for the approaching Australia Modern Slavery Act (MSA) – In 2011 STT submitted a request to the Federal Government for Australia to have a Modern Slavery Act and continued to campaign to successive governments and Attorney’s General. When the Inquiry was announced, STT ran webinars for NGOs and companies, looking at what the UK included (and did not include) in their MSA. A second webinar was held looking at the legal implications and opportunities with the Law Department of University of Technology of Sydney on a Human Rights framework for a MSA. STT presented a submission to the Australian Government MSA Inquiry that was co-signed by 20 other organisations and companies. STT then presented a submission to the Australian Government Attorney General’s Consultation into a MSA and joined with 23 other NGO’s in the face to face consultation with them. A website was produced for people to find and communicate with their local MPs and Senators regarding a robust MSA A campaign was also launched jointly with Freedom United and over 40,000 signatures asking for a robust Modern Slavery Act was presented to Minister Alex Hawke. (Minister who covers the MSA progress for the Australian Government). During the process STT frequently visited politicians, Ministers of the Government, businesses and companies as well as NGOs in an attempt to both listen to opinions and insights, and stimulate thinking towards a robust Modern Slavery Act.