4.1
The Committee shares the concerns of submitters and witnesses to this inquiry about the significant risk of modern slavery in the supply chains of companies, businesses, organisations and governments operating in Australia. The Committee acknowledges that similar concerns were also expressed by its predecessor Committee in its 2013 report Trading Lives: Modern Day Human Trafficking, and more recently by the Joint Committee on Law Enforcement.
4.2
The Committee gives in-principle support for developing a Modern Slavery Act in Australia, including mandatory supply chain reporting requirements for companies, businesses, organisations and governments and an Independent Anti-Slavery Commissioner. The Committee notes that it will consider other elements of a potential Modern Slavery Act in its final report, including prevention measures, support for victims, improvements to Australia’s visa regime and prevention of orphanage tourism, as well as other recommended changes to Australian law, policy and practices to combat modern slavery.
Support for supply chain reporting
4.3
The Committee acknowledges the strong support from businesses, investors, NGOs, unions, legal experts and other groups for the introduction of a supply chain reporting requirement in Australia, similar to but improving upon section 54 of the UK Act.
4.4
The Committee acknowledges that some business representatives, such as the Australian Chamber of Commerce and Industry, suggested that the introduction of reporting requirements should be subject to further consultation prior to consideration. The Committee notes that the high level of engagement from businesses and NGOs already demonstrates a strong level of support for action on this issue.
4.5
The Committee particularly recognises suggestions from businesses that a reporting requirement would ‘level the playing field’, both for those businesses already taking measures to address modern slavery risks in their supply chains and those already required to report in overseas jurisdictions.
4.6
The Committee gives in-principle support for mandatory annual modern slavery supply chain reporting requirements to apply, above a particular threshold, to companies, businesses, organisations (including religious organisations) and governments operating in Australia.
4.7
The Committee gives in-principle support for a requirement that the Board (or equivalent level of a company, business, organisation or government) approve modern slavery statements.
Support for the UK model
4.8
The Committee acknowledges the support for the basic reporting model set out in section 54 of the UK Act, particularly the requirements for public disclosure and board approval of modern slavery statements, and extra‑territorial application. While acknowledging that the UK model has only recently been implemented, the Committee is encouraged by the early indications of its positive effect in raising the awareness of modern slavery issues among businesses and the broader community, while recognising the need to make further improvements.
4.9
The Committee recognises that during the recent visit to the UK by a delegation of the Committee, the positive impact of the UK Act in raising awareness of modern slavery was described by some organisations as a ‘game changer’. The delegation is grateful for the valuable advice provided by these groups during its visit. The itinerary for the delegation is at Appendix A.
4.10
The Committee recognises that, should a reporting requirement be introduced in Australia, there is significant potential to improve on the UK model.
4.11
The Committee gives in-principle support to key elements of the UK model of supply chain reporting and will continue to investigate possible improvements to this model in its final report.
Proposed principles for Australian legislation
Consistency with international jurisdictions and best practice
4.12
The Committee agrees that consistency with international jurisdictions should be a central consideration for any potential Australian reporting requirement. The Committee also acknowledges that existing voluntary initiatives, such as the UN Guiding Principles on Business and Human Rights, provide a useful framework and should be considered in the development of any Australian legislation.
4.13
The Committee gives in-principle support for ensuring that any supply chain reporting requirement be consistent with international jurisdictions and best practice, including Australia’s obligations under international law.
Repository of statements
4.14
The Committee is persuaded by arguments that a central repository of modern slavery statements would improve scrutiny by NGOs, investors and consumers, and encourage a ‘race to the top’ for businesses and organisations. It notes the opportunity to collaborate on a combined platform or international registry.
4.15
The Committee notes that the need for consistency with international jurisdictions and a central repository were key themes raised by UK businesses and organisations during the delegation visit to the UK.
4.16
The Committee gives in-principle support for the establishment of a legislated and government-funded central repository containing modern slavery statements. The Committee is of the view that the Australian Government should work with existing modern slavery registries to create a combined and consistent registry to which statements can be submitted to prevent unnecessary duplication.
4.17
The Committee will further consider whether a modern slavery central repository should sit under the Independent Anti-Slavery Commissioner or elsewhere, noting the comments by the UK’s Independent Anti-Slavery Commissioner on this matter outlined in Chapter 3.
4.18
The Committee will further consider whether it should be made compulsory for a company, business, organisation or government to publish their modern slavery statement on their website and/or in their annual report.
Threshold for reporting
4.19
The question of a threshold, and the appropriate level of the threshold, for reporting requirements attracted a range of views from submitters and witnesses. The Committee considers that a threshold above which businesses and organisations must report should be introduced. The Committee will continue to receive submissions and evidence in public hearings, as well as consult with businesses and organisations, in the lead up to the final report to determine an appropriate threshold.
4.20
The Committee considers that any threshold should consider both size and turnover of businesses and should ensure that small businesses are not unfairly disadvantaged. The Committee agrees that an opt-in option for businesses below the threshold should be considered.
4.21
The Committee gives in-principle support for a threshold to be introduced, above which companies, organisations, businesses and governments must report on modern slavery in their supply chains. The exact threshold will be considered further in the Committee’s final report.
4.22
The Committee gives in-principle support for the introduction of an opt-in option to allow companies, businesses, organisations and governments below the threshold to undertake supply chain reporting on modern slavery.
4.23
The Committee gives in-principle support for ensuring that the proposed reporting requirement enables businesses, companies, organisations and governments that are part of a supply chain to provide a single statement of compliance to multiple clients.
Prescribing reporting requirements
4.24
The Committee acknowledges that submitters and witnesses offered a range of differing views on the level of government involvement in prescribing reporting requirements (including due diligence), setting a threshold for reporting and enforcing penalties and compliance measures. The Committee will consider these arguments in more detail in its final report, and offers its preliminary assessment of each issue below.
4.25
The Committee acknowledges concerns that the UK model of not prescribing specific reporting requirements may lead to confusion for businesses and difficulties for NGOs in scrutinising potentially inconsistent statements. However, the Committee also acknowledges that allowing businesses and organisations flexibility in how they report could encourage more innovative approaches to reporting and more detailed consideration appropriate to the structure and operation of the organisation. Any reporting requirements should be clear for businesses and organisations required to report, and flexible enough to encourage innovation and to avoid a ‘tick box’ exercise.
4.26
The Committee recognises the support for due diligence requirements, similar to legislation in France and the Netherlands. The Committee shares the concerns of some businesses that due diligence requirements are only relatively new and risk placing an undue burden on small and medium‑sized enterprises. The Committee notes that some businesses have already developed internal due diligence processes and that a public reporting mechanism based on the UK model will assist these businesses in promoting these endeavours.
4.27
The Committee will continue to consider possible due diligence requirements, leading up to the final report.
4.28
The Committee will further consider prescriptive requirements for what statements include. Notwithstanding, it is of the view that the Modern Slavery Act outline at minimum what statements should include, in addition to allowing for innovation in reporting. The Committee is also of the view that guidelines should also be produced consistent with international best practice. These issues will be considered further in the Committee’s final report.
4.29
The Committee is of the view that its final report further consider due diligence requirements, as suggested by a number of submitters and witnesses.
Guidance for businesses
4.30
The Committee recognises the important role for government in raising awareness of modern slavery issues and providing clear guidance for companies, businesses, organisations and other Australian governments on how to report on supply chain risks.
4.31
The Committee gives in-principle support for a broad definition of modern slavery to be included in the Modern Slavery Act, to help guide companies, businesses, organisations and governments on what to look for within their supply chains, including, but not limited to, forced labour, child labour, bonded labour, human trafficking, domestic servitude, orphanage trafficking, sex trafficking, forced marriage, slavery and other slavery-like practices. A full non-exhaustive list of terms will be considered in the Committee’s final report.
4.32
The Committee gives in-principle support for the Australian Government to fund public awareness raising, information and training about modern slavery and modern slavery in supply chains, particularly for companies and businesses, as well as for front-line services, departments and embassies.
4.33
The Committee gives in-principle support for lists of at-risk industries, at-risk areas and at-risk groups in Australia and within Australian supply chains to be published by the Australian Government.
4.34
The Committee gives in-principle support for the Australian Government to publish a list of companies, organisations, businesses and governments to which the Modern Slavery Act supply chain reporting requirements apply.
Penalties and compliance measures
4.35
Similarly, the question of penalties and compliance measures attracted a range of conflicting views. The Committee acknowledges concerns from NGOs that the lack of penalties for non-compliance in the UK Act has meant many businesses and organisations have not reported, and that those that have lack incentive to adequately identify and address modern slavery risks in their supply chains. However, the Committee considers that the market-based model of compliance used in the UK will develop over time and encourage a ‘race to the top’ for businesses and organisations.
4.36
The Committee is encouraged by evidence from the UK that the content of modern slavery statements in the UK is improving, and that businesses and organisations are developing more sophisticated approaches to addressing supply chain risks.
4.37
The Committee gives in-principle support for the Australian Government to mandate reporting for companies, businesses, organisations and governments above the threshold, with penalties applying for those that do not report or do not report in compliance with the Modern Slavery Act reporting requirements.
4.38
The Committee does not in-principle support penalties applying to companies, businesses, organisations and governments that look for and do find modern slavery within their supply chains, and are acting to address the issues identified, as this would discourage them looking into their supply chains in the first place.
4.39
The Committee gives in-principle support for the Australian Government to publish a list of companies, businesses, organisations and governments above the threshold that do not comply with the Modern Slavery Act supply chain reporting requirements.
4.40
The Committee gives in-principle support for the Australian Government to publish a list of companies, businesses, organisations and governments above the threshold that are in compliance with modern slavery statements.
4.41
The Committee gives in-principle support for the Australian Government to publish a list of companies, businesses, organisations and governments below the threshold that submitted optional statements to encourage others to report.
Public procurement
4.42
The Committee notes that the Australian Government has an opportunity to lead by example in applying any modern slavery supply chain reporting requirements to government procurement policies.
4.43
The Committee supports the recommendation by the Joint Select Committee on Government Procurement Rules to develop a procurement policy consistent with human rights regulation. The Committee considers that consideration of modern slavery risks should be included in this policy.
4.44
The Committee gives in-principle support for the Australian Government to introduce into its procurement requirements that it only engages with companies, businesses, organisations and other Australian governments that have submitted modern slavery statements. The Committee considers that this would encourage smaller companies to also report via the opt-in option.
Independent Anti-Slavery Commissioner
4.45
The Committee acknowledges the support for the establishment of an Independent Anti-Slavery Commissioner. As the key functions of the Commissioner fall outside the scope of this interim report, the Committee will consider the exact role of a Commissioner in its final report.
4.46
The Committee notes that the Joint Committee on Law Enforcement has already recommended that the Australian Government consider establishing an Anti-Slavery and Trafficking Commissioner. The Committee agrees that it is crucial that such a role be independent of government.
4.47
The Committee gives in-principle support for Australia establishing in its Modern Slavery Act an Independent Anti-Slavery Commissioner, who would have the ability to consult, advise, report on and make recommendations with respect to modern slavery supply chain reporting. The Committee concurs with the recommendation of the Joint Committee on Law Enforcement on this matter, but notes that the Commissioner should be truly independent of government. The Australian Government could consider incorporating the current People Smuggling and Human Trafficking Ambassador within this role. The possible role of the Commissioner will be considered further in the Committee’s final report.
4.48
The Committee gives in-principle support to a legislated review of an Australian Modern Slavery Act at least every three years. The Committee is of the view that the proposed Independent Anti-Slavery Commissioner would be best placed to undertake these reviews, in addition to suggesting other recommended changes outside of the Modern Slavery Act to combat modern slavery.
Further consultation
4.49
The Committee agrees that, should a Modern Slavery Act be considered, further consultation should be undertaken with businesses, NGOs and other relevant stakeholders on the specific draft provisions for supply chain reporting requirements. The Committee suggests that the UK approach of consulting on a draft Bill prior to its introduction to the Parliament may be appropriate for Australia to consider.
4.50
The Committee acknowledges that the Australian Government is currently considering the reporting requirements of the UK Act and other best practice legislation. The Committee considers that its in-principle support for supply chain reporting requirements should be looked at as part of the Bali Process Government and Business Forum in Perth on 24 and 25 August 2017.
4.51
The Committee is of the view that its final report should consider, along with supply chains, how to ensure that foreign aid or corporate, business and organisational giving does not directly or indirectly support modern slavery practices, including via aid or giving to foreign governments.
4.52
The Committee is of the view that its final report should consider other measures to combat modern slavery in global supply chains, such as regulating the importation of goods that have been produced using modern slavery, similar to the US Trade Enforcement and Facilitation Act of 2015.
4.53
The Committee is of the view that its final report should consider whether the Australian Government should, at a later stage, introduce a mark that could be used by modern slavery compliant companies, businesses, organisations and governments.
4.54
The Committee will consider and consult further on the statements of in‑principle support above, leading up to the final report. The Committee will consider additional supply chain and other elements of a Modern Slavery Act in its final report, as well as other changes necessary to combat modern slavery in Australia.
Recommendations
4.55
The Committee recommends that the Australian Government consider supporting in‑principle the development of a Modern Slavery Act in Australia, including supply chain reporting requirements for companies, businesses, organisations and governments in Australia, as well as an Independent Anti-Slavery Commissioner, subject to reviewing the recommendations of the Committee’s final report. The Committee will provide further recommendations for the content of a Modern Slavery Act in its final report, as well as other necessary changes to Australian legislation, policies and practices to combat modern slavery.
4.56
The Committee recommends that the Australian Government consider the Committee’s in-principle support for a Modern Slavery Act, including supply chain reporting requirements and an Independent Anti-Slavery Commissioner, as part of Australia’s contribution to the Bali Process Government and Business Forum in Perth on 24 and 25 August 2017.
4.57
The Committee recommends that the Australian Government consider this interim report as part of its current review of corporate reporting, with a view to developing legislation requiring businesses, companies, organisations and governments operating in Australia to report on measures taken to address modern slavery in their global supply chains, in accordance with the recommendations in the Committee’s final report.
Senator David FawcettMr Chris Crewther MP
ChairChair
Joint Standing Committee on Foreign Affairs and Aid
Foreign Affairs, Defence and TradeSub-Committee