Expand Modern Slavery Reporting Requirements to Smaller Entities

Author: Natasha Lourenço | Publish date: 08/09/2024

Problem Identification: 

In Australia, medium-sized businesses are not required to report on modern slavery risks. 

A review of the Modern Slavery Act 2018  (the Act) highlighted that 2,393 medium-sized businesses are not required to report on modern slavery risks. A medium sized business has an annual revenue between AU $50-$100 million.

This could lead to a lack of transparency and accountability in a large part of the business sector. Without mandatory reporting, medium-sized entities may not assess or address modern slavery risks in their operations or supply chains, potentially undermining efforts to combat modern slavery.

Context: 

According to Walk Free, modern slavery refers to situations where individuals are exploited and controlled through violence, force, fraud, or coercion for others’ commercial or personal gain. This includes practices such as human trafficking, forced labour, forced marriage, and debt bondage which are known to impact both global and local communities. The 2023 Global Slavery Index found that approximately 41,000 people in Australia, and over 40 million people worldwide are affected by modern slavery.

The Act mandates that Australian businesses and government entities with annual revenues exceeding AU$100 million, also known as big businesses, need to report on slavery risks within their operations and supply chains, both domestically and internationally. The stated main objectives of the Act are to enhance awareness of modern slavery risks among businesses and government entities, and to assist these organisations in identifying, reporting, and mitigating these risks effectively. 

Professor John McMillan led the 2022 statutory review of the Act’s initial efficacy and gathered diverse stakeholder insights through consultations. This review aimed to identify key areas for legislative improvement.

One of the recommendations from the review was to lower the reporting threshold to AU$50 million. The report stated that this adjustment could significantly broaden the scope of entities accountable for monitoring and reporting modern slavery risks. McMillan said this could enhance compliance and assist efforts to combat modern slavery. The report noted this change would allow for a natural progression from targeting big businesses alone to including both big and medium-sized businesses, ensuring broader coverage of modern slavery risks across industries.

Internationally, similar regulatory thresholds exist, such as in New Zealand where the threshold is set at AUD 18 million, and in Canada at AUD 43 million. 

Solution Identification: 

Amend Part 2 of the Federal Modern Slavery Act 2018 (Cth) to lower the reporting threshold from AUD$100 million to AUD$50 million. 

This could enhance transparency and accountability across a larger portion of the economy, supporting more comprehensive efforts to address modern slavery risks in Australia.

Advice:

The Minister for Home Affairs should amend Part 2 of the Modern Slavery Act 2018 reporting threshold to AUD $50 million at the next opportunity.

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Public Support: 

1. Professor John McMillan 

Where to go to learn more: 

1. Statutory Review of the Modern Slavery Act 2018 - Access the full report here.

2. Modern Slavery Act 2018 (Cth) - Read the full act here

3. Department of Home Affairs - Provides detailed information on Australia's Modern Slavery Act, including compliance guides for businesses. Visit the Department of Home Affairs

4. Global Slavery Index - Offers extensive data and analysis on the state of modern slavery worldwide. Explore the Global Slavery Index

Human Perspective:

After years of working with a trusted supplier, Skyline Manufacturing, a business with an $80 million turnover, discovered that their partner was involved in modern slavery. Shocked by the revelation, the company cut ties. They realised that if they had been required to report under the Modern Slavery Act threshold earlier, they could have uncovered the exploitation much sooner.

To protect the anonymity of those involved, this is a fictionalised account drawn from an amalgamation of real-life stories, experiences, and testimonials gathered during the research process for this brief. Any resemblance to actual individuals is purely coincidental.

Conflict of interest/acknowledgment statement: 

N/a.

Support 

If your organisation would like to add your support to this paper, or suggest amendments, please email Info@foreaustralia.com. 

Reference list: 

Attorney-General’s Department. (2023, May). Report - Statutory Review of the Modern Slavery Act 2018. https://www.ag.gov.au/sites/default/files/2023-05/Report%20-%20Statutory%20Review%20of%20the%20Modern%20Slavery%20Act%202018.PDF

Australian Human Rights Commission. (n.d.). What businesses need to know about the Modern Slavery Review. https://humanrights.gov.au/about/news/what-businesses-need-know-about-modern-slavery-review

Australian Institute of Company Directors. (n.d.). Modern Slavery Act review: Major changes brewing. https://www.aicd.com.au/regulatory-compliance/government-legislations/modern-slavery-law/modern-slavery-act-review-major-changes-brewing.html

Burn, J. (n.d.). Tabled document - NSW Department of Premier and Cabinet. Parliament of New South Wales.https://www.parliament.nsw.gov.au/lcdocs/other/12778/Tabled%20document%20-%20Professor%20Jennifer%20Burn%20-%20NSW%20Department%20of%20Premier%20and%20Cabinet.pdf

Business & Human Rights Resource Centre. (2023). Global: 2023 Global Slavery Index reports 20 per cent increase in modern slavery, 173 per cent within Australia, despite legislation. https://www.business-humanrights.org/en/latest-news/global-2023-global-slavery-index-reports-20-per-cent-increase-in-modern-slavery-173-per-cent-within-australia-despite-legislation/

Government of the United Kingdom. (n.d.). Publish an annual modern slavery statement. https://www.gov.uk/guidance/publish-an-annual-modern-slavery-statement

Ministry of Business, Innovation & Employment. (n.d.). Consultation on legislation to address modern slavery and worker exploitation - Summary of feedback. https://www.mbie.govt.nz/assets/consultation-on-legislation-to-address-modern-slavery-and-worker-exploitation-summary-of-feedback.pdf

Norton Rose Fulbright. (n.d.). Federal government updates guidance regarding Canada's new modern slavery legislation. https://www.nortonrosefulbright.com/en/knowledge/publications/2cfdad72/federal-government-updates-guidance-regarding-canadas-new-modern-slavery-legislation

UNSW. (n.d.). Testing the effectiveness of Australia’s Modern Slavery Act. UNSW Human Rights Institute. https://www.humanrights.unsw.edu.au/research/testing-effectiveness-Australia-modern-slavery-act

Walk Free. (n.d.). What is modern slavery? https://www.walkfree.org/what-is-modern-slavery/

Walk Free Foundation. (n.d.). Australia - Global Slavery Index. https://www.walkfree.org/global-slavery-index/country-studies/austra