The Business Council of Australia (BCA) supports efforts to reduce the prevalence of modern slavery and protect the safety, dignity and rights of workers in Australia and across global supply chains. The BCA represents 130 of Australia’s major corporations and organisations, many with engagement across diverse domestic and global supply chains. The introduction of the Modern Slavery Act 2018 has been a positive step in improving transparency and mitigating the risk of modern slavery occurring through these supply chains.
The BCA and our members take a strong stand against modern slavery and support efforts to reduce its prevalence. For this reason, we are concerned that the reforms now being proposed do not align with the current transparency-focused regime, the review of the Act and subsequent recommendations or consultations.
The proposed criminal ‘Failure to Prevent’ offence could discourage the transparency, engagement, and remediation the reforms are intended to promote. The introduction of criminal penalties risks discouraging businesses from investigating, disclosing less when risks are identified, or disengaging from high -risk suppliers and communities rather than working constructively with them to remediate harm. We also find the proposed comparison and application of the foreign bribery model of a ‘Failure to Prevent ’ as referenced in the consultation paper inappropriate.
Overall, the proposed changes will increase reporting, legal requirements and costs for large and small businesses and is counter to the Government’s productivity agenda of reducing the regulatory burden across the economy. The consultation paper also provides no empirical evidence that the proposed offence would reduce the incidence of modern slavery or prevent goods and services linked to it entering Australian supply chains.
We also bring to the Department’s attention the current Treasury consultation on the exposure draft legislation concerning non-compete clauses and other restraints. The draft bill could have the unintended consequence of discouraging businesses from including contractual provisions designed to minimise or eliminate labour exploitation, including modern slavery.
The BCA recommends the Government not proceed with the proposed criminal offence and instead proceed with a mandatory due diligence obligation as the preferred model.
Key recommendations:
Recommendation 1.
- Do not proceed with the proposed criminal offence.
- As per the joint letter to the Attorney General from employer groups, we recommend the government proceed with implementing a mandatory due diligence obligation instead.
- If the government does proceed with a criminal offence:
- Consider an alternate model of ‘failure to identify, mitigate and remediate’.
- Do not replicate the Anti -Foreign Bribery model in the modern slavery context.
- There should be a clear link to the actions of the corporation, such that it is clear that they were deliberate and directly caused the modern slavery in the supply chain.
- Clearly define a causal or contributory connection between the corporation’ s own conduct and the underlying offending, with a specified formulation.
- Align the key principles as much as possible with the UNGPs and OECD principles.
- Include the definition of ‘reasonable steps’ in the legislation.
- Provide guidance on how corporations are to undertake ‘reasonable steps’ in locations where it is difficult, or they are unable to seek information, such as where it is illegal to make inquiries into modern slavery.
- Recognise that corporations are unable to address all issues in supply chains, and a proportionate and risk -based approach is required.
- Do not impose an absolute or strict liability, consider recklessness with significant caveats, that it only applies where the company was aware of the modern slavery, it fails to take reasonable steps and there is a direct connection with the corporation.
- Criminal penalties only apply where there is a direct nexus between the company’s actions, and it knowingly facilitated modern slavery.
- Penalties should be proportionate. If liability is strict or absolute, and proof of fault is therefore not required, then maximum penalties should be limited. Any penalty should reflect the seriousness of the corporation’s conduct, actual culpability and any benefit obtained.
- Allow a two -year timeframe for implementation following the date of the passage of the legislation and issuing of guidance.
- The Australian Government as a major procurer, should also be in scope.
Recommendation 2.
- Include details on ‘reasonable steps’ in the legislation for clarity.
- Provide additional guiding materials and education for businesses, including SMEs.
- Align where possible with other international principles to minimise Australia being an outlier in its reporting requirements and requests to its supply chains, and additional costs from creating duplicative reports.
- Provide for mutual recognition of compliance with equivalent international frameworks.
- Facilitate industry sector collaboration on initiatives to address modern slavery.
Recommendation 3.
- Develop a graduated enforcement process, enabling the prioritisation of the most egregious cases for criminal prosecution.
- Consult further on the practicalities and details of a ny proposed DPA scheme.
- Any DPA scheme must be voluntary.
- Judicial approval should be required for the terms of a DPA.
- Clarify how the criminal and civil systems will operate to minimise complexity and costs and avoid a greater emphasis on legal matters at the expense of remediating modern slavery and improving outcomes for those affected.
- Develop a safe harbour model to encourage transparency, including for multi -entities or an industry sector.