On modern slavery, we need moral leadership not market morality

This week the Senate passed a Bill seeking to amend Federal customs regulations to prohibit the import of any goods made using forced labour.

The government introduced the Modern Slavery Act in 2018. Do we need another law on this issue? Do we now need to make it unlawful to import goods produced by forced labour into Australia?

The short answer is yes.

The Modern Slavery Act appears to be falling short

From 2020 onwards, the Modern Slavery Act requires organisations with an annual revenue exceeding $100 million to publish a statement each year disclosing the risks of modern slavery in their operations and supply chain, actions taken to address these risks, and what the effectiveness of these actions has been.

To date, more than 4400 entities have produced statements. But early analysis shows the first statements are underwhelming.

study of modern slavery reports from ASX200 companies, shows a ‘race to the middle’: companies seek to comply with the legal requirements under the Act without disclosing or taking more action than their industry peers do.

Another report on the first year of statements noted that while “some organisations have gone to extensive lengths to understand their supply chains and the risks that lie within it […] Others have barely scratched the surface”.

While it is still early days, the Australian Modern Slavery Act is in danger of following its counterpart in the United Kingdom, by engendering cosmetic compliance rather than action.

As yet, there is no sign of the ‘race to the top’ to improve workplace practices predicted by the Australian government.

What does the Customs Amendment Bill add?

The amendment to federal customs regulations that passed the Senate is inspired by the United States Tariff Act, which prohibits the import of goods made by forced labour.

The number of industries, goods and services that are associated with forced labour is staggering.

Every two years the United States Department of Labor tables a list of goods produced by child or forced labour.

In 2020, 155 goods from 77 countries were identified.

The Tariff Act allows the United States Customs and Border Protection to investigate allegations of forced labour and detain imports under a ‘withhold release’ order. There are currently dozens of active orders listed on the US register.

If a withhold release order is issued, the goods will be denied entry or seized until the importer is able to show that the goods were not produced with forced labour.

Amending the Customs Act in Australia would grant similar powers to the Australian Border Force.

Moral leadership, not market morality

The Customs Amendment Bill was introduced by independent Senator Rex Patrick, with cross-party support from Labor, the Greens and the crossbench. It was not supported by the Morrison government.

For the amendment to come into effect, the Bill would also have to clear the government-controlled lower house.

Unfortunately, the government has thus far been hesitant to directly intervene to address modern slavery and has instead relied on market enforcement.

Australia’s Modern Slavery Act does not impose penalties on reporting entities for failing to lodge a report or for lodging an incomplete report.

Neither has the government appointed an anti-slavery commissioner with the authority and resources to oversee compliance.

Instead, enforcement of the Act relies on the market.

The underlying idea is that poor reporting will result in a consumer or investor backlash, while reporting conversely presents an opportunity to showcase efforts to address modern slavery and enhance reputation.

Given that we have not witnessed the predicted ‘race to the top’, what is needed now from the government is moral leadership by supporting the Customs Amendment Bill, rather than a continued reliance on market morality.

Dr Martijn Boersma is a Senior Lecturer at the University of Technology Sydney Business School 

Professor Justine Nolan is the Director of the Australian Human Rights Institute, UNSW Sydney

This piece was originally published in The New Daily.

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