The Review

The review process included extensive public consultation, allowing diverse stakeholders to contribute their perspectives. Through an Issues Paper published in August 2022, an online questionnaire based on the paper, an online survey sent to entities that had submitted a statement under the Act, as well as targeted consultations and meetings held both in person and online, participants from various sectors such as business, government, civil society, academia, unions, charities, and professional associations shared their insights and recommendations.

The central questions addressed by the review were whether a law such as the Modern Slavery Act could effectively combat modern slavery, whether changes were needed to enhance its effectiveness, and whether the law was being taken seriously. Modern slavery remains a complex and challenging issue, with an estimated 49.6 million people living in situations of modern slavery in 2021. The driving factors behind modern slavery include poverty, economic shocks, gender inequality, exploitative business practices, and weak governance in certain countries.

The Modern Slavery Act operates on the principle that transparency reporting can exert a counter pressure on modern slavery by compelling government entities and large businesses to scrutinise their supply chains, identify potential risks, and take necessary actions to address them. The Act outlines mandatory reporting criteria, which encompass examining modern slavery risks within an entity’s operations and supply chains, detailing actions taken to mitigate those risks, and evaluating the effectiveness of those actions. The modern slavery statement must be approved by the governing board and signed by a senior officer, typically the managing director. The public register aims to encourage entities to proactively identify, report, and address modern slavery risks, thereby ostensibly fostering a race to the top in terms of responsible business practices.

Glacial Progress

However, despite the growing engagement from businesses and some positive developments, such as executive-level training, appointment of specialist staff, auditing and supply chain mapping, and collaboration with civil society, the review revealed that the early years of the Modern Slavery Act had not yet resulted in significant changes to the lives of people subjected to modern slavery. Although isolated instances of modern slavery incidents and victim identification have been reported, there is no compelling narrative suggesting a reversal of the underlying drivers of modern slavery.

Nevertheless, it is widely acknowledged that the Act and reporting requirements have prompted a shift in business culture, with greater commitment and collaboration in the fight against modern slavery. Investors are increasingly considering the quality of modern slavery reporting when making investment decisions, and procurement processes are also emphasizing this issue. These positive trends indicate progress, but there are concerns about the level of compliance and the effectiveness of the transparency reporting mechanism itself.

Summary of Key Recommendations

The review concludes with thirty recommendations for improving the Modern Slavery Act. These recommendations aim to address the weaknesses identified, including variability in reporting standards, enforceability challenges, and the potential overwhelm of large and incompatible statements on the Register. Proposed changes include the implementation of due diligence systems that go beyond reporting, imposing a duty on entities to take effective action in identifying, assessing, and addressing modern slavery risks. The reporting requirements would also be clarified, potentially including a mechanism for declaring high-risk regions, locations, industries, products, suppliers, or supply chains that necessitate specific attention in the reporting process.

Financial Penalties, Reporting Threshold, Reporting Period

Penalties would be introduced for noncompliance, and the reporting threshold would be lowered to encompass businesses with annual consolidated revenue of $50M or more. Additionally, the reporting process would be streamlined, allowing entities to submit a full modern slavery statement every three years, with updates in the intervening two years. A standardized coversheet highlighting key features of the report would be required, facilitating easier access to vital information. These proposed changes aim to enhance the effectiveness and impact of the Modern Slavery Act.

Continued Development of Guidance for Reporting Entities

The administration of the Modern Slavery Act also requires improvements to ensure its efficacy. The review highlights the heavy reliance placed by entities on the government guidance manual, known as the Guidance for Reporting Entities. Considering the wealth of experience and insights gained over three years of reporting, the review recommends a comprehensive review of the Guide, with input from the Attorney-General’s Department, the Commonwealth Anti-Slavery Commissioner, and the wider business and professional community. This review would address various suggestions made during the consultation process, including the publication of supplementary guidance tailored to specific sectors, such as the financial sector.

Streamlined Processes, Communication and Public Awareness

In addition to the Guide review, the report recommends administrative enhancements to the reporting process. These include the creation of reporting templates to streamline and standardize submissions and improvements to the searchability function of the Online Modern Slavery Statements Register. Emphasis is placed on the critical role of the Commonwealth Anti-Slavery Commissioner in monitoring compliance, facilitating collaborative networks, and providing national leadership in raising awareness of modern slavery risks and ensuring their effective addressal.

Implementing the extensive recommendations outlined in the review may require additional substantial resources over time. However, the promising basis of strong interest and commitment demonstrated throughout the review process provides a solid foundation for strengthening Australia’s Modern Slavery Act. An effective law conveys the promise to current and potential victims of modern slavery that action is being taken and that the problem can be remedied.

Overview of All Recommendations:

• Recommendation 1
  The Australian Government – either through or in consultation with the Anti-Slavery Commissioner – initiate discussion with other jurisdictions in Australia and internationally on options for defining ‘modern slavery’ for the purpose of mandatory reporting laws such as the Modern Slavery Act 2018. A report on those discussions should be provided to any later review of the Act.
• Recommendation 2
  The Modern Slavery Act be amended to include, in an Appendix to the Act, the terms of Article 3 of the Trafficking Protocol (defining ‘trafficking in persons’) and Article 3 of the Worst Forms of Child Labour Convention (defining ‘the worst forms of child labour’).
• Recommendation 3
  The Attorney-General’s Department review the Guidance for Reporting Entities to ensure that the description of modern slavery in Appendix 1 of the Guide accurately represents the terms of the Criminal Code.
• Recommendation 4
  The Modern Slavery Act s 5(1)(a) be amended to provide that a ‘reporting entity’ is an entity that has a consolidated revenue of at least $50 million for the reporting period.
• Recommendation 5
  The Attorney-General’s Department, in consultation with the Anti-Slavery Commissioner, amend the Guidance for Reporting Entities to provide tailored guidance to small and medium-sized entities on complying with the reporting requirements of the Modern Slavery Act, either on a voluntary basis or as required by the Act under a lowered reporting threshold.
• Recommendation 6
  The Attorney-General’s Department examine the matters discussed in Chapter 4 of the report as to difficulties that have been encountered in deciding whether an entity is a ‘reporting entity’ for the purposes of the Modern Slavery Act. The Department should consider the desirability of amending the Guidance for Reporting Entities or the Modern Slavery Act.
• Recommendation 7
  The Attorney-General’s Department, as part of the forward work program proposed in Recommendation 25, commence a review of how the terms ‘operations’ and ‘supply chains’ are explained in the Guidance for Reporting Entities. The review could suitably be done in stages, commencing with a review of how those terms apply to the financial sector. The review should include public consultation.
• Recommendation 8
  The Attorney-General’s Department consider the desirability of amending the mandatory reporting criteria in s16 of the Modern Slavery Act:
  • replace the phrase ‘operations and supply chains’ in ss 3, 11 and 16 with the phrase ‘operations and supply networks’
  • revise criteria 3, 4, 5 and 6 in the manner discussed in Chapter 6 of the report
  • add new mandatory reporting criteria that require an entity to report on:
    • modern slavery incidents or risks identified by the entity during the reporting year
    • grievance and complaint mechanisms made available by the entity to staff members and other people, and
    • internal and external consultation undertaken by the entity during the reporting year on modern slavery risk management.
• Recommendation 9
  The Attorney-General’s Department consider the desirability of amending the Modern Slavery Act to provide that the mandatory reporting criteria can be prescribed in a rule or regulation made under the Act, and deal with specified matters, rather than listed in s 16 of the Act as at present.
• Recommendation 10
  The Attorney-General’s Department, as part of the forward work program proposed in Recommendation 25, give consideration to the matters raised in Chapter 6 of the report regarding revision of the Guidance for Reporting Entities.
• Recommendation 11
  The Modern Slavery Act be amended to provide that a reporting entity must:
  • have a due diligence system that meets the requirements mentioned in rules made under s 25 of the Act, and
  • in the entity’s annual modern slavery statement, explain the activity undertaken by the entity in accordance with that system.
  • This duty should not apply to an entity with a consolidated annual revenue of between $50-100M until two years after the entity has become subject to the reporting requirements of the Act.
• Recommendation 12
  The Modern Slavery Act be amended to provide that an entity has the option of submitting every three years a modern slavery statement that addresses all requirements of the Act, and in the intervening two years to submit a report that updates the information in the full statement. The procedure for reporting along these lines should be spelt out in rules made under s 25 of the Act.
• Recommendation 13
  The Attorney-General’s Department develop a template for optional use by reporting entities for preparing and submitting an annual modern slavery statement in compliance with the Modern Slavery Act.
• Recommendation 14
  The Attorney-General’s Department facilitate the submission of an online modern slavery statement (using the template referred to in Recommendation 13) through an online portal on the Online Register for Modern Slavery Statements.
• Recommendation 15
  The Modern Slavery Act be amended to require that all modern slavery statements submitted under the Act include a coversheet that addresses specified matters.
• Recommendation 16
  The Attorney-General’s Department review the Guidance for Reporting Entities to consider inclusion of clearer guidance, including an optional template, for use by entities to record that they have complied with the approval and signature requirements in the Modern Slavery Act ss 13(2) and 14(2).
• Recommendation 17
  The Attorney-General’s Department seek further clarity regarding criticisms discussed in Chapter 8 of the report about difficulties encountered in joint reporting.
• Recommendation 18
  The Modern Slavery Act be amended by removing the requirement that an entity that has notified the Minister that it will submit a voluntary modern slavery statement under s 16 of the Act can only revoke that notice by notifying the Minister before the start of the reporting period in which the entity would otherwise
  report.
• Recommendation 19
  The Attorney-General’s Department establish a formal arrangement for annual review of the Commonwealth Modern Slavery Statement, and to consider the role of the Anti-Slavery Commissioner in that review.
• Recommendation 20
  The Act be amended to provide that it is an offence for a reporting entity:
  • to fail, without reasonable excuse, to give the Minister a modern slavery statement within a reporting period for that entity
  • to give the Minister a modern slavery statement that knowingly includes materially false information
  • to fail to comply with a request given by the Minister to the entity to take specified remedial action to comply with the reporting requirements of the Modern Slavery Act
  • to fail to have a due diligence system in place that meets the requirements set out in rules made under s25 of the Act.
    The penalty offence provisions should not apply to an entity with a consolidated annual revenue of between $50-100M until two years after the entity has become subject to the reporting requirements of the Act.
• Recommendation 21
  The Modern Slavery Act be amended to provide that an entity that will not be lodging a modern slavery statement in a year following the earlier lodgement of a statement, will notify the Minister before the end of the reporting year, with an explanation as to why a statement will not be lodged that year.
• Recommendation 22
  The Attorney-General’s Department compile, and publish on the Modern Slavery Statements Register, an annual list of entities that have submitted statements that are published on the Register.
• Recommendation 23
  The Attorney-General’s Department examine the practicability of making additional information available regarding reporting entities’ compliance with the reporting requirements of the Modern Slavery Act.
• Recommendation 24
  The Attorney-General’s Department examine the practicability of establishing a procedure for the receipt and investigation of complaints from the public regarding entity reporting under the Modern Slavery Act.
• Recommendation 25
  The Attorney-General’s Department, in consultation with the Anti-Slavery Commissioner, develop and publish a forward work program for reviewing and updating the Guidance for Reporting Entities and other guidance material.
• Recommendation 26
  The Modern Slavery Act be amended to provide that the Minister shall arrange for guidelines to be published on the reporting requirements in Part 2 of the Act, and that reporting entities shall be encouraged to have regard to any such guidelines.
• Recommendation 27
  The Modern Slavery Act be amended to provide that:
  • the Minister or the Anti-Slavery Commissioner may make a written declaration of a region, location, industry, product, supplier or supply chain that is regarded as carrying a high modern slavery risk, and
  • the declaration may prescribe the extent to which reporting entities must have regard to that declaration in preparing a modern slavery statement under the Act.
• Recommendation 28
  The Attorney-General’s Department have regard to options discussed in Chapter 11 of the report for improving the Online Register for Modern Slavery Statements.
• Recommendation 29
  The Modern Slavery Act s 24 be amended to provide that a further review of the kind described in that section be undertaken in another three years by a person appointed by the Minister, who may be the AntiSlavery Commissioner.
• Recommendation 30
  The legislation establishing the office of Anti-Slavery Commissioner provide expressly that a function of the Commissioner is to issue guidelines on special issues relating to the reporting requirements in Part 2 of the Modern Slavery Act. Any guidelines must not be inconsistent with guidelines that the Minister has arranged to be published under the Act.