Australian Government responds to statutory review of Modern Slavery Act

06 December 2024

On 2 December 2024, the International Day for the Abolition of Slavery, the Federal Government published its long-awaited response to the May 2023 independent statutory review of the Modern Slavery Act 2018 (Cth) (Modern Slavery Act).

Despite having over 18 months to consider the review, the Government has not made any firm commitments to amend the Modern Slavery Act. Instead, the Government has committed to engage in further consultation with key stakeholders on a number of core recommendations, including the introduction of civil penalties, additional reporting requirements, and how to enhance due diligence requirements. Notably, the Government has not agreed to reduce the reporting threshold to $50 million or amend the reporting requirements to permit triennial reporting.

The Government has not provided any timeline for when these consultations will occur, nor when any subsequent amendments to the Modern Slavery Act will take effect. However, it has flagged that its priority will be to engage in consultation regarding pecuniary penalties.

This does not provide clarity for reporting entities entering into their next reporting periods, and risks Australia falling behind other jurisdictions in its approach to addressing modern slavery.

Background to the Modern Slavery Act review

The Modern Slavery Act requires Australian entities (or entities carrying on business in Australia) that have A$100 million or more in annual consolidated revenue, to prepare annual reports that identify the risks of modern slavery in their operations and supply chains, and outline the actions taken to assess and address those risks.

The purpose of the Modern Slavery Act is to increase transparency in the operations and supply chains of large Australian businesses, and to encourage businesses to effectively prevent and address modern slavery.

An independent statutory review of the Modern Slavery Act was undertaken in 2022/23 through a range of consultations and published its report in May 2023.

Key recommendations and responses

The Government has agreed to 13 of the review’s 30 recommendations, agreed in principle to 12 recommendations, and noted a further five recommendations. The Government’s full response is available here, and we have summarised the Government’s responses to a number of the key recommendations in a table at the end of this article.

Of particular note:

Penalties: The Government has indicated it will, as a priority, consult with stakeholders on the introduction of penalties to strengthen the enforcement framework of the Modern Slavery Act.
Due diligence: The Government has committed to undertake consultation with stakeholders to identify how the existing due diligence reporting requirements could be strengthened.
Amended reporting criteria: The Government will consult on introducing additional mandatory reporting criteria including 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 on modern slavery risk management undertaken by the entity during the reporting year.
Reporting threshold: The Government has not agreed to lower the reporting threshold to $50 million in annual consolidated revenue. This will be revisited in a future review of the Modern Slavery Act.
High risk declarations: The Government has committed to consulting on the ability for the Government or the Anti-Slavery Commissioner to make declarations in respect of a high risk of modern slavery (including jurisdictions, products and suppliers).

The Government has also agreed, or agreed in principle, to a number of other recommendations, including to streamline requirements for notifying when a voluntary entity or an entity that no longer meets the reporting threshold will not report, and to examine the practicability of establishing a procedure for the receipt and investigation of complaints from the public regarding reporting entities.

In addition, earlier this year the Government implemented one of the other recommendations from the statutory review by creating the role of a Commonwealth Anti-Slavery Commissioner. The Anti-Slavery Commissioner’s role will be focused on increasing compliance with the Modern Slavery Act, supporting Australian businesses and building awareness of modern slavery. The Anti-Slavery Commissioner, Chris Evans, commenced on 2 December 2024, and it is likely that he will play a key role in implementing the Government’s commitments, including by engaging in consultations and preparing updated Guidance for Reporting Entities.

Observations, impacts and next steps

The Government’s response, while not committing to any immediate changes to the Modern Slavery Act, does foreshadow that amendments will likely be made in the future.

With the prospect of penalties for non-compliance being introduced, businesses should ensure they are meeting all current reporting requirements of the Modern Slavery Act. Businesses should also consider implementing grievance and remediation frameworks, or otherwise reviewing the effectiveness of existing remediation frameworks, as there is a high likelihood that more detailed reporting on these mechanisms will become mandatory.

Although the Government has not committed to introducing a mandatory due diligence obligation at this stage, it is likely that it will face significant pressure to implement such a requirement in the next review cycle. When the Modern Slavery Act was first introduced in 2018, Australia was a world leader in modern slavery reporting requirements. However, without a requirement for entities to implement and report upon their utilisation of a due diligence system, Australia now lags behind the jurisdictions that have already introduced human rights due diligence obligations (for example Canada, Germany and Norway). When the world is working towards harmonisation in human rights related due diligence requirements, Australia’s lagging regulation may add to inconsistency, increase complexity and potentially increase reporting costs for entities reporting in multiple jurisdictions.

Businesses should continue to prioritise developing and implementing effective due diligence systems, as this will not only put the business on the front foot, it will also help to ensure that other reporting requirements are met by ensuring that modern slavery risks are properly identified and addressed.

Recommendations	Recommendation detail	Government response
Penalties	The Modern Slavery 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 Act; and to fail to have a due diligence system in place that meets the requirements set out in rules made under s 25 of the Act.	Agreed in principle, in part. The Government agrees that Modern Slavery Act’s enforcement framework needs to be strengthened. The introduction of penalties will level the playing field for reporting entities by more effectively targeting entities who are non-compliant with the Act, and it will provide certainty to reporting entities that their efforts to comply with the requirements under the Act are being recognised. The Government has agreed to consult with stakeholders as a matter of priority on the introduction and operation of penalties for non-compliance with the Act, specifically for: failing to submit a modern slavery statement; providing false information in a modern slavery statement; and failing to comply with a request for specified remedial action. The Government has otherwise noted the recommendation regarding penalties for failing to have a required due diligence system.
Due diligence obligations	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.	Noted. While the Government recognises the importance of due diligence mechanisms and acknowledges that this is becoming a key tool to mitigate human rights and environmental concerns in other jurisdictions, it has not agreed to amend the Modern Slavery Act to require reporting entities to implement due diligence systems. Rather, the Government noted that the Act already requires reporting entities to describe the actions taken to assess and address modern slavery risks, including due diligence processes, and committed to undertaking consultations to identify how the existing due diligence reporting requirements could be enhanced. This should be done consistently with the United Nations Guiding Principles on Business and Human Rights (UNGPs). These consultations will include considering how any enhanced reporting requirements would align with broader global developments towards human rights due diligence, and whether reporting entities will have due diligence reporting obligations in multiple jurisdictions.
New mandatory reporting criteria	The Attorney-General’s Department consider adding new mandatory reporting criteria that would 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.	Agreed in principle. The Government has agreed there is a greater need for transparency regarding modern slavery incidents and risks, acknowledged the importance of access to remedies, and noted that collaboration with stakeholders is an important way to strengthen responses modern slavery. In light of this, the Government will consider, in close consultation with stakeholders, whether the Act should be amended to implement each of these recommendations.
Reporting threshold	The Modern Slavery Act section 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.	Noted. The Government does not consider it appropriate to lower the reporting threshold at this stage, including because other recommendations will impact reporting requirements. This avoids the need for entities to develop compliance systems that may later need to be changed. The Government has stated it will reconsider the appropriate threshold at the next review of the Act. Therefore, entities with annual revenues between $50-$99 million should be aware that the reporting threshold may be lowered in the coming years. In the interim, the Government has agreed to provide tailored guidance to small and medium-sized entities on complying with Act’s reporting requirements.
High risk regions	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.	Agreed in principle. The Government recognises that reporting entities would benefit from a mechanism such as a high-risk declaration that would aid and encourage businesses to identify, assess and respond to modern slavery risks. The Government will consult with stakeholders and the Anti-Slavery Commissioner on a model for declarations taking into account international law obligations, and potential implications for Australia’s economy, trade, national security and foreign policy objectives. Prior to the last election, the Labor Party committed to providing the Anti-Slavery Commissioner with a power of this nature.
Reporting guidance and templates	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 Act. The Act be amended to require that all modern slavery statements submitted under the Act include a coversheet that addresses specified matters.	The Government has agreed to develop a template for reporting entities to use when preparing their modern slavery statements. This will support better reporting and will enhance comparability of statements. The Government has also agreed in principle to requiring all reporting entities to include a coversheet which addresses certain matters, and will consult with stakeholders to understand the impacts of making the completion of a coversheet mandatory. The statutory review suggested that a coversheet address any modern slavery incidents identified by the entity during the year, actions taken by the entity on commitments or plans foreshadowed in a previous year’s modern slavery statement, whether external consultation and quality assurance were part of the statement preparation process, and details of the approval of the statement.
Amending the Guidance for Reporting Entities	The Review made a number of recommendations to help clarify reporting requirements by amending the Guidance for Reporting Entities, including to address: the definition of a reporting entity; the meaning of ‘operations’ and supply chains’; and approval and signature requirements.	The Government has agreed to: consider amending the Guidance to address difficulties in deciding whether an entity is a ‘reporting entity’ under the Act; review how the terms ‘operations’ and ‘supply chains’ are explained; and consider including clearer guidance, including an optional template, for use by entities to record that they have complied with the approval and signature requirements.