Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016-2017-2018
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
MODERN SLAVERY BILL 2018
EXPLANATORY MEMORANDUM
(Circulated by authority of the Assistant Minister for Home Affairs, the Honourable
Alexander Hawke, MP)
MODERN SLAVERY BILL 2018
OUTLINE
1. The Modern Slavery Bill 2018 ('the Bill') will establish a Modern Slavery Reporting
Requirement. This will require certain large businesses and other entities in Australia
to make annual public reports (Modern Slavery Statements) on their actions to address
modern slavery risks in their operations and supply chains.
2. The Modern Slavery Reporting Requirement supports the Bill's primary objective to
assist the business community in Australia to take proactive and effective actions to
address modern slavery. This will help mitigate the risk of modern slavery practices
occurring in the supply chains of goods and services in the Australian market.
Modern slavery risks in Australia
3. Modern slavery practices are major violations of human rights and serious crimes.
Modern slavery practices include trafficking in persons, slavery, slavery-like practices
(including forced labour and forced marriage) and the worst forms of child labour
(including using children for prostitution or in hazardous work).
4. Modern slavery can affect any country and the United Nations estimates there are
more than 40 million victims of modern slavery worldwide.1 Over half of these victims
are exploited in the Asia-Pacific region, in which the supply chains of a significant
number of large businesses operating in Australia are based. Modern slavery can occur
in any sector or industry, and at any point in a supply chain. Internationally, high-risk
industries include agriculture, construction, electronics, extractives, fashion and
hospitality.
5. There is a high risk Australian businesses are exposed to modern slavery risks and that
Australian goods and services are tainted by modern slavery. This risk may be
heightened for large companies and other entities with extensive, complex and/or
global supply chains.
Support for the Australian business community to address modern slavery
6. There is currently no formal mechanism in Australia that directly targets
modern slavery in business operations and supply chains, or supports the business
community to take action to address modern slavery.
7. The Bill will support large businesses to identify and address modern slavery risks and
to develop and maintain responsible and transparent supply chains. It will drive a
'race to the top' as reporting entities compete for market funding and investor and
consumer support. The Bill also aims to increase awareness of modern slavery risks
among the Australian business community, and assist investors and consumers to
make more informed decisions when using, buying and selling goods and services.
1
Global estimates of modern slavery: Forced labour and forced marriage, International Labour Office, Walk
Free Foundation and International Organization for Migration, Geneva, 2017.
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Modern Slavery Reporting Requirement
8. The Bill will establish a Modern Slavery Reporting Requirement, requiring
reporting entities to provide annual Modern Slavery Statements to the responsible
Minister to be published online on a central register.
9. Australian entities and foreign entities carrying on business in Australia are required to
submit Modern Slavery Statements for every twelve month period that they have
annual revenue of at least 100 million Australian dollars. The Australian Government
must also publish an annual Modern Slavery Statement. Entities that are not required
to report can volunteer to provide annual public Modern Slavery Statements.
10. A Modern Slavery Statement must cover mandatory criteria by describing:
the entity's structure, operations and supply chains;
the potential modern slavery risks in the entity's operations and supply chains;
actions the entity has taken to assess and address those risks, including
due diligence and remediation processes; and
how the entity assesses the effectiveness of those actions.
11. Modern Slavery Statements must also identify the reporting entity, describe
consultation with other entities and details of approvals, and can include other relevant
information. A Modern Slavery Statement must be signed by a responsible member for
the entity, approved by the principal governing body of the entity and provided to the
Minister within six months from the end of the entity's financial year.
12. The Bill provides for a review of the legislation three years after commencement to
ensure the Modern Slavery Reporting Requirement remains effective and responsive to
the Australian context.
Financial impact statement
13. The measures in this Bill have no financial impact on Government revenue.
Statement of compatibility with human rights
14. The statement of compatibility with human rights appears at the end of this
explanatory memorandum.
Regulation impact statement
15. The regulation impact statement appears at the end of this explanatory memorandum,
after the statement of compatibility with human rights.
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MODERN SLAVERY BILL 2018
NOTES ON CLAUSES
Part 1: Preliminary
Section 1: Short Title
16. Section 1 is a formal provision specifying that the Bill, when enacted, is to be cited as
the Modern Slavery Act 2018 ('the Act').
Section 2: Commencement
17. Section 2 provides for the different commencement dates for different parts of the Bill.
18. Item 1 of the table provides that sections 1 and 2 of the Bill commence on the day the
Bill receives Royal Assent. This gives effect to the Bill's title and commencement.
19. Item 2 of the table provides that the remaining sections of the Bill (sections 3 to 10
and Parts 2 to 4) commence on a day to be fixed by Proclamation.
20. A fixed date by Proclamation, or the day after six months from Royal Assent, is
appropriate for commencement of the Bill. Fixing the date of commencement by
Proclamation will enable the Australian Government to align the Modern Slavery
Reporting Requirement to commence at the beginning of either the Australian
calendar year or the Australian financial year. This will also allow entities time
between passage and commencement of the Act to identify whether they are a
reporting entity and become familiar with their obligations to comply with the Modern
Slavery Reporting Requirement. For the definition of reporting entity, refer to
section 5.
21. The Proclamation period is limited to a period of six months. If Proclamation does not
occur within six months after the Bill receives Royal Assent, the Bill will
automatically commence the day after six months from Royal Assent. The six month
period is a finite period and is intended to ensure that commencement is not delayed
beyond what is reasonably necessary to establish arrangements to support the
operation of the Modern Slavery Reporting Requirement.
Section 3: Simplified outline of this Act
22. Section 3 provides a simple outline of the Bill to assist readers to understand the
substantive provisions in general. The simplified outline is not intended to be
comprehensive and readers should rely on the substantive provisions.
Section 4: Definitions
23. The purpose of section 4 is to define key terms used in the Bill. Terms in section 4 are
explained below. Some key terms are explained in other sections of the Bill. Refer to
the definitions of: 'reporting entity' and 'carries on business in Australia' in section 5;
'modern slavery statement' in section 12; and 'higher entity' in section 14.
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Accounting standards
24. 'Accounting standards' is defined as having the same meaning as in the
Corporations Act 2001 (Cth) (Corporations Act) and refers to the accounting standards
made by the Australian Accounting Standards Board. For the purposes of the Bill, the
Australian Accounting Standards apply to all entities. This means the Australian
Accounting Standards apply to an entity, even if those standards do not otherwise
apply to that entity.
25. For the purposes of the Modern Slavery Reporting Requirement, the
'accounting standards' are to be used to determine whether a reporting entity controls
another entity and to determine a reporting entity's consolidated revenue. For further
explanation, refer to the definitions of 'control' and 'consolidated revenue' below.
Australia
26. 'Australia' is defined to include all external Territories of Australia.
Australian entity
27. 'Australian entity' is defined broadly to include a wide range of Australian-based
entities, including commonly used business structures such as companies, partnerships
and trusts. The definition includes, but is not limited to, entities that are
Australian residents for tax purposes. The purpose of defining 'Australian entity'
broadly is to comprehensively address the risks of modern slavery in the supply chains
of goods and services in the Australian market. It will also ensure the Bill creates a
level playing field by covering as many entity types as practicable.
28. For an entity to be an 'Australian entity' for the purposes of the Modern Slavery
Reporting Requirement, the entity needs only to fit the definition of 'Australian entity'
under either item (a), (b), (c), or (d). The entity is not required to meet more than one
of these definitions.
29. Items (a), (b) and (c) make it clear that an 'Australian entity' includes a company,
trust, or corporate limited partnership, that is an Australian resident for tax purposes.
In most cases, these entity types will be able to readily identify themselves as an
'Australian entity' using these definitions.
30. Item (d) defines an entity or partnership as an 'Australian entity' where it is formed,
incorporated, or centrally managed or controlled in Australia. The entity or partnership
may be incorporated or unincorporated. For example, an unincorporated partnership
will be an Australian entity if it is formed in Australia (including any of the
external Territories).
31. Item (d) is intended to ensure that entities that are not specifically covered by items
(a), (b) and (c) are able to identify whether they are an 'Australian entity'. This
definition applies regardless of whether the entity is an Australian resident for tax
purposes. This means entities covered under items (a), (b) and (c) may also rely on this
test to identify as an 'Australian entity', including where they may be exempt from
income tax.
32. Determining whether an entity fits the definition of 'Australian entity' is an important
consideration in establishing whether the entity is a 'reporting entity' and therefore
must comply with the Modern Slavery Reporting Requirement. For further
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explanation, refer to the definition of 'reporting entity' in section 5 and the extension
of the Bill to external Territories in Section 9.
Carries on business in Australia
33. 'carries on business in Australia' is defined in section 5.
Consolidated revenue
34. 'consolidated revenue' means the total revenue of the reporting entity plus the
revenue of any other entities it controls, when these entities are considered as a group
in accordance with the Australian Accounting Standards. In effect, this means the
downstream revenue of the entity, including revenue earned in Australia and overseas.
Requiring 'consolidated revenue' to be assessed on a group basis ensures that revenue
from intercompany transactions within the group is excluded. 'Consolidated revenue'
is to be calculated based on the reporting entity's own financial year (or equivalent
reporting period).
35. The definition of 'consolidated revenue' makes it clear that revenue is to be
determined in accordance with the Australian Accounting Standards. For the purposes
of the Bill, the Australian Accounting Standards apply to all entities. This means an
entity must apply the Australian Accounting Standards to determine its
'consolidated revenue', even if those standards do not otherwise apply to that entity.
36. Using existing definitions in the Australian Accounting Standards means that entities
are able to more easily determine their 'consolidated revenue'. For example, an
existing definition of revenue in AASB 118: Revenue states:
Revenue is the gross inflow of economic benefits during the period arising in the
course of the ordinary activities of an entity when those inflows result in
increases in equity, other than increases relating to contributions from equity
participants.
37. Determining an entity's 'consolidated revenue' is one consideration in establishing
whether the entity meets the revenue test for a 'reporting entity' and therefore must
comply with the Modern Slavery Reporting Requirement. The Bill only requires an
entity to determine if it has annual consolidated revenue of at least 100 million
Australian dollars and does not necessarily require an entity to calculate its exact
annual consolidated revenue.
38. For example, Trust A needs to determine its consolidated revenue to identify if it is a
'reporting entity'. Trust A is a member of a larger consolidated group. Trust A must
apply the Australian Accounting Standards to determine its consolidated revenue, even
though Trust A would not normally have to prepare consolidated financial statements
in accordance with those standards.
39. For further explanation about the revenue test, refer to the meaning of
'reporting entity' in section 5. Refer also to the definition of 'accounting standards'
above and the definitions of 'control' 'and 'reporting period' below.
Control
40. 'control' of an entity is defined by reference to the definition of control in the
Australian Accounting Standards. For the purposes of the Bill, the Australian
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Accounting Standards apply to all entities. This means the Australian Accounting
Standards apply to an entity, even if those standards do not otherwise apply to that
entity.
41. Using existing definitions in the Australian Accounting Standards ensures
reporting entities can consistently determine whether they 'control' another entity for
the purpose of the Modern Slavery Reporting Requirement. For example, an existing
definition of control in AASB 10: Consolidated Financial Statements states:
an investor controls an investee when the investor is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee.
42. For example, Company A is a member of a larger consolidated group. Company A
does not have to prepare consolidated financial statements in accordance with the
Australian Accounting Standards. However, Company A must still apply the definition
of control in the Australian Accounting Standards to determine whether it controls
Company B. If Company A controls Company B according to the Australian
Accounting Standards, then Company A has control of Company B for the purposes of
the Modern Slavery Reporting Requirement.
43. Determining whether a reporting entity controls a second entity is relevant to
establishing the consolidated revenue of the reporting entity. It also determines
whether the reporting entity reports on the second entity in its statement. For further
explanation, refer to the definitions of 'consolidated revenue' and
'accounting standards' above and refer also to section 16.
Entity
44. 'entity' has the definition under section 960-100 of the Income Tax Assessment Act
1997 (Cth). This means an 'entity' includes a wide range of persons and bodies,
including an individual, bodies corporate, bodies politic, partnerships,
unincorporated associations or bodies of persons, trusts, superannuation funds and
approved deposit funds. An unincorporated joint venture is excluded from the
definition of 'entity'.
45. The purpose of defining entity broadly is to comprehensively address the risks of
modern slavery in goods and services in the Australian market. It also ensures the Bill
creates a level playing field by covering as many entity types as practicable. For
further explanation, refer to the definitions of 'Australian entity' above and
'reporting entity' in section 5.
Modern slavery
46. 'modern slavery' is not clearly defined in existing international or Australian
domestic law. For the purposes of the Modern Slavery Reporting Requirement,
'modern slavery' is defined broadly to include all forms of trafficking in persons,
slavery and slavery-like practices, and the worst forms of child labour.
47. The definition of 'modern slavery' determines the scope of conduct that
reporting entities will be required to report on under section 16. The Australian
Government will provide detailed explanatory information about the definition of
'modern slavery', including case studies, in formal administrative guidance.
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48. Item (a) defines 'modern slavery' in the Bill to include conduct which would be a
criminal offence under Division 270 (slavery and slavery-like offences) or
Division 271 (trafficking in persons and debt bondage) of the Criminal Code. This
ensures the definition of modern slavery encompasses slavery and the slavery-like
practices of servitude, forced labour, forced marriage, debt bondage and deceptive
recruiting for labour or services. These offences involve varying degrees of limitations
on a person's freedom.
49. 'Modern slavery' in the Bill also includes trafficking in persons, trafficking in
children, trafficking in persons for the purpose of organ removal, and harbouring a
victim. These offences involve the movement of a person by use of threat, force or
coercion, for the purpose of exploitation.
50. The offences in Divisions 270 and 271 of the Criminal Code apply irrespective of the
purpose for which a person is trafficked, or the industry or context in which they are
exploited. For example, these offences could apply to exploitation in mining and
agricultural contexts, as well as the trafficking and/or exploitation of children in
orphanages.
51. For conduct to amount to any of these offences (other than slavery) under Division 270
or 271 of the Criminal Code, the conduct (or result of the conduct) must occur in
Australia or be performed by an Australian citizen, resident or body corporate. The
slavery offences in Division 270 of the Criminal Code apply to conduct by any person
or body corporate that occurs anywhere in the world.
52. Item (b) defines 'modern slavery' in the Bill to include overseas conduct that would
constitute an offence under Division 270 or 271 of the Criminal Code, if that conduct
had taken place in Australia. Item (b) is intended to overcome the jurisdictional
limitations of the Criminal Code offences under item (a). Item (b) means that the
definition of 'modern slavery' includes trafficking in persons, slavery and slavery-like
offences that occur outside Australia and are not perpetrated by an Australian citizen,
resident or body corporate. For example, this ensures that the Bill would cover a
forced labour offence in a foreign country, where this conduct takes place in a
reporting entity's overseas supply chains.
53. Item (c) defines 'modern slavery' in the Bill to include trafficking in persons as
defined in Article 3 of the Protocol to Prevent, Suppress and Punish Trafficking in
Persons, Especially Women and Children (Trafficking Protocol). Article 3 defines
trafficking in persons as:
the recruitment, transfer, harbouring or receipt of persons, by means of the
threat or use of force or coercion, of abduction, of fraud, of deception, of the
abuse of power or of a position of vulnerability or of giving or receiving of
payments or benefits to achieve the consent of a person having control over
another person, for the purpose of exploitation.
54. The trafficking offences under Division 271 of the Criminal Code are limited to
movement across Australian borders or within Australia. The purpose of item (c) is to
ensure the definition of 'modern slavery' is not limited only to domestic trafficking in
Australia, or trafficking into or out of Australia, but also encompasses trafficking in
persons anywhere in the world. For example, this will ensure the Bill covers the
trafficking of exploited labourers within or between foreign countries, where this
conduct takes place in a reporting entity's overseas supply chains.
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55. Australia ratified the Trafficking Protocol in 2005. The definition in Article 3 of the
Trafficking Protocol is well understood and commonly used internationally.
56. Item (d) defines 'modern slavery' in the Bill to include the worst forms of child
labour, as defined in Article 3 of the International Labour Organization Convention
No. 182 concerning the Prohibition and Immediate Action for the Elimination of the
Worst Forms of Child Labour (Worst Forms of Child Labour Convention). Article 3
defines the worst forms of child labour as:
(a) all forms of slavery or practices similar to slavery, such as the sale and
trafficking of children, debt bondage and serfdom and forced or compulsory
labour, including forced or compulsory recruitment of children for use in armed
conflict;
(b) the use, procuring or offering of a child for prostitution, for the production of
pornography or for pornographic performances;
(c) the use, procuring or offering of a child for illicit activities, in particular for
the production and trafficking of drugs as defined in the relevant international
treaties;
(d) work which, by its nature or the circumstances in which it is carried out, is
likely to harm the health, safety or morals of children.
57. Item (d) expands the definition of 'modern slavery' to encompass each of the forms of
conduct specified in Article 3, occurring anywhere in the world. In some cases, the
worst forms of child labour may already be covered by the trafficking in persons,
slavery and slavery-like offences under items (a) and (b) above. However, specifically
including the worst forms of child labour in the definition of 'modern slavery' sends a
clear normative signal that this conduct is unacceptable. It also makes it clear that
entities need to report on hazardous child work as defined in Article 3(d) of the
Worst Forms of Child Labour Convention.
58. Australia ratified the Worst Forms of Child Labour Convention in 2006. The definition
in Article 3 of the Worst Forms of Child Labour Convention is well understood and
commonly used internationally.
Modern Slavery Statement
59. 'modern slavery statement' is defined in section 12.
Principal governing body
60. 'principal governing body' is a generic term used to describe the various governance
mechanisms of different entity types covered by the Modern Slavery Reporting
Requirement.
61. Item (a) defines 'principal governing body' broadly to cover a person, body or group
of persons responsible for, and with control over, the entity. For example, a company's
board of directors is a 'principal governing body' of the company.
62. Item (b) provides that the definition of 'principal governing body' may be prescribed
by rules, in accordance with section 25. This enables the responsible Minister to make
a rule or rules to clarify what is the 'principal governing body' of a specific entity type,
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if further clarification is needed. For further explanation about the use of rules, refer to
section 25.
63. Determining the 'principal governing body' of a reporting entity is an important
consideration because the 'principal governing body' is responsible for approving a
reporting entity's Modern Slavery Statement. This ensures senior management are
accountable for the information provided through Modern Slavery Statements. For
further explanation about approval requirements, refer to sections 13 and 14.
Register
64. 'register' is defined as the Modern Slavery Statements Register that the Minister
establishes and maintains under section 18.
Reporting entity
65. 'reporting entity' is defined in section 5.
Reporting period
66. 'reporting period' is defined as an entity's financial year or other annual
accounting period. This allows for equivalent yearly accounting periods to be
considered 'reporting periods'. The entity's financial year or equivalent
accounting period must commence after section 4 commences. The definition of
'reporting period' is linked to an entity's financial or accounting year to minimise the
regulatory impact of the Bill by aligning the Modern Slavery Reporting Requirement
with entities' other reporting processes.
67. A reporting entity must provide a Modern Slavery Statement for each reporting period.
For further explanation, refer to sections 13, 14 and 15.
Responsible member
68. 'responsible member' is a generic term used to describe the various decision-making
members of different entity types.
69. Item (a) specifies that, for entities that have a 'principal governing body', the
'responsible member' will be a member of that body. Two examples are provided in
item (a):
A director of a company is a 'responsible member' of that company.
A trustee on the board of trustees for a superannuation fund is a
'responsible member' of that superannuation fund.
For further explanation, refer to the meaning of 'principal governing body' above.
70. Item (b) specifies the 'responsible member' of a trust administered by a sole trustee.
The sole trustee is the 'responsible member' of that trust.
71. Item (c) specifies the 'responsible member' of a corporation sole. A corporation sole
is a legal entity occupied by an individual. The individual is the 'responsible member'
of that corporation sole.
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72. Item (d) specifies the 'responsible member' of an entity under administration, within
the meaning of the Corporations Act. The administrator is the 'responsible member' of
an entity under administration.
73. Item (e) provides that the definition of 'responsible members' for different entity types
may be prescribed by rules, in accordance with section 25. This enables the
responsible Minister to make a rule or rules to clarify who is the 'responsible member'
for a specific entity type, if further clarification is needed. For further explanation
about the use of rules, refer to section 25.
74. Determining the 'responsible member' of a reporting entity is an important
consideration because the 'responsible member' must sign a reporting entity's
Modern Slavery Statement. For further explanation, refer to sections 13 and 14. For
responsible members acting on behalf of unincorporated entities, refer to section 22.
Rules
75. 'rules' is defined as any rules that the Minister makes under section 25.
Section 5: Meaning of reporting entity
76. Section 5 is the main section for entities to determine whether they must comply with
the Modern Slavery Reporting Requirement. Section 5 sets out a range of tests for
determining whether an entity is a 'reporting entity', and is therefore required to
provide an annual Modern Slavery Statement.
Revenue test
77. Subsection 5(1) sets a revenue test that requires reporting entities to have annual
consolidated revenue of at least 100 million Australian dollars. This revenue test is
calculated based on the entity's own reporting period. The Bill only requires an entity
to determine if it meets the revenue test by having annual consolidated revenue of at
least 100 million Australian dollars. It does not necessarily require an entity to
calculate its exact annual consolidated revenue. For further explanation, refer to
section 4 for the definitions of 'entity', 'consolidated revenue', 'control' and
'reporting period'.
78. The revenue test of at least 100 million Australian dollars covers large businesses and
other entities in Australia, including those with extensive, complex and/or global
operations and supply chains. This is intended to cover those entities that have the
capacity to meaningfully comply with the Modern Slavery Reporting Requirement,
and have the market influence to effect change in their supply chains.
Test for 'carries on business in Australia'
79. Subsection 5(2) sets a test to determine whether an entity 'carries on business in
Australia'. This test draws on the existing meaning of 'carries on business in Australia'
in the Corporations Act and applies it to all entities, regardless of type. Under
section 21 of the Corporations Act, an entity 'carries on business in Australia' if it:
has a place of business in Australia
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establishes or uses a share transfer office or share registration office in
Australia, or
administers, manages, or otherwise deals with property situated in Australia as
an agent, legal personal representative or trustee, whether by employees or
agents or otherwise.
Types of 'reporting entities'
80. Paragraph 5(1)(a) identifies an entity as a 'reporting entity' where, during its
reporting period, the entity meets both the revenue test and the definition of an
'Australian entity'. For further explanation about the definition of 'Australian entity',
refer to section 4. Paragraph 5(1)(a) also identifies a foreign entity as a
'reporting entity' where, during its reporting period, the foreign entity meets both the
revenue test and the test for 'carries on business in Australia'. This includes a
foreign entity that meets the revenue test and carries on business in Australia through
an Australian subsidiary.
81. Paragraph 5(1)(b) identifies the Commonwealth of Australia as a 'reporting entity'.
The note makes it clear that the Commonwealth must produce a consolidated annual
Modern Slavery Statement on behalf of all non-corporate Commonwealth entities. For
further explanation about Commonwealth Modern Slavery Statements, refer to
section 15.
82. Paragraph 5(1)(c) identifies a corporate Commonwealth entity or Commonwealth
company as a 'reporting entity' where, during its reporting period, it meets the revenue
test. This makes it clear that these entities will not be covered by the consolidated
Commonwealth Modern Slavery Statement and must report separately.
83. Paragraph 5(1)(d) identifies an entity that volunteers to provide an annual
Modern Slavery Statement as a 'reporting entity'. A volunteer entity must comply with
the Modern Slavery Reporting Requirement in the same way as any other
reporting entity. For further explanation about voluntary Modern Slavery Statements,
refer to section 6.
84. For explanation about how a single reporting entity can report, refer to section 13. For
explanation about how multiple reporting entities can report jointly, or an entity can
report on behalf of one or more reporting entities, refer to section 14.
Section 6: Voluntary modern slavery statements
85. Section 6 enables entities to voluntarily comply with the Modern Slavery Reporting
Requirement. This section is intended to ensure that entities not otherwise covered by
the Modern Slavery Reporting Requirement are able to participate if they wish to do
so. For example, an entity may decide to voluntarily provide a Modern Slavery
Statement as a way to demonstrate their commitment to identifying and mitigating
modern slavery risks in their operations and supply chains.
86. Once an entity volunteers to report, they are taken to be a 'reporting entity' and must
comply with all aspects of the Modern Slavery Reporting Requirement. This includes
the requirements in section 13 for Modern Slavery Statements to address the
mandatory criteria (in section 16) and to be submitted six months from the end of their
reporting period.
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87. Subsection 6(1) sets out the process by which an entity can volunteer to comply with
the Modern Slavery Reporting Requirement. In order to volunteer for a
reporting period, an entity must give written notice to the Minister prior to the end of
that reporting period. An entity can volunteer to report for a single reporting period.
Alternatively, an entity can volunteer to report on an ongoing basis for all future
reporting periods.
88. Subsection 6(2) sets out the types of entities that can voluntarily comply with the
Modern Slavery Reporting Requirement. In order to volunteer to comply, an entity
must be either an Australian entity or a foreign entity carrying on business in Australia.
89. Subsection 6(3) allows an entity that has volunteered to report to 'opt out' from
voluntary reporting on future reporting periods. An entity can opt out by notifying the
Minister before their next reporting period starts. This is intended to prevent an entity
that volunteers to comply from withdrawing during a current reporting period to avoid
their obligations to report on modern slavery risks identified during that period.
90. For the definitions of 'Australian entity' and 'reporting period', refer to section 4. For
the definitions of 'reporting entity' and 'carries on business in Australia', refer to
section 5.
Section 7: Constitutional basis
91. Section 7 clarifies the constitutional basis for the Bill. Subsection 7(1) outlines the
legislative powers the Commonwealth relies on to enact the Act. Subsection 7(2)
outlines the various international agreements that form the basis for the
Commonwealth to rely on the external affairs power to enact the Act.
Section 8: Act binds the Crown
92. Section 8 provides that the Act will bind the Crown in right of the Commonwealth.
The effect of this is that the Commonwealth must comply with the Modern Slavery
Reporting Requirement. For Commonwealth Modern Slavery Statements, refer to
section 15.
93. Section 8 makes it clear that the Act will not bind the Crown in right of each of the
States, the Australian Capital Territory nor the Northern Territory. The effect of this is
that the Australian States and Territories are not required to comply with the
Modern Slavery Reporting Requirement. The States and Territories are, however, able
to opt in to voluntarily provide annual Modern Slavery Statements.
Section 9: Extension to external Territories
94. Section 9 makes it clear that the Bill extends to all external Territories of Australia.
This means reporting entities should consider acts, omissions, matters and things
occurring in the external Territories when preparing Modern Slavery Statements. For
example, reporting entities will need to consider modern slavery risks in any
operations and supply chains existing in any of the external Territories. This also
means an entity based or carrying on business in any of the external Territories must
comply with the Modern Slavery Reporting Requirement if it fits the definition of
'reporting entity'. For the definition of 'reporting entity', refer to section 5.
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Section 10: Extra-territorial application
95. Section 10 makes it clear that the Bill extends outside Australia. This means
reporting entities may consider acts, omissions, matters and things that occur outside
Australia in preparing Modern Slavery Statements. For example, reporting entities will
need to consider modern slavery risks in their global operations and supply chains, not
only their operations and supply chains in Australia. This also means that a
foreign entity must comply with the Modern Slavery Reporting Requirement if it fits
the definition of a 'reporting entity'. For the definition of 'reporting entity', refer to
section 5.
Part 2: Modern Slavery Statements
Section 11: Simplified outline of this Part
96. Section 11 provides a simple outline of Part 2 of the Bill to assist readers to
understand the substantive provisions in relation to Modern Slavery Statements. The
simplified outline is not intended to be comprehensive and readers should rely on the
substantive provisions.
Section 12: Meaning of modern slavery statement
97. Section 12 identifies a Modern Slavery Statement as:
a statement prepared by one reporting entity, as required under section 13; or
a joint statement prepared by one entity on behalf of one or more
reporting entities, as required under section 14; or
a Commonwealth statement prepared by the Minister on behalf of the
Commonwealth, as required under section 15.
Section 13: Modern slavery statements for single reporting entities
98. Section 13 and section 16 are the main sections for single reporting entities (except the
Commonwealth) to determine how to comply with the Modern Slavery Reporting
Requirement. If a reporting entity is preparing a Modern Slavery Statement only
covering itself, the entity is a single reporting entity and must comply with section 13.
For example, Partnership A is a reporting entity and prepares a Modern Slavery
Statement which covers itself and no other reporting entities. Partnership A must
comply with section 13 as it is a single reporting entity.
99. If an entity is preparing a Modern Slavery Statement on behalf of one or more
reporting entities, it is not required to comply with section 13 and must instead comply
with section 14 (joint Modern Slavery Statements). The Commonwealth is not
required to comply with section 13 and must instead comply with section 15.
Requirements for single reporting entities
100. Subsection 13(1) requires single reporting entities to give a Modern Slavery Statement
to the Minister for the entity's reporting period.
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101. Subsection 13(2) sets out the requirements for single reporting entities to submit a
Modern Slavery Statement. The Modern Slavery Statement must:
address the mandatory criteria in section 16
be prepared in a form approved by the Minister (the form will be determined
administratively, for example a PDF document)
be approved by the principal governing body of the entity
be signed (electronically or otherwise) by a responsible member of the entity,
and
be given to the Minister within 6 months from the end of the entity's
reporting period.
For further explanation, refer to section 4 for the definitions of 'responsible entity',
'principal governing body', 'responsible member' and 'reporting period'. Refer to
section 5 for the definition of 'reporting entity'.
Section 14: Joint modern slavery statements
102. Section 14 allows for Modern Slavery Statements to be submitted on behalf of one or
more reporting entities. Where an entity (except the Commonwealth) prepares a
Modern Slavery Statement on behalf of one or more reporting entities, section 14 and
section 16 are the main sections to determine how those reporting entities must comply
with the Modern Slavery Reporting Requirement. For example, Company A is a
reporting entity and controls Trust B, which is also a reporting entity. Company A
prepares a Modern Slavery Statement which covers itself and Trust B. Company A
must comply with section 14 as it will submit a joint Modern Slavery Statement. The
statement must cover the mandatory criteria in section 16 for both Company A and
Trust B.
103. If a reporting entity is preparing a Modern Slavery Statement covering only itself, it is
not required to comply with section 14 and must instead comply with section 13. The
Commonwealth is not required to comply with section 14 and must instead comply
with section 15.
104. Section 14 is intended to minimise the regulatory impact of the Bill and makes it easier
for investors, consumers and the public to access a single Modern Slavery Statement
covering a corporate group or other collection of entities. Section 14 provides
flexibility for multiple entities to report jointly, while maintaining the integrity of the
Modern Slavery Reporting Requirement. For example, this section allows a
parent entity (whether or not it is a reporting entity) the flexibility to prepare a single
statement on behalf of multiple subsidiaries that are reporting entities. Section 14 is
also intended to enable an entity to report on behalf of other entities that are
reporting entities and are within the same corporate group. This section does not
prevent all reporting entities in the same corporate group from preparing single
Modern Slavery Statements under section 13.
Requirements for joint Modern Slavery Statements
105. Subsection 14(1) requires an entity to give a joint Modern Slavery Statement, which
covers one or more reporting entities, to the Minister. The joint Modern Slavery
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Statement must be for a reporting period that applies to all reporting entities covered
by the statement.
106. Subsection 14(2) sets out the requirements for an entity to submit a joint
Modern Slavery Statement. A joint Modern Slavery Statement must:
address the mandatory criteria in section 16
be prepared in a form approved by the Minister (the form will be determined
administratively, for example a PDF document)
be prepared in consultation with every reporting entity that is covered by the
statement
be approved by the principal governing body of at least one reporting entity
covered by the statement; or by the principal governing body of a higher entity
(that is, an entity that has direct influence or control, or indirect influence or
control, over each reporting entity covered by the statement)
be signed (electronically or otherwise) by a responsible member of at least one
of the reporting entities; or by a responsible member of a higher entity
be given to the Minister within 6 months from the end of the reporting period
that applies to all reporting entities covered by the statement.
107. Subparagraph 14(2)(f)(ii) provides that the timeframe for providing Modern Slavery
Statements to the Minister for registration may be prescribed by rules, in accordance
with section 25. This enables the responsible Minister to make a rule or rules to clarify
the timeframes, if further clarification is needed. For further explanation about the use
of rules, refer to section 25.
108. For further explanation, refer to section 4 for the definitions of 'responsible entity',
'principal governing body', 'responsible member' and 'reporting period'. Refer also to
section 5 for the definition of 'reporting entity'.
Consultation, approvals and signatures
109. Subsection 14(2) requires joint Modern Slavery Statements to be developed in
consultation with all reporting entities, approved at the level of principal governing
body, and signed by a responsible member. These requirements are intended to ensure
senior management is accountable for the information provided through
Modern Slavery Statements and that Modern Slavery Statements are subject to
appropriate scrutiny.
110. The term 'in consultation with' is not defined in the Bill and is intended to take its
ordinary meaning. The term 'in consultation with' includes the process of discussing
and liaising with reporting entities about the content of Modern Slavery Statements.
111. Paragraphs 14(2)(d) and 14(2)(e) require approvals and signatures by key entities
covered by a joint Modern Slavery Statement. There are three different options for
approvals and signatures of a joint Modern Slavery Statement. These options are
intended to provide important flexibility for different reporting entities to determine
the most practical way to seek approvals and signatures within their corporate
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structure. However, these options do not negate the requirement for all
reporting entities to be consulted in developing a joint Modern Slavery Statement.
112. The three options for approvals and signatures of a joint Modern Slavery Statement
are:
1. The principal governing body of each reporting entity covered by the joint
statement must approve it, and a responsible member of each of those
reporting entities must sign it.
2. The principal governing body of a higher entity (that can, directly or indirectly,
influence or control each reporting entity) must approve the joint statement on
behalf of all of the reporting entities covered by the statement, and the
responsible member of the higher entity must sign it. This option is intended to
allow a parent entity in a corporate group to provide a single statement on behalf
of the group without needing to have the statement approved by the
principal governing bodies of each reporting entity in the group.
3. If neither of these two options are practical, the principal governing body of at
least one reporting entity must approve the statement, and a responsible member
of that reporting entity must sign it. If this option is chosen, the joint statement
must explain why the other reporting entities have not approved the statement at
principal governing body level. This option is intended to cover situations where
an entity may wish to provide a joint statement on behalf of related
reporting entities, such as sibling entities in a corporate group. For further
explanation, refer to subsection 16(2).
Section 15: Commonwealth modern slavery statements
113. Section 15 and section 16 are the main sections for the Commonwealth to determine
how to comply with the Modern Slavery Reporting Requirement.
114. Subsection 15(1) requires the Minister to prepare a Commonwealth Modern Slavery
Statement for a reporting period. The relevant reporting period for the Commonwealth
is the Australian financial year. The Commonwealth must prepare a consolidated
annual Modern Slavery Statement on behalf of all non-corporate Commonwealth
entities, as defined in the Public Governance, Performance and Accountability Act
2013 (Cth) (PGPA Act).
115. Corporate Commonwealth entities and Commonwealth companies are treated like any
other entity. If those entities meet the revenue test in section 5, they are a
'reporting entity' and must comply with the Modern Slavery Reporting Requirement
under section 13 or 14.
116. Requiring Modern Slavery Statements from the Commonwealth, corporate
Commonwealth entities and Commonwealth companies helps to create a level playing
field by covering as many entity types as practicable. It will also help ensure that
potential modern slavery risks in Government procurement are assessed and addressed.
Requirements for Commonwealth Modern Slavery Statements
117. Subsection 15(2) sets out a range of requirements for how the Commonwealth must
submit a Modern Slavery Statement. A Commonwealth Modern Slavery Statement
must:
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meet the mandatory criteria in section 16, and
be prepared within 6 months from the end of the Australian financial year.
118. The Commonwealth Modern Slavery Statement will address the mandatory criteria in
section 16 on a whole-of-government basis. The statement will focus on potential
modern slavery risks in Commonwealth procurement at a whole-of-government level
and the operations of the Australian Government, including its investments. Consistent
with its strategic, whole-of-government focus, the statement will not necessarily refer
to specific Commonwealth entities or provide entity-specific details about
procurement.
Section 16: Mandatory criteria for modern slavery statements
119. Section 16 is the main section for a reporting entity to determine what needs to be
included in a Modern Slavery Statement. Section 16 sets out the mandatory criteria
that all reporting entities, including the Commonwealth, must address in a
Modern Slavery Statement. The mandatory criteria are intended to clearly focus the
content of all Modern Slavery Statements and give clarity to reporting entities about
their obligations. The mandatory criteria will also help ensure that statements are
consistent and can be easily compared. For the definition of 'modern slavery', refer to
section 4.
Mandatory criteria for single reporting entities and the Commonwealth
120. Subsection 16(1) requires that Modern Slavery Statements prepared by single
reporting entities or the Commonwealth must address the mandatory criteria by
identifying the reporting entity and describing:
the reporting entity's structure, operations and supply chains
modern slavery risks in the reporting entity's operations and supply chains,
including in the operations and supply chains of any entities it owns or
controls (subsidiary entities)
actions the reporting entity has taken, and any of its subsidiary entities have
taken, to assess and address those modern slavery risks, including due
diligence and remediation processes
how the reporting entity assesses the effectiveness of those actions,
the process of consultation with subsidiary entities in preparing the Modern
Slavery Statement, and
any other information the reporting entity considers relevant.
121. The note in subsection 16(1) provides examples of actions an entity may take to assess
and address modern slavery risks in its operations and supply chains. These actions
may include, but are not limited to, developing and implementing policies and
processes, and providing training to staff.
122. Subsection 16(2) requires that a Modern Slavery Statement prepared by a single
reporting entity must also include details of the approval by that entity's
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principal governing body. For example, a statement from a reporting entity that is a
company must specify the statement was approved by the board.
123. It is not expected that a reporting entity would ordinarily identify no modern slavery
risks in their operations or supply chains. If an entity does not identify any
modern slavery risks, the entity must still respond to the mandatory criteria. In doing
so, the entity must explain its actions taken to assess for modern slavery risks, and to
prevent modern slavery practices from occurring in their operations and supply chains.
The entity must also explain how they assess the effectiveness of those actions.
Mandatory criteria for joint Modern Slavery Statements
124. All joint Modern Slavery Statements must address all mandatory criteria in section 16
for each and every reporting entity covered by the joint statement. Subsection 16(1)
requires that a joint Modern Slavery Statement must identify all reporting entities
covered by the joint statement and must describe:
the structure, operations and supply chains of each reporting entity
modern slavery risks in the operations and supply chains of each
reporting entity, including any entities owned or controlled by each
reporting entity (subsidiary entities)
actions each of the reporting entities have taken (and any of their
subsidiary entities have taken) to assess and address those modern slavery
risks, including due diligence and remediation processes
how each reporting entity assesses the effectiveness of those actions
the process of consultation between each reporting entity and the entity
preparing the joint statement, and any subsidiary entities of each
reporting entity, and
any other information the entity preparing the statement, or any of the
reporting entities, consider relevant.
125. Subsection 16(2) requires that a joint Modern Slavery Statement must also include
details of the approval by the relevant principal governing body or bodies of the
reporting entities, or of a higher entity (that can, directly or indirectly, influence or
control each reporting entity). If these requirements for approval are not practicable,
the joint Modern Slavery Statement must be approved by the principal governing body
of at least one reporting entity covered by the statement (in accordance with
subparagraph 14(2)(d)(iii)). In this case, the Modern Slavery Statement must include
an explanation about why it was not practicable for the principal governing body of all
of the reporting entities, or of a higher entity, to approve the joint statement.
Definitions of terms in mandatory criteria
126. The Australian Government will clearly explain and clarify the terms 'risks',
'operations', 'supply chains', 'due diligence' and 'remediation processes' in formal
administrative guidance. This will provide flexibility by ensuring different terms can
be appropriately applied to the broad range of reporting entities, with varying
structures, that are covered by the Modern Slavery Reporting Requirement. The
Australian Government will issue the guidance before the Act commences.
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127. The mandatory criteria draw on terminology and concepts used in the business and
human rights context, particularly in the 2011 United Nations Guiding Principles on
Business and Human Rights (UNGPs). The Australian Government will encourage
entities to make use of the UNGPs and other relevant frameworks to help them
identify, prioritise and respond to modern slavery risks.
128. The 'risks' of modern slavery practices are intended to mean the potential for an entity
to cause, contribute to, or otherwise be directly linked to, modern slavery practices
through their operations and supply chains. It is not intended that entities must
necessarily report exhaustively on all modern slavery risks. The
Australian Government recognises that entities may need to prioritise their modern
slavery risk management, especially in the early years of implementation. Entities will
be encouraged to identify, prioritise and respond to those risks that are the most severe,
including because of their scale, scope and irremediable character. The requirement to
report on modern slavery risks is not intended to require entities to report on identified
incidences or cases of modern slavery. However, this is not intended to prevent entities
from reporting on incidences or cases where they consider it appropriate to do so.
129. 'Operations' is intended to cover any activity undertaken by the entity to pursue its
business objectives and strategy. These activities may include research and
development, construction, production, distribution, purchasing, sales, and
financial lending and investments.
130. 'Supply chains' is intended to refer to the products and services that contribute to the
entity's own products and services and is not restricted to 'tier one' or direct suppliers.
131. 'Due diligence' is intended to refer to an entity's ongoing management processes to
identify, prevent, mitigate and account for how they address incidences of
modern slavery.
132. 'Remediation processes' is intended to cover any process or mechanism to remedy
incidences of modern slavery. For example, 'remediation processes' could include
establishing and maintaining an entity-level grievance mechanism.
133. The requirement to report on 'due diligence' and 'remediation' processes is intended
to ensure reporting entities communicate their general approaches to prevent and
address modern slavery. It does not require reporting on specific responses to
particular incidences or cases of modern slavery. However, this is not intended to
prevent entities from reporting on specific responses to incidences or cases where they
consider it appropriate to do so.
Part 3: Access to Modern Slavery Statements
Section 17: Simplified outline of this Part
134. Section 17 provides a simple outline of Part 3 of the Bill to assist readers to
understand the substantive provisions in relation to accessing Modern Slavery
Statements. The simplified outline is not intended to be comprehensive and readers
should rely on the substantive provisions.
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Section 18: Modern Slavery Statements Register
135. Section 18 requires the Minister to establish and maintain a Modern Slavery
Statements Register. The Modern Slavery Statements Register will be a freely
accessible, public website that contains all registered Modern Slavery Statements. The
Modern Slavery Statements Register is intended to contribute to the transparency and
effectiveness of the Modern Slavery Reporting Requirement by ensuring that entities'
Modern Slavery Statements are easily identifiable and accessible. The Modern Slavery
Statements Register will not prevent entities also making their statements available
through other means, including on their webpages.
Section 19: Registration of modern slavery statements
136. Section 19 sets out the process for registering Modern Slavery Statements on the
Modern Slavery Statements Register.
137. Subsection 19(1) requires the Minister to register a Modern Slavery Statement that:
is a Modern Slavery Statement for a single reporting entity and meets the
requirements set out in section 13
is a joint Modern Slavery Statement and meets the requirements set out in
section 14, or
is a Commonwealth Modern Slavery Statement and meets the requirements set
out in section 15.
138. Subsection 19(2) allows the Minister to register a single or joint Modern Slavery
Statement that does not fully comply with the requirements set out in section 13 or
section 14 respectively. However, the note clarifies that the Minister has the discretion
not to register a Modern Slavery Statement that does not comply with these
requirements. This would allow the Minister to decline to register a statement in cases
of egregious noncompliance. For further information about the Minister's discretion to
decline to register a statement, refer to section 20.
Section 20: Registration of revised modern slavery statements
139. Section 20 allows an entity to revise and re-publish its Modern Slavery Statement. The
intention of allowing registration of revised Modern Slavery Statements is to allow
entities to correct any false or misleading statements, or other errors. It also allows
entities to revise information that may be market sensitive.
Revised single and joint Modern Slavery Statements
140. Subsection 20(1) allows an entity (except the Commonwealth) to write to the Minister
to replace that entity's previously published Modern Slavery Statement with a revised
version.
141. Subsection 20(2) requires a revised Modern Slavery Statement to include the date of
revision and describe the changes made to the previously published Modern Slavery
Statement. There is no time limit on when an entity may revise a Modern Slavery
Statement.
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142. Subsection 20(3) makes it clear that a revised Modern Slavery Statement must meet
the minimum requirements for an original Modern Slavery Statement, then the
Minister must register it. The only difference in minimum requirements for original
Modern Slavery Statements and revised Modern Slavery Statements is the deadline for
providing the statement to the Minister. For further explanation, refer to section 13 for
the minimum requirements for single Modern Slavery Statements and section 14 for
the minimum requirements for joint Modern Slavery Statements.
143. Together, subsections 20(2) and 20(3) require that the revised single or joint
Modern Slavery Statement must:
include the date of revision
describe the changes made to the previously published statement
address the mandatory criteria in section 16
be prepared in a form approved by the Minister
if it is a joint statement - be prepared in consultation with all reporting entities
covered by the statement
be approved by the relevant principal governing body or bodies; and
be signed by the relevant responsible member or members.
144. Subsection 20(4) states that the Minister may or may not register a Modern Slavery
Statement where it does not comply with these requirements. This would allow the
Minister to decline to register a statement in cases of egregious non-compliance. This
provision is consistent with the process for registering single Modern Slavery
Statements set out in subsection 19(2).
Revised Commonwealth Modern Slavery Statements
145. Subsection 20(5) allows the Commonwealth to publish a revised Modern Slavery
Statement on the Modern Slavery Statements Register. A revised Commonwealth
Modern Slavery Statement must:
include the date of revision
describe the changes made to the previously published statement, and
address the mandatory criteria in section 16.
Additional information about registration of Modern Slavery Statements
146. Subsections 19(2) and 20(4) provide the Minister with the discretion to decline to
register a Modern Slavery Statement that does not comply with minimum
requirements.
147. It is appropriate that this discretion is not subject to formal external merits review due
to the nature of the decision-making power. Any decision not to register a
Modern Slavery Statement would only be made in limited cases of egregious
non-compliance. Such a decision would only be taken after reasonable attempts were
made to engage in dialogue and work with the affected entity to ensure their
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Modern Slavery Statement meets the minimum legislated requirements. It is also
unlikely that a decision not to register a Modern Slavery Statement would directly
affect the rights or interests of an individual.
Part 4: Miscellaneous
Section 21: Simplified outline of this Part
148. Section 21 provides a simple outline of Part 4 of the Bill to assist readers to
understand the miscellaneous substantive provisions. The simplified outline is not
intended to be comprehensive and readers should rely on the substantive provisions.
Section 22: Unincorporated entities
149. Section 22 applies only to unincorporated associations or bodies of persons. As an
unincorporated entity is not a separate legal entity, section 22 allows a
responsible member of the unincorporated entity to act on behalf of that entity. For
further explanation, refer to section 4 for the definition of 'responsible member'.
150. For example, a responsible member of an unincorporated entity may be an individual
that is a member of the principal governing body of that entity, such as member of the
entity's management committee. That member can act on behalf of that
unincorporated entity. For the definition of 'principal governing body', refer to
section 4.
Section 23: Delegation
151. Section 23 allows for the delegation of any or all of the Minister's powers and
functions under the Act. It is appropriate for the Minister to be able to delegate his or
her powers and functions to ensure the Modern Slavery Reporting Requirement can be
effectively administered. For example, requiring the Minister to personally exercise all
of the powers and functions of the Modern Slavery Reporting Requirement could lead
to delays receiving, processing and registering new and revised Modern Slavery
Statements.
152. Section 23(1) allows the Minister to formally delegate the powers and functions under
the Act to be undertaken by a Departmental employee at the level of Senior Executive
Service (SES) (or acting SES employee). For example, this would mean the
responsible Minister may delegate the receipt and registration of Modern Slavery
Statements, including revised statements, to an SES employee within the Minister's
Department.
153. Section 23(2) makes it clear that, where an SES employee is carrying out delegated
powers or functions under the Act, the employee must comply with the Minister's
directions.
154. Section 23(3) clarifies that the rule-making power cannot be delegated. Only the
responsible Minister can make, vary or revoke the rules. For further explanation about
the use of rules, refer to section 25.
Section 24: Review of this Act
155. Section 24 requires a review of the legislation after three years.
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156. Subsection 24(1) requires that the Minister must prepare a report to review the
operation of the Act and any rules over the first three years, and determine whether
amendments are needed. The intention of providing for a review is to ensure the
Modern Slavery Reporting Requirement remains effective and responsive to the
Australian context.
157. Section 24(2) sets the timing of the review. The Minister must start the review as soon
as practicable after the first three years. The review is intended to start after
reporting entities have published at least two Modern Slavery Statements to ensure
there is a sufficient evidence base to inform the review. This will facilitate an effective
review of the practical operation and implementation of the Act, including the levels of
compliance by reporting entities and the quality of Modern Slavery Statements. The
Minister must then complete the review within 12 months.
158. Section 24(3) requires the report of the review to be tabled in the Parliament of
Australia within a set timeframe. The deadline for tabling the report in each House of
Parliament is within 15 sitting days of that House once the review is completed.
Section 25: Rules
159. Section 25 is a formal rule-making power. Section 25 enables the responsible Minister
to make rules that prescribe matters required or permitted by the Act to be prescribed
by rules, or necessary and convenient to be prescribed for carrying out or giving effect
to the Act.
160. The Bill enables a number of matters to be specified by rules made by the Minister, if
not otherwise identified with certainty by the Bill:
principal governing bodies of entities (section 4)
responsible members of entities (section 4), and
the annual due date for giving joint Modern Slavery Statements to the Minister
(section 14).
161. Specifying these matters in rules rather than regulations is in accordance with the
Office of Parliamentary Counsel's Drafting Direction No. 3.8 - Subordinate
Legislation. Paragraph 2 of that Drafting Direction states that "OPC's starting point is
that subordinate instruments should be made in the form of legislative instruments (as
distinct from regulations) unless there is good reason not to do so". Consistent with
paragraph 16 of the Drafting Direction, the approach of including these matters in
rules (rather than regulations) has a number of advantages including:
a) it facilitates the use of a single type of legislative instrument being needed for
the Bill, thereby reducing the complexity otherwise imposed on the regulated
community if these matters were to be prescribed across a number of different
types of instruments;
b) it simplifies the language and structure of the provisions in the Bill that
provide the authority for the legislative instruments; and
c) it shortens the Bill.
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Due to these advantages, paragraph 17 of the Drafting Direction states that drafters
should adopt this approach where appropriate with new Acts.
162. Section 22(2) provides limitations on the power to make rules. Specifically, any rules
could not:
create an offence or civil penalty,
provide powers of arrest, detention, entry, search or seizure,
impose a tax,
set an amount to be appropriated from the Consolidated Revenue Fund under
an appropriation in the Act, or
directly amend the text of the Act.
163. Paragraph 3 of the Drafting Direction No. 38 states that matters such as compliance
and enforcement, the imposition of taxes, setting amounts to be appropriated, and
amendments to the text of an Act, should be included in regulations unless there is a
strong justification otherwise. This is clarified by section 25 of the Bill, which
specifically prevents the rules from including these matters.
164. Section 25 clarifies that the rules made under the Bill are a legislative instrument for
the purposes of the Legislation Act 2003 (Cth) (Legislation Act). All legislative
instruments and their explanatory statements must be tabled in both Houses of the
Parliament within 6 sitting days of the date of registration of the instrument on the
Federal Register of Legislation (refer to sections 38 and 39 of the Legislation Act).
Once tabled, the rules will be subject to the same level of Parliamentary scrutiny as
regulations (including consideration by the Senate Standing Committee on Regulations
and Ordinances), and a motion to disallow the rules may be moved in either House of
the Parliament within 15 sitting days of the date the rules are tabled (refer to section 42
of the Legislation Act).
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STATEMENT OF COMPATIBILITY FOR A BILL THAT RAISES HUMAN
RIGHTS ISSUES
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Modern Slavery Bill 2018
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
1. The Modern Slavery Bill 2018 establishes a Modern Slavery Reporting Requirement
to strengthen Australia's approach to combating modern slavery.2 The Modern
Slavery Reporting Requirement will support Australian businesses to respond to
modern slavery and will increase information available to consumers and investors by
providing a practical, risk-based framework for transparency.
2. Reporting entities will be required to publish annual Modern Slavery Statements
detailing their actions to address modern slavery. The purpose of Modern Slavery
Statements is to increase business awareness of modern slavery, reduce modern
slavery risks in Australian goods and services, and encourage business to improve
workplace standards and practices.
3. The Bill applies to a broad range of entities, including foreign entities carrying on
business in Australia and the Australian Government. The Bill establishes the Modern
Slavery Reporting Requirement, which requires reporting on modern slavery practices
that are criminalised under Commonwealth law, wherever they occur. This includes
slavery, trafficking in persons, servitude, forced labour and forced marriage. The Bill
also requires reporting on trafficking in persons internationally and the worst forms of
child labour as defined in relevant international instruments.
4. The Bill establishes mandatory reporting criteria that require entities to provide
information about:
their structure, operations and supply chains
potential modern slavery risks
actions taken to assess and address these risks, and
how they assess the effectiveness of these actions.
5. Modern Slavery Statements will be published online on a Government-administered,
public register.
Human rights implications
2
Modern slavery is an umbrella term used to describe trafficking in persons, slavery and slavery-like practices,
such as forced labour and forced marriage, as well as the worst forms of child labour.
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6. This Bill protects a number of key human rights, including:
The absolute right to freedom from slavery and forced labour contained in
Article 8 of the International Covenant on Civil and Political Rights (ICCPR)
The absolute right to freedom from torture and other cruel, inhuman or
degrading treatment or punishment, contained in Article 7 of ICCPR and
Articles 1,2,3,13,14,15 and 16 of the Convention against Torture and Other
Cruel, Inhuman or Degrading Treatment or Punishment (UNCAT)
The right to work and rights at work located in Articles 6 and 7 of the
International Covenant on Economic, Social and Cultural Rights (ICESCR)
The right to protection from exploitation, violence and abuse located in Article
20 of ICCPR, Article 19 of the Convention on the Rights of the Child (CRC)
and Article 16 of the Convention on the Rights of Persons with Disabilities
(CRPD)
The right to freedom of movement contained in Articles 12 and 13 of ICCPR
The right to health contained in Article 12(1) of ICESCR, and
The right to privacy and reputation contained in Article 17 of ICCPR.
Human rights engaged by the Bill
7. By strengthening Australia's response to modern slavery, this Bill engages and
promotes a number of key human rights. The paragraphs below discuss the key
human rights promoted by this Bill. The human rights identified and discussed are not
an exhaustive account of the rights promoted by this Bill, but focus on those rights
most directly protected by this Bill.
Right to freedom from slavery and forced labour
8. Article 8 of ICCPR conveys that no one shall be held in slavery or servitude and that
no one shall be required to perform forced or compulsory labour. The right to freedom
from slavery and forced labour is an absolute right, meaning that it cannot be limited
or qualified under any circumstance.
9. The Bill engages and protects the right to freedom from slavery and forced labour by
establishing a Modern Slavery Reporting Requirement to encourage large businesses
in Australia to take action to combat modern slavery (which includes slavery and
forced labour). The Bill aims to equip and enable business to respond effectively to
modern slavery, and to develop and maintain responsible and transparent
supply chains.
10. Section 16 of the Bill establishes mandatory criteria for Modern Slavery Statements.
Mandatory criteria include reporting on risks that modern slavery practices are, or
may be, occurring within the operations or supply chains of a reporting entity or an
entity it owns or controls, describing the entity's actions to assess and address these
risks, and describing how the entity assesses the effectiveness of their actions.
11. By strengthening Australia's response to modern slavery, this Bill will further
Australia's commitment to upholding the absolute right to freedom from slavery and
forced labour set out in Article 8 of ICCPR. Adopting legislative measures to give
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effect to Article 8 is consistent with Australia's obligations as a State Party to ICCPR,
as set out in Article 2.
Right to freedom from torture and other cruel, inhuman or degrading treatment or
punishment
12. Article 7 of ICCPR conveys that no one shall be subjected to torture or to cruel,
inhuman or degrading treatment or punishment.
13. UNCAT also establishes the absolute right to freedom from torture and other cruel,
inhuman or degrading treatment or punishment.
14. Combatting modern slavery protects the right to freedom from torture and other cruel,
inhuman or degrading treatment or punishment. Modern slavery is fundamentally
concerned with exploitation. It robs people of their dignity and their liberty.
Exploitative practices can lead to serious physical and psychological harm, and even
death.
15. By strengthening Australia's response to modern slavery, this Bill will further
Australia's commitment to upholding the absolute right to freedom from torture and
other cruel, inhuman or degrading treatment or punishment as set out in Article 7 of
ICCPR and in UNCAT. Adopting legislative measures to give effect to Article 7 is
consistent with Austria's obligations as a State Party to ICCPR and to UNCAT, as set
out in Article 2 of both treaties.
The right to work and the rights at work
16. Article 6 of ICESCR conveys that State Parties will recognise the right to work,
which includes the right of everyone to the opportunity to gain their living by work
which is freely chosen or accepted, and will take appropriate steps to safeguard this
right.
17. Article 7 of ICESCR further specifies the right of everyone to the enjoyment of just
and favourable conditions of work, including to rest, leisure and reasonable limitation
of working hours.
18. Modern slavery severely curtails a person's right to work and their rights at work by
robbing a person of the freedom to freely choose and accept work, and in many cases,
severely curtailing the conditions of work, including regarding rest, leisure and
reasonable limitations on working hours.
19. The Bill engages and promotes the right to work and rights at work by strengthening
Australia's approach to combating modern slavery in businesses' operations and
supply chains. Increasing transparency around modern slavery in operations and
supply chains will drive businesses to improve their practices around identifying and
responding to instances of modern slavery, and to risks of modern slavery.
20. By strengthening Australia's response to modern slavery, this Bill will further
Australia's commitment to upholding the right to work and the rights at work, as set
out in Article 2 of ICESCR.
Right to protection from exploitation, violence and abuse
21. Article 19(1) of CRC conveys that State Parties shall take all appropriate legislative,
administrative, social and educational measures to protect the child from all forms of
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physical or mental violence, injury or abuse, neglect or negligent treatment,
maltreatment or exploitation, including sexual abuse.
22. Article 32 further states that State Parties recognise the right of the child to be
protected from economic exploitation and from performing any work that is likely to
be hazardous or to interfere with the child's education, or to be harmful to the child's
health or physical, mental, spiritual, moral or social development.
23. The right to protection from exploitation, violence and abuse is also articulated in
Article 16(1) of CRPD, which specifies that State Parties shall take all appropriate
legislative, administrative, social, educational and other measures to protect persons
with disabilities, both within and outside the home, from all forms of exploitation,
violence and abuse, including their gender-based aspects.
24. Modern slavery is fundamentally concerned with exploitation. Australia's
Commonwealth legislation criminalises the exploitation of individuals, including
through offences criminalising trafficking in persons, slavery, servitude, forced
labour, debt bondage and forced marriage. Offences involving the exploitation of
children are particularly serious and carry maximum penalties of up to 25 years'
imprisonment.
25. The nature and extent of modern slavery means that there is high risk that Australian
businesses' operations and supply chains may be affected by modern slavery and
therefore impinging upon the right to protection from exploitation, violence and
abuse.
26. The Bill engages and promotes the right to protection from exploitation, violence and
abuse by strengthening Australia's response to modern slavery. By requiring
businesses to report on modern slavery risks in their operations and supply chains,
including the worst forms of child labour, the Bill supports businesses to take action
to respond to modern slavery risks.
27. A strengthened response to modern slavery will further Australia's commitment to
upholding the right to protection from exploitation, violence and abuse, as set out in
Article 2 of CRC and Article 4 of CRPD.
The right to freedom of movement
28. Articles 12 and 13 of ICCPR specify that a person must be able to move freely and
choose a place of residence within a country without restrictions. Articles 12 and 13
of ICCPR further specify that State Parties have a duty to ensure that a person's
freedom of movement is not unduly restricted by others, including private persons and
companies.
29. Modern slavery can severely limit a person's right to freedom of movement.
Exploitative practices can restrict a person's freedom of movement in numerous ways,
including through debt bondage, physical restraint and other methods of control and
coercion.
30. The Bill engages and promotes the right to freedom of movement by strengthening
Australia's response to modern slavery. By requiring business to report on
modern slavery risks in their operations and supply chains, the Bill supports business
to take action and respond to modern slavery risks. A strengthened response to
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modern slavery promotes Australia's commitment to uphold the right to freedom of
movement, as set out in Article 2 of ICCPR.
The right to health
31. Article 12(1) of ICESCR requires State Parties to recognise the right of everyone to
the enjoyment of the highest attainable standard of physical and mental health.
32. The United Nations Committee on Economic Social and Cultural Rights has stated
that the right to health includes the right to control one's health and body, including
sexual and reproductive freedom, and the right to be free from interference, such as
the right to be free from torture.
33. The right to health also includes the right to a system of health protection for people
to enjoy the highest attainable level of health.
34. Modern slavery can severely limit a person's right to health. Persons that experience
modern slavery are commonly subject to physical or psychological abuse and
hazardous working conditions, and the experience of modern slavery can have
ongoing implications for a person's mental and physical wellbeing.
35. The Bill engages and promotes the right to health by strengthening Australia's
response to modern slavery. By requiring business to report on modern slavery risks
in their operations and supply chains, the Bill supports business to take action and
respond to modern slavery risks. A strengthened response to modern slavery supports
Australia's commitment to uphold the right to health, set out in Article 2 of ICESCR.
Human rights limited by the Bill
Legitimate objective of the Bill
36. Under international human rights law, any limitation on rights and freedoms must be
reasonable, necessary and proportionate for the pursuit of a legitimate objective. For
an objective to be legitimate, it must address a pressing or substantial concern, and not
simply seek an outcome regarded as desirable or convenient.
37. Collectively described as 'modern slavery,' trafficking in persons, slavery,
slavery-like practices and the worst forms of child labour are severe violations of
human rights and serious crimes. In an increasingly globalised and interconnected
world, there is a high risk that Australian businesses' operations and supply chains
may be tainted by modern slavery. Modern slavery can occur in any industry and at
any stage of a business supply chain.
38. The Australian Government established a comprehensive response to modern slavery
in 2004. Since 2004, the Australian Government has identified more than 350
suspected victims of modern slavery. Victims have been identified in a range of
industries, including domestic service, hospitality, construction and sex work.
Modern slavery is often underreported and not all cases of modern slavery in
Australia may be identified.
39. Although Australia's response to modern slavery is strong, it is primarily focused on
identifying and supporting victims and deterring and prosecuting offenders.
Australia's current legislative framework does not directly target modern slavery in
business operations and supply chains or support the business community to take
action to combat modern slavery.
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40. There is currently no formal Australian Government mechanism to support businesses
to combat modern slavery in their operations and supply chains. There is also
currently no formal Australian Government mechanism to support the business
community to inform consumers, investors and other bodies about their efforts to
address modern slavery.
41. This Bill has a legitimate objective, to strengthen Australia's approach to
modern slavery by equipping and enabling Australia's business community to respond
effectively to modern slavery and develop and maintain responsible and transparent
supply chains.
Right to privacy and reputation
42. Article 17(1) of ICCPR states that no one shall be subjected to arbitrary or unlawful
interference with his privacy, family, home or correspondence, nor to unlawful attacks
on his honour and reputation. The United Nations Human Rights Committee have
interpreted the right to privacy as comprising freedom from unwarranted and
unreasonable intrusions into activities that society recognises as falling within the
sphere of individual autonomy. The right to privacy may be limited where the
limitation is lawful and not arbitrary and where it is reasonable, necessary and
proportionate to achieving a legitimate objective.
43. The Bill limits the right to privacy in that it will require disclosure of information
pertaining to the structure, operations and supply chain of the reporting entity.
Information about businesses can be considered personal information if information
can be linked to an individual. In some cases, an individual's personal information
can be so interconnected to information about their business or company, that
information about that business or company can constitute personal information about
the individual.
44. This limitation to the right to privacy is reasonable and necessary as the disclosure of
certain information is required to achieve the legitimate objectives of the Bill.
45. In General Comment No.16, the United Nations Human Rights Committee noted that
the protection of privacy is necessarily relative, as all persons live in a society.
However, authorities should only be able to call for information relating to an
individual's private life, where the knowledge of that information is essential to the
interests of society.
46. Allowing information to be made publically available fulfils the transparency
objective of the Bill and encourages businesses to strive to improve practices
regarding identifying instances and risks of modern slavery in their operations and
supply chains. The collection and retention of information relevant to this Bill is
carefully regulated, with only limited information required to be disclosed. Section 16
of the Bill specifies mandatory reporting criteria, and requires that Modern Slavery
Statements:
identify the reporting entity,
describe the structure, operations and supply chains of the reporting entity,
describe the risks of modern slavery practices in the operations and supply
chains of the reporting entity, and any entities it owns or controls,
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describe the actions undertaken by the reporting entity, and any entities it
owns or controls, to assess and address those risks,
describe how the reporting entity assesses the effectiveness of such actions
describe the process of consultation to develop the statement, and
describe the relevant approvals undertaken.
47. There is also a very small risk that Modern Slavery Statements made in accordance
with the reporting criteria could identify victims or potential victims of modern
slavery, compromising their right to privacy and reputation. For example, a business
might voluntarily provide too much specificity about identified modern slavery risks
in their statement (for example about a specific case) resulting in a victim or potential
victim being identified.
48. The reporting criteria set out in section 16 of the Bill do not mandate the provision of
any information that would identify victims or potential victims of modern slavery.
Extensive and detailed guidance will also be issued prior to the commencement of the
Bill, underscoring the importance of ensuring Modern Slavery Statements do not
identify individual victims or potential victims of modern slavery. The
Australian Government will also monitor Modern Slavery Statements to help ensure
that victims and potential victims are not, and cannot be, identified.
49. The Bill's limitation to the right to privacy has a clear legal basis. The legislation will
be publicly accessible and accompanied by detailed guidance so that affected persons
have adequate information about how the Bill may limit their right to privacy.
Information provided through the Bill and accompanying guidance is also sufficiently
precise to enable affected persons to regulate their behaviour accordingly.
50. The Bill does not confer unfettered discretion on those charged with the Bill's
execution. Information can only be collected by the Minister or the Minister's
delegates as specified in section 23 of the Bill. The information that can be collected
is clearly prescribed and limited to that information of most importance to achieving
the legitimate objectives of the Bill.
Conclusion
51. The Bill is compatible with human rights because it promotes the protection of a
number of human rights, including absolute rights to freedom from slavery and forced
labour and to freedom from torture and other cruel, inhuman or degrading treatment
or punishment. To the extent that the Bill may limit the right to privacy and
reputation, those limitations are reasonable, necessary and proportionate to the
legitimate objective of the Bill, which is to strengthen Australia's approach to modern
slavery by equipping and enabling the business community to respond effectively to
modern slavery and develop and maintain responsible and transparent supply chains.
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REGULATION IMPACT STATEMENT
Modern Slavery Reporting Requirement
Prepared by the Department of Home Affairs
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EXECUTIVE SUMMARY
This Regulation Impact Statement (RIS) assesses options to address modern slavery risks in
the operations and supply chains of Australian businesses and other entities. This RIS
identifies the problem to be solved, outlines the possible policy options considered and
assesses the costs and benefits of each option. This RIS also includes an overview of the
proposed Commonwealth Modern Slavery Business Engagement Unit, including its purpose,
functions, and details of how it will work with the business community.
This RIS has been prepared by the Department of Home Affairs in accordance with the
Australian Government Guide to Regulation and guidance notes issued by the Office of Best
Practice Regulation.
What is the problem that is being addressed?
Modern slavery practices are serious crimes and grave abuses of human rights. Modern
slavery can occur in a variety of industries and recent United Nations (UN) estimates suggest
that there are 40 million modern slavery victims globally. The nature and extent of
modern slavery means there is high risk that Australian businesses' operations and supply
chains may be tainted by serious exploitation. This poses significant legal and reputational
risks for the Australian business community.
Why is Government action required?
The Australian Government is committed to combating modern slavery practices and has
implemented a strong strategy to combat these crimes.
However, the Government's strategy does not directly target modern slavery in business
operations and supply chains or support the business community to take action to combat
modern slavery. This makes it difficult for the Australian business community to assess,
disclose and respond to modern slavery risks and contributes to a lack of public awareness.
What policy options are being considered?
The Government's primary objective for reform is to equip and enable the business
community to respond effectively to modern slavery and develop and maintain responsible
and transparent supply chains. This RIS considers the following three possible options for
Government action:
1) Continue with a 'business as usual' response: This option would not meet the
Government's objective for reform, is unlikely to result in changes to business
behaviour and is inconsistent with business support for regulatory action.
2) Take non-regulatory action, including awareness-raising, developing guidance
materials and supporting voluntary business-led measures: This option may lead to
limited behaviour change from business and would not have any regulatory
compliance costs. Any measures introduced as part of this option may duplicate
existing non-government initiatives and would likely have limited uptake - primarily
from businesses already acting to address modern slavery risks. This option is also
inconsistent with business support for regulatory action.
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3) Take targeted regulatory action through introducing a Modern Slavery Reporting
Requirement: This option would address the Government's primary objective for
reform and has the highest overall net benefit. This option would provide certainty
and consistency for the business community, create a level playing field for large
businesses in the Australian market, and facilitate a 'race to the top' amongst
businesses competing for market funding and reputational reward. This option would
have an average annual regulatory impact on the business community of
approximately $65.85 million ($21,950 per reporting entity).
The Government also proposes to establish a new Modern Slavery Business Engagement
Unit in the Department of Home Affairs to ensure business is appropriately supported to
address modern slavery risks in their supply chains.
Who was consulted?
The Government has conducted an accessible and transparent consultation process to seek the
views of business and civil society. The consultation process was structured to focus on key
stakeholders, including businesses that would be impacted by proposed regulation.
Opportunities were also provided for a broad range of stakeholders to provide their views to
Government, including private individuals.
To ensure full public consultation, Government conducted a two-phase consultation process.
The first phase of consultations involved a series of 12 stakeholder roundtables in Canberra,
Melbourne, Sydney and Perth. More than 130 representatives from business and civil society
attended these roundtables. The second phase of consultations involved seeking
written submissions from interested stakeholders. The Australian Government received 99
written submissions addressing the key areas for feedback set out in the consultation paper. In
addition to formal consultations, the Australian Government has held more than 50 direct
meetings with interested stakeholders. The Australian Government also held targeted
exposure draft consultations on draft legislation with over 40 expert stakeholders between
29-30 May 2018.
What is the best option?
This RIS recommends the Australian Government pursue Option Three by taking targeted
regulatory action through introducing a Modern Slavery Reporting Requirement. This option
is likely to deliver the greatest benefit, by addressing the Government's primary objective for
reform through raising business awareness of modern slavery and providing shareholders and
consumers with information about modern slavery risks in entities' operations and
supply chains. This option also has strong business and civil society support. This RIS also
recommends the Government establish a Modern Slavery Business Engagement Unit in the
Home Affairs Portfolio to provide advice and support to business.
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SECTION ONE
WHAT IS 'MODERN SLAVERY' AND WHY IS GOVERNMENT ACTION
NEEDED?
This section of the RIS describes the policy problem the Australian Government is seeking to
address. It explains why existing Government action is insufficient and sets out why
additional action is required and the Government's key objectives. This section of the RIS
aligns with RIS Questions 1 and 2.
Overview of the problem: Modern slavery in business operations and supply chains
Human trafficking, slavery and slavery-like practices, such as servitude, forced labour and
debt bondage, are severe violations of human rights and serious crimes. Collectively, these
exploitive practices are often described as 'modern slavery'. In a globalised economy and
increasingly interconnected world, there is a high risk that Australian businesses' operations
and supply chains may be tainted by modern slavery. This poses significant legal and
reputational risks for the Australian business community. Australian businesses must also
compete in the global marketplace against other businesses that may be benefiting from
modern slavery. This means that it is important for the Australian Government to consider
how it can best support and equip the Australian business community to address
modern slavery.
Understanding the problem: The extent of modern slavery
Globally, there is no single agreed estimate of the total number of modern slavery victims.
Recent UN estimates suggest that there are 40 million modern slavery victims globally. Up to
25 million of these victims are exploited through forced labour.
Modern slavery can occur in any industry and exists in both the formal and informal
economies. In contrast to the formal economy, the informal economy describes economic
activities that are not directly regulated by governments. For example, the global informal
economy can include unregulated manufacturing and service industries, such as construction
work and cleaning, as well as home-based workers in industries like textiles and fashion.
Key UN estimates suggest the informal economy includes more than half the global labour
force and that workers in the informal economy are vulnerable to exploitation and abuse.
The complexity of formal and informal economies means that modern slavery can be present
at all stages of the supply chain and in many different settings. For example, entities like
corporations, charities and universities may be exposed to modern slavery risks through
direct suppliers in the formal economy. These entities may also be indirectly exposed to
modern slavery through trusts, investments and extended supply chains that involve informal
economic activities. Internationally, key industries of concern include agriculture,
construction, electronics, fashion, hospitality and extractives. The U.S. Government has
identified 139 goods from 75 countries that it believes are produced through child or forced
labour, including bricks, cotton, footwear, gold and garments.
No country is immune from modern slavery, including Australia. The Australian Government
established its current comprehensive response to modern slavery in 2004. Since 2004, the
Australian Government has identified more than 350 suspected victims of modern slavery.
During this period, the Australian Government has prosecuted more than 55 individuals for
human trafficking, slavery or slavery-like offences under the Commonwealth Criminal Code
and has recorded 21 convictions. Victims of modern slavery in Australia have been identified
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in a range of industries, including domestic service, hospitality, construction and sex work.
Modern slavery is often underreported and not all cases of modern slavery in Australia may
be identified.
Understanding the problem: How does modern slavery impact the Australian business
community?
Large businesses and other entities operating in Australia may be exposed to modern slavery
risks through their operations and supply chains. Modern slavery risks can be particularly
significant in high-risk industries with complex or changeable multi-national supply chains
that make it difficult to monitor supplier practices. Industries with high proportions of
migrant workers or where operations are based in countries with weak regulatory
environments may also be vulnerable to modern slavery. Modern slavery can also occur in
domestic operations and supply chains in Australia, including through contracted labour or
service providers. A 2015 study by the Ashridge Centre for Business and Sustainability at
Hult International Business School and the Ethical Trading Initiative found 71 per cent of
companies believe there is a likelihood of modern slavery occurring at some point within
their supply chains. Both small and large businesses can be exposed to modern slavery risks.
However, the size and complexity of large entities' operations can increase their possible
vulnerability. Other types of entities such as universities and hospitals that have large
supply chains or significant investments may also be exposed to modern slavery risks.
Modern slavery can impact the Australian business community in a number of ways. It is not
possible to quantify the full impact of modern slavery on business due to the hidden nature of
modern slavery crimes. However, it is clear that taking no action to address modern slavery
would leave the Australian business community exposed to the following legal and
reputational risks.
Modern slavery practices such as forced labour are serious crimes. As a result, businesses
involved in modern slavery may face significant legal penalties, including criminal and civil
sanctions. For example, a number of civil suits have been bought against businesses in the
United States (US) in relation to exploitive supplier practices. Modern slavery can also occur
in conjunction with other harmful and illegal practices, such as corruption.
In addition, the presence of modern slavery in business operations or supply chains poses
substantial reputational risks for businesses and may impact shareholder and investor
confidence. These risks have been highlighted by the United Kingdom (UK) Independent
Anti-Slavery Commissioner. Modern slavery can also undermine the competitiveness of
Australian businesses where competitors benefit from modern slavery, including through
lower production costs. Taken together, these risks may result in negative financial impacts
for businesses, including financial losses due to changes to share pricing and increased
lending rates from financiers. In some cases, these impacts may affect the viability of the
business. The UK Government, in its official statutory guidance for reporting entities, has
emphasised that business action to address modern slavery can help to mitigate these risks, by
improving investor confidence and enhancing businesses' brand and reputation.
Government's response to the problem: What measures are in place to address
modern slavery and why is additional action needed?
The Australian Government is committed to combating modern slavery. Australia's
comprehensive strategy to combat modern slavery was established in 2004 and is led by the
Commonwealth Department of Home Affairs. Key elements of Australia's response include
specialist police investigative teams, strong criminal offences, a dedicated victim support
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program and partnerships with the community. Australia's strategy to combat modern slavery
is one of the strongest in the world. For example, the US Government's annual Trafficking in
Persons Report has consistently ranked Australia as a Tier One country since 2004. This
means Australia is fully consistent with US minimum standards for the elimination of human
trafficking. The measures in Australia's strategy are also subject to continual review and
improvement by the Government.
Although Australia's strategy to combat modern slavery is strong and effective, it is primarily
focused on identifying and supporting victims and deterring and prosecuting offenders. This
means the strategy does not directly target modern slavery in business operations and
supply chains or support the business community to take action to combat modern slavery.
This is particularly the case where exploitation occurs offshore. For example, the Australian
Government does not currently provide detailed guidance or awareness-raising materials
about modern slavery specific to the business community. Nor is there a
Government-sponsored mechanism to enable the business community to inform consumers,
investors and other bodies about their efforts to address modern slavery. While there are
some targeted initiatives at the state and territory level, such as the New South Wales Ethical
Clothing Trades Extended Responsibility Scheme, these initiatives are generally limited to
specific industries and locations.
This makes it difficult for the Australian business community to assess, disclose and respond
to modern slavery risks and contributes to a lack of public awareness. A 2015 report by the
Australian Human Rights Commission found that despite a clear 'aspiration and commitment
to address human rights impacts in their supply chains, many businesses lack clear strategies
and processes to trace, monitor and address such risks.' Baptist World Aid's annual Ethical
Fashion Report and Electronic Industry Trends Report also indicates that many fashion and
electronics companies operating in Australia can do more to prevent exploitation. Since 2013,
a number of major businesses operating in Australia have been criticised over allegations of
exploitive conduct in their supply chains. Other businesses have independently acknowledged
the presence of modern slavery in their supply chains and have taken remedial action.
What is the basis for Government to intervene?
Not every problem can be solved by the Government. However, there is a strong basis for the
Australian Government to take action to address modern slavery in business operations and
supply chains.
The Australian Government has a responsibility to ensure Australia's response to modern
slavery is as strong as possible. Australia's international legal obligations require Australia to
respond effectively to human trafficking, slavery and slavery-like practices. Under
Sustainable Development Goal 8.7, Australia has committed to take immediate and effective
measures to end modern slavery by 2030. Importantly, under international law, the
Australian Government is also obliged to take necessary steps, including through the
adoption of laws, policy and other appropriate measures, to prevent and combat human
trafficking and slavery (including slavery-like practices) and ensure an effective remedy for
victims. Such necessary steps may include regulating non-state actors under its jurisdiction,
including businesses. Government intervention is consistent with the UN Guiding Principles
on Business and Human Rights (UN Guiding Principles), which require companies to
respond to human rights impacts that are 'directly linked to their operations, products or
services.' The UN Guiding Principles are not legally binding on Australia as a matter of
international law. However, Australia supports the UN Guiding Principles and encourages
businesses to apply them in their operations.
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The Australian Parliament, business community and civil society have expressed clear
support for the Australian Government to take action to address modern slavery in business
operations and supply chains. The Australian Parliament's Joint Standing Committee on
Foreign Affairs, Defence and Trade recommended in 2013 and 2017 that the Government
legislate to improve transparency in supply chains. In 2016, the Australian Government
National Roundtable on Human Trafficking and Slavery's multi-stakeholder Supply Chains
Working Group also recommended that Government take this approach. The
Australian Government's consultations with business and civil society have also
demonstrated strong support for Government action (see Section Three). Key stakeholders
have also made public statements of support for Government action.
Australian Government action in this area is also consistent with international best-practice.
Internationally, governments are increasingly working with the business community to
combat modern slavery, including by requiring improved supply chain transparency. A
number of foreign jurisdictions are already taking targeted regulatory action to strengthen
their domestic responses to modern slavery and other human rights abuses in supply chains.
These include the United Kingdom, United States, France, the Netherlands and the European
Union. The Australian Government is closely monitoring the effectiveness of these initiatives
to ensure that any Australian Government action corresponds to international best-practice.
What are the Government's objectives for reform?
The Australian Government's primary objective for reform is to equip and enable the
business community to respond effectively to modern slavery and develop and maintain
responsible and transparent supply chains. The Government can achieve this by:
improving the business community's awareness of modern slavery risks, including at
senior levels
creating an environment in which businesses feel 'safe' to identify and disclose
modern slavery risks by establishing a level playing field in the Australian market for
large businesses covered by the reporting requirement. This will mean entities
required to comply and smaller entities that opt in are not disadvantaged by disclosing
modern slavery risks
encouraging the business community to identify and address modern slavery risks
beyond first tier suppliers (direct suppliers) and through their entire supply chains
supporting businesses to use their market influence and leverage to work with
suppliers to improve workplace standards and practices
facilitating a 'race to the top' by providing reputational incentives for businesses to
take action on modern slavery, including the possibility of positive treatment from
investors and consumers for entities that take action, and
improving the information available to consumers and investors about what
businesses are doing to combat modern slavery.
Australian Government action on this issue, including the establishment of a Modern Slavery
Business Engagement Unit, will support the Australian business community to meaningfully
strengthen its response to modern slavery. Without this support, modern slavery risks in
business operations and supply chains may not be addressed. As a result, Australian
businesses and consumers may continue to be exposed to goods and services tainted by
modern slavery.
There are a number of constraints that may impact the Australian Government's ability to
achieve these objectives. These constraints include the risk that further
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Australian Government action may be ineffective or inappropriate due to poor design or
implementation. There is also a risk that Australian Government action may cause unforeseen
consequences, such as excessive costs for business. The Australian Government has
mitigated these risks by engaging in a detailed public consultation process (see
Section Three).
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SECTION TWO
ASSESSMENT OF POSSIBLE POLICY OPTIONS
This section of the RIS assesses three possible options for Australian Government action and
analyses the costs and benefits of each option. This section of the RIS aligns with RIS
Questions 3 and 4.
Overview of possible policy options
The three possible options for Australian Government action considered in this RIS are:
Option One
The Government continues with a business as usual response and takes no further action.
Option Two
The Government takes non-regulatory action by developing measures to raise the business
community's awareness of modern slavery and provide guidance on ways to identify and
address modern slavery risks. The Government could also ask the business community to
address this issue through voluntary, business-led measures.
Option Three
The Government takes targeted regulatory action by introducing a Modern Slavery Reporting
Requirement and provides supporting guidance to the business community.
Impact analysis of possible policy options
OPTION ONE: BUSINESS AS USUAL
The Australian Government Guide to Regulation requires the Australian Government to
analyse a business as usual option as a benchmark.
Benefits Costs and limitations
Allows the business community Does not meet the Government's
flexibility to address modern slavery objectives for reform.
risks.
Inconsistent with business support for
No new regulatory compliance costs. Government regulatory action.
Does not provide support for business
and leaves the business community
exposed to modern slavery risks.
Likely domestic and international
criticism.
Unlikely to result in widespread changes
in business behaviour or increased
action to address modern slavery risks.
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Possible benefits
A business as usual approach may have very limited benefits in some circumstances. The
absence of Australian Government action (particularly regulatory action) could allow
members of the business community to address modern slavery risks flexibly and as they see
fit. Taking no action would also mean that businesses do not need to respond to new
Government regulation and would not incur any compliance costs.
Possible costs and limitations
A business as usual approach would not meet the Australian Government's objectives for
reform and could have substantial costs. Maintaining the status quo would mean the
Australian Government continues to provide inadequate support to the Australian business
community to address modern slavery. This would be inconsistent with business support for
Government action on this issue and may negatively impact Australian businesses if
modern slavery is subsequently identified in their operations or supply chains. Taking no
action would also lead to international and domestic stakeholder criticism. It could
disadvantage Australian businesses competing for market share in foreign jurisdictions that
have already taken regulatory action on this issue.
Some members of the business community have already taken steps to address modern
slavery risks, including utilising non-government ethical certification schemes and updating
policies and processes. It is likely some businesses would continue to take steps to address
modern slavery in the absence of Australian Government action. However, these actions are
generally ad hoc and are not widespread or consistent. Business action is also generally
confined to sectors and companies that have been targeted by advocacy groups or where
businesses can gain market advantage through ethical branding.
Summary of submissions
The Australian Government has not received any written submissions or verbal feedback
during consultations in support of taking a business as usual approach.
OPTION TWO - NON-REGULATORY ACTION
The Australian Government could seek to support the business community to address
modern slavery through non-regulatory initiatives. This could involve the Government
developing and disseminating awareness-raising and guidance materials to the business
community on modern slavery. The Government could also promote and support voluntary
business-led measures to address modern slavery, such as codes of conduct and pledges. This
option does not involve regulation so would not result in any additional costs to business.
Benefits Costs and limitations
Allows the business community Does not meet the Government's
flexibility to address modern slavery objectives for reform.
risks.
Inconsistent with business support for
Allows the Government to set out Government regulatory action.
expectations for business behaviour and
Likely domestic and international
raise awareness without imposing new
criticism.
regulatory compliance costs.
Success contingent on business
Could be targeted to high risk sectors.
engagement.
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May lead to limited behaviour change Unable to create a level playing field for
from business. business.
May duplicate existing international and
business-led initiatives.
Business-led initiatives like certification
schemes may still impose costs on
business.
Possible benefits
Taking non-regulatory action could have a number of benefits and may assist businesses to
respond more effectively to modern slavery risks without imposing additional compliance
costs through new regulation.
Non-regulatory action could take a number of forms, including producing guidance and
awareness-raising materials. Government guidance and awareness materials would allow the
Australian Government to clearly set out its expectations for how the business community
should respond to modern slavery risks. This would also ensure the business community has
access to materials to help them more effectively address modern slavery risks. This could
lead to improved awareness of modern slavery amongst the business community and increase
the number of businesses taking action to combat modern slavery. Developing guidance and
awareness materials in consultation with business would be likely to improve their
effectiveness and uptake.
Voluntary business-led measures may also provide a mechanism for parts of the business
community to collectively address modern slavery. This could include codes of conduct,
industry certification schemes or other measures. Promoting voluntary action would allow
businesses to work collaboratively to design and implement business-led responses. In some
cases, it is possible that a business designed and led response may be more effective than
Government regulation. Voluntary actions could also be focused on sectors with the highest
modern slavery risks. This would mean businesses in low risk sectors would not be required
to take action that may be unnecessary.
Possible costs and limitations
The effectiveness of non-regulatory Government action is limited by a number of factors. In
particular, the success of voluntary, non-regulatory measures is contingent on business
engagement. This means the most likely businesses to adopt voluntary mechanisms or utilise
guidance material are those already acting to increase transparency and address the risk of
exploitation within their supply chains. Voluntary initiatives may also have limited uptake as
competitive tensions may mean some businesses choose not to collaborate with others.
Businesses may also opt not to take voluntary action because this may expose them to more
scrutiny from media and civil society than businesses that take no or little action. As a result,
the Australian Government would not be able to use non-regulatory action to create a level
playing field for business. The reliance of non-regulatory action on business engagement also
means any non-regulatory initiatives would be unlikely to substantially increase information
available to consumers and investors.
Another disadvantage of non-regulatory action is that any Australian Government initiatives
are likely to duplicate existing initiatives. Importantly, international bodies, business groups
and civil society already produce a range of guidance and awareness-raising materials for the
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business community. Additional Government guidance may not add value to this existing
information if it is not tied to a regulatory framework. There are also a range of existing
business-led initiatives to address modern slavery across various industries, including cocoa
and palm oil. It is unlikely the Australian Government would be able to improve on these
existing initiatives through non-regulatory measures.
Summary of submissions
The Australian Government has received very limited feedback in support of non-regulatory
action. Over 90% of written submissions support the Australian Government taking
regulatory action.
OPTION THREE: TARGETED REGULATION THROUGH A MODERN SLAVERY
REPORTING REQUIREMENT
The third option available to the Australian Government is to take targeted regulatory action
by introducing a Modern Slavery Reporting Requirement, tailored to the Australian context.
This would require entities operating in Australia with total annual revenues over a set
threshold to report annually on their efforts to address modern slavery in their operations and
supply chains. An outline of the key features of the Australian Government's proposed model
reporting requirement is set out at Appendix A.
Benefits Costs and limitations
Addresses the Australian Government's Will impose a regulatory cost on
objectives for reform. business and other entities
(estimated at $65.85 million or
Will reduce modern slavery risks in Australian
$21,950 per reporting entity
goods and services.
annually).
Provides certainty for businesses by setting
Will require action from large
clear standards for action and creating a level
businesses that meet the threshold.
playing field in the Australian market for
businesses covered by the reporting
requirement.
Will facilitate a 'race to the top' amongst
business.
Aligns with business expectations for
Government action.
Consistent with Australian Government
regulatory action on gender and illegal
logging.
Will prompt flow on change down supply
chains.
Possible benefits
Targeted regulation through introducing a Modern Slavery Reporting Requirement would
address the Australian Government's primary objective for reform. The primary objective is
to equip and enable the business community, led by large business, to respond effectively to
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modern slavery, and develop and maintain responsible and transparent supply chains. This
form of regulation will also send a clear message to the business community that the
Australian Government will work with businesses to address modern slavery and will not
tolerate Australian businesses benefiting from modern slavery in their operations and
supply chains.
This type of regulation would have a number of key benefits. Importantly, a reporting
requirement would provide certainty and consistency for the business community because it
would set clear standards that apply to all entities above the set revenue threshold. This will
create a level playing field in the Australian market for large businesses covered by the
reporting requirement and smaller businesses that opt in to reporting by ensuring that they are
not disadvantaged by taking action to disclose and address modern slavery risks. It will also
contribute to the creation of an emerging international level playing field by complementing
existing disclosure legislation in jurisdictions like the UK and California. Importantly,
Government's consultations indicate that the current absence of a requirement for all large
business to report means that businesses that publicly disclose modern slavery risks are likely
to face increased scrutiny from investors and civil society. This means competitors may gain
a market advantage by not disclosing modern slavery risks.
The reporting requirement will also facilitate a 'race to the top' amongst businesses
competing for market funding and investment and consumer support. For example, investors
are increasingly considering human rights issues as part of responsible investment processes.
Government's consultations indicate this may mean businesses that provide high quality and
comprehensive statements could receive more favourable lending rates and attract more
investment because they can show they are addressing potentially costly modern slavery
risks. Producing a Modern Slavery Statement may also have a positive impact on consumer
purchasing where consumers choose to buy from businesses seen as 'ethical'.
Importantly, the UK Independent Anti-Slavery Commissioner has noted the UK
reporting requirement is driving positive change, including significant increases in
involvement on modern slavery issues from CEOs and senior executives as well as
businesses tracing and mapping supply chains, establishing collaborative partnerships and
receiving recognition from civil society award programs. However, the effectiveness of the
UK legislation in creating a race to the top may be limited by the absence of a
Government-designated central register for statements produced under the reporting
requirement and mandatory reporting criteria. This affects the accessibility and quality of
statements, which may limit the ability of investors and consumers to identify and support
businesses that take a best-practice approach. The Australian reporting requirement will
address this issue by including mandatory criteria and a Government-designated, publically
available central register to improve the quality and accessibility of statements.
The targeted nature of the reporting requirement means it will only directly impact large
business that have the market leverage and influence to foster change in their supply chains.
This means it will only impact those businesses best prepared to comply with the reporting
obligation and that this regulation is unlikely to restrict competition or entry to markets for
new businesses. Modern slavery risks are not necessarily confined only to large businesses
and importantly, the reporting requirement will include an 'opt in' provision to allow smaller
entities below the set revenue threshold to provide statements on a voluntary basis. This will
ensure small and medium businesses are able to benefit from the reporting requirement if
participation provides them with material benefits. For example, a small business may wish
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to voluntarily comply with the reporting requirement as a way to heighten its reputation and
promote its products and services.
Introducing new regulation through a reporting requirement accords with business and
community expectations that the Government will lead on this issue. Implementing targeted
regulation is also consistent with the Australian Government's response to other
supply chain-related or social issues, including illegal logging and gender equality. The
Commonwealth Illegal Logging Prohibition Act 2012 requires importers to implement risk
management systems to address the risk of illegally harvested wood being used in imported
products. More broadly, the Commonwealth Workplace Gender Equality Act 2012 requires
certain non-public sector entities to submit annual reports to the Workplace Gender Equality
Agency under a range of gender equality indicators. The Department of Home Affairs has
consulted with the agencies responsible for both these measures to identify 'lessons learned'
and key feedback.
Possible costs and limitations
Targeted regulation through a reporting requirement has a number of costs and limitations.
These need to be weighed carefully against the benefits of regulation identified above.
Due to its targeted nature, the reporting requirement will only require action from large
business and other large reporting entities. Small and medium businesses will not be directly
covered by the regulation which means these entities may not take effective action to address
modern slavery risks that may be present in their operations and supply chains. However,
large businesses covered by the reporting requirement are likely to take steps to improve
responses to modern slavery throughout their supply chains, including by working with small
and medium suppliers. The Government recognises this may result in increased costs for
suppliers. The Government will work with reporting entities in key industries to encourage
them to engage with suppliers in a constructive and coordinated way to minimise any
potential flow on costs.
Another potential cost of the reporting requirement is that its effectiveness may be
undermined by low rates of compliance and poor reporting practices from business. This
could be due to low business awareness of their obligations or wilful non-compliance. The
Government has committed to developing clear mandatory criteria and comprehensive
guidance for business to ensure reporting entities are able to understand their obligations. The
Government will also work with peak bodies, industry groups and civil society to raise
business awareness of the reporting requirement.
A further limitation associated with the proposed reporting requirement may be stakeholder
perceptions that it is too strong or not strong enough. This could lead to calls for additional
reform which may cause business uncertainty. The Government has taken steps to address
this by undertaking extensive consultations to ensure the reporting requirement reflects
community expectations. The Government will also review the reporting requirement after
three years to assess its effectiveness.
All regulation involves new compliance costs. The reporting requirement will impose
quantifiable new costs on large businesses required to comply. It will also impose costs on
other large entities that have revenue in excess of the reporting threshold, including
universities and charities. The Department of Home Affairs has carefully considered these
costs and has consulted with key business and non-business stakeholders about possible
impacts of new regulation.
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Assessment of regulatory impact
In contrast to options one and two, the proposed reporting requirement will have a regulatory
impact on business. The primary regulatory impact will be on large corporations and other
entities required to comply with the reporting requirement. There may also be a secondary,
flow-on regulatory impact on smaller entities that have business relationships with larger
reporting entities.
The Government estimates the proposed reporting requirement will have an average, annual
regulatory cost of $65.85 million or $21,950 per reporting entity.
Average annual regulatory costs (from business as usual)
Change in costs Business Community Individuals Total
($ million) organisations change in
costs
Total, by sector $65.85 $0 $0 $65.85
A detailed outline of the costings is at Appendix B. These costings estimate the minimum
reasonable cost for reporting entities to comply with the reporting requirement. The costings
only relate to actions reporting entities are required to take to comply with the reporting
requirement. This means the costings do not cover additional discretionary actions that may
be taken by reporting entities.
These costings are an estimate only. For the reasons set out below it is not possible to
accurately determine actual compliance costs for individual reporting entities:
Reporting entities will respond to the reporting requirement in different ways and with
varying levels of effort. The way in which an entity responds to the reporting requirement
is likely to be determined by a range of variables including: entity type; investor and
consumer pressure; reputational risk; financial resources; and the perceived costs and
benefits of compliance.
Reporting entities' compliance costs will not be uniform and will be contingent on a
range of variables. These variables include: the entity's existing staff profile; internal
expertise; the size and complexity of the entity's operations and supply chains; degree of
reliance on external consultancy or legal services; and any existing human rights
reporting processes undertaken by the entity. Compliance costs will also vary where
reporting entities elect to take additional discretionary actions to improve their
compliance, such as implementing new policies and processes.
Reporting entities' compliance costs will vary year on year. Some entities may incur
initial one-off compliance costs, such as implementing new reporting systems and
databases. Compliance costs in later years may also be reduced as efficiencies are
identified. Other entities may incur additional costs in subsequent years if they decide to
increase their efforts to comply with the reporting requirement.
Steps taken to minimise the regulatory impact
The Government is committed to ensuring it considers all possible options to reduce the
regulatory impact associated with this option.
One key way the Government can reduce the regulatory impact on business is to design the
reporting requirement to provide the greatest possible certainty to business about their
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obligations and complement existing business reporting cycles. For example, the
Government's proposed reporting requirement includes simple definitions of key concepts
and terms and four simple mandatory criteria that all reporting entities must address, instead
of a series of recommended criteria as in the United Kingdom.
On the basis of feedback received during consultations, the Government will also align the
reporting deadline to entities' own financial years, rather than the Australian financial year.
This will help to reduce compliance costs for business by ensuring Modern Slavery
Statements can be developed and approved as part of entities' broader reporting cycles.
The Government will also develop comprehensive guidance for reporting entities to help
reduce compliance costs for business. Consultations and international experience have
highlighted the importance of providing practical, clear guidance for business about how to
comply with the reporting obligation, including case studies, best practice examples and clear
definitions. The Government's guidance will help to mitigate compliance costs by
minimising business uncertainty about their obligations and providing business with a simple
and practical pathway to implement the reporting requirement. This will also reduce the need
for reporting entities to seek external legal advice and guidance.
The Government has also taken steps to reduce the regulatory impact on business by aiming
for regulatory consistency across international jurisdictions. This will reduce compliance
costs for businesses operating internationally by ensuring they do not have to comply with
different requirements in different jurisdictions. The proposed reporting requirement has been
designed to ensure the minimum necessary disruption for Australian entities already reporting
on modern slavery issues in other jurisdictions, particularly the UK. As at February 2018, at
least 21 Australian entities have complied with modern slavery reporting legislation in the
UK.
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SECTION THREE
OVERVIEW OF PUBLIC CONSULTATION PROCESS AND FINDINGS
This section provides an overview of the Australian Government's public consultation
process. This section explains the purpose and objective of the consultation process and
provides detail about the Government's consultation strategy. This section also provides a
summary of key feedback from consultations, including written submissions. This section of
the RIS aligns with RIS Question 5.
What did the consultation process involve?
The Australian Government has conducted an accessible and transparent consultation process
to seek the views of business and civil society. The aim of the consultation process was to
ensure that any Government action is: simple, sensible and as effective as possible; consistent
with community expectations; and does not impose unnecessary regulatory impacts. The
consultation process was structured to focus on key stakeholders, including businesses that
would be impacted by proposed regulation. Opportunities were also provided for a broad
range of stakeholders to provide their views to Government, including private individuals.
The consultation process commenced on 16 August 2017, when the then Minister for Justice,
the Hon Michael Keenan MP, announced the Australian Government would hold national
consultations on the proposed Modern Slavery Reporting Requirement. The then Minister for
Justice also released a Public Consultation Paper and Regulation Impact Statement detailing
the Australian Government's proposal, other options for reform and highlighting key areas
for feedback. This consultation paper was made available online.
The Commonwealth Attorney-General's Department led the consultation process. On
20 December 2017, responsibility for the Modern Slavery Reporting Requirement transferred
to the new Commonwealth Department of Home Affairs. To ensure full public consultation,
the Government conducted a two-phase consultation process. The first phase of consultations
involved a series of 12 stakeholder roundtables in Canberra, Melbourne, Sydney and Perth.
Each roundtable was scheduled for three-and-a-half hours and included discussion of each of
the key areas for feedback identified in the consultation paper. More than 130 representatives
from business and civil society attended these roundtables. To ensure all relevant
stakeholders were represented, the Australian Government worked with key industry and
business groups to circulate invitations. The Australian Government also directly approached
key stakeholders, including those that had made submissions to the 2017 parliamentary
inquiry on modern slavery.
The second phase of consultations involved seeking written submissions from interested
stakeholders. The Australian Government received 99 written submissions addressing the key
areas for feedback set out in the consultation paper. The deadline for written submissions was
set after the consultation roundtables concluded to ensure stakeholders could address matters
raised during the roundtables in their submissions.
In addition to formal consultations, the Australian Government held over 50 direct meetings
with interested stakeholders. Relevant Ministers and Australian Government representatives
have also spoken about the proposed reporting requirement at civil society and industry
events.
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The Australian Government also held targeted exposure draft consultations on 29-30 May
2018 with over 40 expert stakeholders. The purpose of these consultations was to test that the
proposed legislation was clear and practical for business to implement.
What were the findings from the consultation process?
To ensure the consultation process was as transparent as possible, the Government published
a summary of the consultation roundtables online. The Government also published
submissions online in early 2018.3 The Government is continuing to consider options for
further consultation as required. The table below sets out key feedback and findings from the
Government's consultation process.
ISSUE Roundtables Written submissions
Should the Almost all business and civil Written submissions demonstrated
Government take society roundtable attendees strong support for regulatory action.
regulatory action supported the Government Approximately 98% of submissions
through a taking regulatory action. Most supported the Government
reporting attendees supported the introducing a reporting requirement
requirement? proposed reporting requirement or stronger due diligence legislation.
but some civil society attendees The majority of these submissions
indicated a preference for favoured the proposed reporting
stronger regulation that would requirement rather than due diligence
create a legal requirement for measures.
due diligence.
Should the Business and civil society The clear majority of business
reporting attendees generally supported submissions supported the
requirement only the use of a threshold but application of the reporting
cover large expressed differing views on requirement only to large businesses
business? where the threshold should be by establishing a threshold of $100
set. Generally, business million or higher. In contrast, most
participants supported an initial civil society submissions supported a
threshold of around $100 million threshold of $50-60 million to align
annual revenue. Civil society with existing UK legislation. Some
attendees mostly supported a civil society submissions advocated
lower threshold of either $50-60 for a threshold of $25 million.
million, to align with existing
UK legislation, or $25 million.
3
Copies of submissions received are available online at:
https://www.homeaffairs.gov.au/about/consultations/modern-slavery-supply-chains-reporting-requirement
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Would the The majority of business participants The majority of business and
reporting did not express concerns about civil society submissions did
requirement have managing the regulatory costs for the not express concerns about the
excessive or proposed reporting requirement. The regulatory impact. Many
inappropriate majority of participants suggested submissions noted difficulties
regulatory regulatory impacts would likely vary accurately estimating the total
impacts on depending on an entity's structure, regulatory costs, which may
business and industry and readiness to report on vary widely between reporting
other entities? modern slavery. Some business entities.
participants also highlighted that the
regulatory burden may be passed
down through supply chains to
smaller entities.
Is the proposed Business and civil society Most business submissions
scope of the participants supported the proposal supported limiting reporting
reporting to require entities to report on both only to modern slavery. A
requirement their operations and supply chains. small number of business
appropriate? Many civil society participants and a submissions and some civil
small number of businesses society submissions supported
suggested the Government consider including related conduct, such
requiring reporting on conduct that as all forms of child labour.
would not necessarily constitute
modern slavery, such as all forms of
child labour and hazardous working
conditions for all labour.
How can the The majority of business participants Almost all submissions from
Government best noted that penalties could create a large businesses that would be
ensure focus on compliance rather than covered by the proposed
compliance with sharing best-practice, and reporting requirement
the reporting reputational risk and investor supported not including
requirement? pressure are more effective drivers punitive penalties. In contrast,
for compliance. Civil society most civil society submissions
participants generally supported argued for including penalties
penalties for non-compliance but for non-compliance.
expressed mixed views on their
appropriateness during the first three
years.
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SECTION FOUR
RECOMMENDED OPTION
This section sets out why targeted regulatory action is the Australian Government's
recommended option. This section of the RIS aligns with RIS Question 6.
This RIS recommends the Australian Government pursue Option Three by taking targeted
regulatory action through a Modern Slavery Reporting Requirement. Modern slavery
involves grave abuses of human rights and serous criminal misconduct. It is appropriate that
the Government takes regulatory action to support the business community to combat this
issue.
This RIS assesses that Option Three is likely to deliver the greatest benefit in terms of raising
business awareness of modern slavery and providing shareholders and consumers with
information about modern slavery risks in entities' operations and supply chains. This will
support business to better address modern slavery risks and may assist investors and
consumers with their investing and purchasing decisions. Option Three will impose an
average annual regulatory cost on reporting entities of approximately $21,950 per entity.
However, the benefits arising from this cost are commensurate with: the Government's
objectives for reform; the nature and extent of modern slavery risks in business operations
and supply chains; and the benefits of the regulation, including the creation of a level playing
field for business. It is also consistent with the Australian Government's international
obligations to give effect to human rights within Australia's jurisdiction and to prevent and
suppress human trafficking, slavery and slavery-like practices, including as they are impacted
by business.
Importantly, this option will achieve all of the Government's objectives for reform. If
implemented effectively, the reporting requirement will improve the business community's
awareness of modern slavery risks, including at senior levels, and create an environment in
which businesses feel 'safe' to identify and disclose modern slavery risks. It will also
encourage businesses and other reporting entities to identify and address modern slavery
risks, and use their market influence and leverage to improve workplace standards and
practices. The reporting requirement will facilitate a 'race to the top' by creating reputational
incentives for businesses to take action on modern slavery. The reporting requirement will
also improve information available to consumers and investors about actions businesses are
taking to combat modern slavery.
Consultations have shown very strong business and civil society support for the Government
to proceed with the development and implementation of the reporting requirement, and
establishment of a mechanism to provide advice and support to business about complying
with the reporting requirement. This includes strong support from large businesses that would
be covered by the regulation. There is also clear Parliamentary support for the Government to
take regulatory action.
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SECTION FIVE
IMPLEMENTATION AND EVALUATION
This section sets out how the Australian Government proposes to implement and evaluate the
Modern Slavery Reporting Requirement. This section addresses RIS question 7.
Implementation plan
Reporting Requirement
The Government aims to implement the reporting requirement in a way that ensures:
- the majority of reporting entities understand and meaningfully comply with their
obligations
- reporting entities, investors, consumers, civil society and business peers collaborate
together to drive a 'race to the top' and share best practice
- modern slavery risks in entities' operations and supply chains are identified, assessed
and mitigated, and
- reporting entities receive appropriate support and assistant from Government to
comply with the reporting requirement.
The Department of Home Affairs is responsible for implementing the reporting requirement
and will work closely with government, business and civil society stakeholders to achieve
these implementation objectives.
The reporting requirement will apply to a reporting entity's first full financial year after the
legislation enters into force (expected late 2018). This means that there will be a period of
time after the legislation entering into force where reporting entities are not required to
publish statements. As part of the implementation process, the Australian Government will
use this period to focus on ensuring that reporting entities understand their obligations and are
prepared to comply with the reporting requirement. This is likely to include business forums,
workshops and awareness-raising through key business peak bodies. The establishment of a
Modern Slavery Business Engagement Unit will also ensure business has a single point of
contact to seek guidance and non-binding advice on compliance with the reporting
requirement, including how to remedy identified risks of modern slavery.
The Australian Government will also develop detailed guidance for business to facilitate the
implementation of the reporting requirement. This guidance will include case studies, clear
definitions, frequently asked questions, tips on best-practice and additional information about
the Government's expectations. The Government will draft this guidance in consultation with
business and civil society. The guidance will be made available as soon as practicable after
legislation is passed.
Entities will be required to provide their statements to Government for publication on a
central register. Entities will also have discretion to publish their statements on their
webpages or in annual reports or other relevant documents. Further detail on the key features
of the Australian Government's proposed model reporting requirement is set out at
Appendix A.
Modern Slavery Business Engagement Unit
The Australian Government proposes to establish a new Modern Slavery Business
Engagement Unit within the Department of Home Affairs to support the effective
implementation of the proposed reporting requirement and strengthen the
Australian Government's engagement with business on modern slavery issues more broadly.
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The Australian Government has committed $3.6 million through the 2018 Federal Budget to
establish and run the Unit over January 2019 to June 2022.
The Unit's primary role will be to work with the business community to support the effective
implementation of the reporting requirement. To achieve this, the Unit will:
develop and maintain detailed official guidance for the business community about the
reporting requirement
provide objective, non-binding advice to up to 3,000 individual businesses to support
their compliance with the reporting requirement
monitor compliance with the reporting requirement, including by identifying and
promoting best-practice trends and initiatives
deliver targeted education, training and awareness-raising initiatives for business,
civil society and consumers to raise the profile of modern slavery
develop and administer the online central register of Modern Slavery Statements
coordinate the Australian Government's annual Modern Slavery Statement
lead broader work to address possible modern slavery risks in Government
procurement, and
support research into modern slavery risks in supply chains.
The Unit will report on its key strategic priorities and outcomes through the
Interdepartmental Committee on Human Trafficking and Slavery's annual report to
Parliament, as well as through Senate Estimates processes.
A timetable for implementation and key tasks is set out below.
Activity Estimated date
Legislation introduced to the Parliament June 2018
Legislation likely to be passed by the Parliament Prior to December 2018
Department of Home Affairs releases guidance for December 2018
reporting entities
Legislation expected to enter into force (subject to January 2019
passage through Parliament)
New Modern Slavery Business Engagement Unit November 2018
established
Department of Home Affairs establishes expert working January 2019
group to guide implementation
Department of Home Affairs establishes a central September 2018 - September
register for statements 2019
Department of Home Affairs works with business and September 2018 - December
civil society to raise awareness of the reporting 2019
requirement
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Most reporting entities release first statements January - December 2020
Formal review of legislation commences January 2022
Evaluation process
The Australian Government will carefully evaluate the proposed Modern Slavery Reporting
Requirement in consultation with key stakeholders.
The Australian Government proposes to establish an expert reference group to help evaluate
the effectiveness of the reporting requirement and ensure it is properly implemented. The
Department of Home Affairs will lead the reference group as the agency responsible for the
reporting requirement. Other reference group members will include key government agencies
and business and civil society stakeholders. The reference group will provide a forum for the
Government to seek feedback on implementation of the reporting requirement, promote
best-practice and help to identify and address key risks and threats to success. Additional
governance and accountability processes are not required because the reporting requirement
does not establish any decision-making powers.
A formal evaluation of the reporting requirement will be undertaken three years after the
legislation enters into force. This timeframe means that the review will take place after all
reporting entities will have published at least one to two Modern Slavery Statements under
the reporting requirement. This will provide a detailed evidence base for the review and allow
for a rigorous assessment of the reporting requirement's effectiveness and necessity. The
Government will undertake the three year review in consultation with business and civil
society. The outcomes of the review will be provided to the relevant Australian Government
Minister for consideration.
The reference group and review will consider a range of data in assessing the effectiveness
and success of the reporting requirement. This is likely to include quantitative data around the
number of statements published and their consistency with the legislative requirements of the
reporting requirement. Data is also likely to include qualitative information, including
examples of changes in individual business behaviour and the development of collective
best-practice trends within the business community.
Changes in individual business behaviour could include the development of new policies and
processes, such as codes of conduct and training for suppliers. Best-practice trends could
include situations where a number of reporting entities have taken the same or similar actions
and this is seen by business, civil society and or government to be leading to a shift in
broader business culture. For example, a best-practice trend might be businesses developing
collaborative partnerships with civil society to combat modern slavery. Information about
changes in business behaviour and best-practice trends will be primarily be gathered by
assessing published Modern Slavery Statements. The review and reference group may also
draw on reference group members' expertise and consider independent benchmarking reports
and assessments of entities' reports, as well as evidence from formal and informal
submissions and consultations with businesses, civil society and consumers.
The effectiveness of the Modern Slavery Business Engagement Unit will be assessed on an
ongoing basis, including through the Interdepartmental Committee on Human Trafficking
and Slavery's annual report to Parliament, Senate Estimates processes and feedback from
businesses.
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APPENDIX A: OVERVIEW OF PROPOSED MODEL -
REPORTING REQUIREMENT
The Australian Modern Slavery Reporting Requirement (reporting requirement) will require
large corporations and entities operating in Australia to publish an annual statement detailing
their actions to address modern slavery practices in their operations and supply chains. The
reporting requirement will cover approximately 3,000 corporate groups and other relevant
entities. This reporting requirement proposed model has been refined through public
consultations and includes the key features set out below.
Legislative basis
The reporting requirement will be established through a new Act of Parliament.
Application
To help ensure a level playing field, the reporting requirement will apply to a broad range of
entity types, including bodies corporate, unincorporated associations or bodies of persons,
superannuation funds and approved deposit funds.
Terminology
For the purposes of the reporting requirement, modern slavery will be defined as
incorporating the human trafficking, slavery and slavery-like practices criminalised and
defined in Divisions 270 and 271 of the Commonwealth Criminal Code. This means
modern slavery will encompass trafficking in persons, slavery, servitude, forced labour,
forced marriage, debt bondage and deceptive recruiting for labour or services. The definition
of modern slavery will also include the worst forms of child labour as defined in the
1999 Convention on the Worst Forms of Child Labour4 but will not include practices such
hazardous working conditions for adults or broader human rights issues. Mandating reporting
on these issues would substantially broaden the scope of the reporting requirement and be
inconsistent with existing reporting requirements in other jurisdictions. The Australian
Government will encourage entities to consider reporting on these issues where appropriate.
Threshold
The threshold for the reporting requirement will be set at $100 million total annual revenue.
Revenue will include the consolidated revenue of the reporting entity and the entities it
controls (if any) and will be calculated in accordance with the Australian Accounting
Standards. To create a level playing field, the reporting requirement will apply to all
Australian entities that meet the revenue threshold as well as all foreign entities with more
than $100 million consolidated revenue that are carrying on business in Australia. A
foreign entity will be considered to be carrying on business in Australia where its activities
meet the test for carrying on a business set out in the Commonwealth Corporations Act 2001
(irrespective of whether the reporting entity is a body corporate). This secondary test will
provide clarity for business by ensuring that foreign entities have certainty about whether
they are required to report.
Timeframe for reporting
Reporting entities will be required to publish Modern Slavery Statements within six months
after the end of the entity's financial year. This will provide certainty for the business
community by ensuring that entities cannot seek any competitive advantage by delaying
publishing statements.
4
See the Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms
of Child Labour, 1999 (No. 182)
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Scope of reporting
Reporting entities will be required to report on their operations and supply chains as well as
the operations and supply chains of any subsidiary entities and other relevant entities owned
or controlled by the reporting entity (irrespective of whether the subsidiary or other relevant
entity is operating in Australia or is part of the entity's core business). Where a parent entity
and subsidiary entity are both required to report, the parent entity will be able to choose
whether to also report on behalf of the subsidiary.
Reporting content
Reporting entities will be required to address four key mandatory criteria. These criteria
cover:
the entity's structure, operations and supply chains
possible modern slavery risks
actions to assess and address modern slavery risks, including due diligence and
remediation process; and
how the entity assesses the effectiveness of its actions.
These criteria will provide certainty to the business community about what information to
include and ensure consistency of statements. Statements must be approved at the equivalent
of board level and will need to be signed by a director.
Application to Government
The Australian Government recognises that it needs to show leadership in combating
modern slavery and that government procurement is not immune from modern slavery risks.
This is why the Australian Government will publish an annual Modern Slavery Statement
covering Commonwealth procurement. Corporate Commonwealth entities and
Commonwealth companies will be required to publish separate Modern Slavery Statements if
they meet the revenue threshold. This will complement existing requirements for
Australian Government agencies to undertake due diligence under the Public Governance,
Performance and Accountability Act 2013, including by ensuring procurements are ethically
sourced. The Australian Government will also encourage Australian State and Territory
Governments to publish Modern Slavery Statements.
Guidance for business
The Australian Government will provide detailed guidance and awareness-raising materials
for business before the reporting requirement enters into force. This guidance will be drafted
in consultation with experts from business and civil society. The Modern Slavery Business
Engagement Unit will also provide guidance and objective, non-binding advice to the
business community to facilitate compliance with the reporting requirement.
Compliance mechanism
The Australian Government will not publish a list of entities required to report or introduce
punitive measures for non-compliance with the reporting requirement. The
Australian Government does not hold sufficient information to compile an accurate list of all
entities required to report. The reporting requirement is also intended to facilitate a
collaborative 'race to the top' amongst business and punitive penalties may lead to a tick box
compliance approach from reporting entities.
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Monitoring and Evaluation
The Australian Government will make entities' Modern Slavery Statements available through
a free, publicly accessible central register. Entities will be required to provide their statements
to Government for publication on the central register. Entities will also have discretion to
publish their statements on their webpages or in annual reports or other relevant documents.
The register will be administered by the Department of Home Affairs. The
Australian Government will also establish a business and civil society reference group to
provide feedback to government about the implementation and operation of the reporting
requirement.
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APPENDIX B: OUTLINE OF COSTINGS
Average annual regulatory costs (from business as usual)
Change in costs Business Community Individuals Total
($ million) organisations change in
costs
Total, by sector $65.85 $0 $0 $65.85
Action Description Costs
Drafting These costings assume one full time Cost = $11,500
the employee (or equivalent) requires
statement approximately five weeks (25 working days)
to gather information and produce a draft
statement. This is likely to include gathering
information from suppliers and relevant
business areas of the entity. This costing also
includes time taken for the employee to
provide the final statement to the Australian
Government for lodgement in the central
register (approximately 1.5 hours). For the
purposes of this calculation, it is not possible
to accurately account for likely differences in
staff remuneration between reporting entities.
Based on consultations with business, this
calculation assumes the total wage of the
employee is $120,000 per year. This equates
to a weekly wage cost of approximately
$2,300.
Finalising These costings assume the draft statement is Cost = $3,450
the reviewed by up to four senior staff in the
statement reporting entity for a combined total of 24
hours (equivalent to three standard working
days). This review process is likely to include
scrutiny from an entity's legal area (where
applicable). For the purposes of this
calculation, it is not possible to accurately
account for likely differences in approval
processes between reporting entities. It is also
not possible to accurately account for likely
differences in staff remuneration between
reporting entities. Based on consultations
with business, this calculation assumes that
the average total wage of the senior staff
members that review the statement is
$300,000 per year. This equates to a weekly
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wage cost of $5,770 per staff member and a
daily wage cost of $1,150 per staff member.
Approving These costings assume that, as required by Cost = $7,000
the the reporting requirement, the reporting
statement entity's board or equivalent approves the
statement and that the statement is also
signed by a director or equivalent. These
costings assume this process requires two
hours per board member. For the purposes of
this calculation it is not possible to accurately
account for likely differences in board sizes
and remuneration between reporting entities.
This calculation assumes that the average
board size is 7 members. The average
remuneration for directors in Australia for
large companies is between $60,000 to
$140,000 per year. Assuming directors have
an average time commitment of 5 hours per
week for 40 weeks each year, this equates to
200 hours at a maximum hourly wage of
$700 per hour or minimum of $300 per hour.
This calculation uses an average total wage
of $500 per hour.
TOTAL $21,950 TOTAL $65.85 million.
COST COST
PER (assuming
ENTITY 3,000
reporting
entities
based on a
revenue
threshold of
$100
million)
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