Getting the balance right: proportionate due diligence to address modern slavery risks

Good afternoon.

Firstly, thank you to Innes and your team for the opportunity to speak at this Australian Industry Group conference.

It’s appropriate I speak to you, IR practitioners, because my role is focused on the most egregious of workplace exploitation – modern slavery. Both in Australian operations and your overseas supply chains, the Australian Government has required large companies to join in the fight against modern slavery.

Australian law covers a range of modern slavery practices, most relevantly including forced labour, trafficking in persons, debt bondage, and deceptive recruitment.  Whichever form it takes, people are forced to work through coercion, deception or threats. They cannot leave – that is the difference between modern slavery and severe exploitation.

The Modern Slavery Act passed in 2018 with bipartisan support and continues to be supported across the Parliament. This reflects a shared conviction that Australians want to know that the goods and services they use aren’t made through the exploitation of people, either here or overseas. 

The Act didn’t introduce changes to existing criminal provisions but placed an obligation on large entities operating in Australia to report on their activity in combatting these crimes in their domestic and international operations and supply chains. The Act also requires companies to report on the effectiveness of the actions they are taking. 

A legislated three-year review of the Act found that it had had limited impact on improving the plight of people in modern slavery. The only amendment to the Act was made in 2024 to create my role as Anti-Slavery Commissioner.  There is much more that needs to be done. The Government has agreed to consult further on reforms recommended in the review.

The Functions of the Commissioner, defined in the Act, have given me a clear mandate to work with business to:

• Promote compliance with the Act
• Support businesses to address their risks; and
• To support sector-based and cross-sector collaboration to address modern slavery. 

This is a reinforcement of the Parliaments view that Australian businesses remain a key stakeholder in the drive to stamp out forced labour and other forms of modern slavery.

My role is not one of a regulator, nor an investigator. I have no role in law enforcement nor service delivery. These are the clear mandates of the Fair Work Ombudsman, the Australian Federal Police and other agencies.

My role is to work closely with the FWO, AFP and other agencies to add value and to recommend to Government changes in policy and practice that can lift the effectiveness of our responses. 

My role is to provide leadership, promote compliance and advocate for continuous improvement in due diligence efforts. I want to raise ambition across government, business and the community to help drive practical change.

According to the International Labour Organization, globally, an estimated 27.6 million people are in situations of forced labour on any given day; of them, 3.9 million are in state-imposed forms of forced labour. 

More than half of all victims experiencing forced labour are in the Asia Pacific region. 

Migrant workers are three times more likely to experience forced labour. Modern slavery is present in high income countries like Australia, not just developing economies.

It’s here, and it’s in our supply chains. It’s hard to see by design, and that’s the point.

Modern slavery occurs on a spectrum of work practices. This starts with decent work, where work is safe, fair and voluntary – the type of employment conditions that most of us experience. 

Then follows a range of substandard workplace conditions including unpaid wages and benefits; excessive overtime that is expected; poor health and safety practices; and discrimination, particularly of migrant workers

Modern slavery is the experience at the most extreme end of the exploitation spectrum. These are situations where people’s vulnerability is weaponised and intentionally abused by others that seek to profit from their exploitation.

In situations of forced labour, wages may be deliberately withheld; people are fearful of refusing work due to coercion including threats of dismissal and deportation; movement may be monitored or curtailed; and workers may be tricked into high debt. Victims of modern slavery will typically experience multiple forms of abuse. And modern slavery is more likely where other exploitation or practice is found.

In Australia, there are examples of modern slavery occurring in many different contexts.  Migrant workers on temporary visas are most at risk. This includes international students, backpackers, PALM scheme workers, and those who have overstayed visas or disengaged from their visa program.

Regardless of their visa status, migrant workers are entitled to the same workplace rights, including minimum rates of pay, as other workers in Australia.  

We know that severe exploitation occurs across a number of higher risk sectors including cleaning, security, logistics, construction, horticulture, viticulture, meat processing, food manufacturing, and hospitality.

Opaque or unauthorised subcontracting arrangements, including circumstances in which people are incorrectly engaged on ABNs, is also a risk driver across many of these sectors.  

The same is true for labour hire where good law-abiding companies are undercut by rogue exploitative operators. The Fair Work Ombudsman’s recent report on horticulture found significant non-compliance by labour hire providers compared to growers that directly hire.

This includes high rates of unpaid superannuation, poor record-keeping, and incorrect pay slips. Research shows most migrant workers are afraid to speak up for fear of losing their visa, retaliation, or threats of harm to their families.

There are some basic governance questions that all companies should be asking:

• Are risk assessments capturing risks to indirect workers and vulnerable migrant worker groups across your operations and supply chain?
• How do you know that sub-contractors are not engaging in unauthorised sub- contracting? Or that the people servicing your sites are being paid correctly?
• What type of due diligence are you conducing on labour hire providers, and does this extend to spot checks throughout the term of the contract?

During the last parliamentary term, the Labour government introduced a number of measures that aim to address these issues and provide further protections to temporary visa holders.

Under the Migration Amendment Act it is now illegal for employers to pressure temporary visa holders to breach work related visa conditions or accept exploitative arrangements. Wage theft was also criminalised, and changes to the PALM scheme introduced pay parity and minimum take-home pay.   

One of the measures that wasn’t legislated, however, was the Government’s commitment to a nationally consistent labour hire regulation scheme.

After a series of consultations with the States, work commenced on a model law for a National Labour Hire Licensing Regulator. However, progress has stalled and Queensland has seemingly withdrawn its support. That is regrettable. 

In horticulture, industry groups, unions, and retailers are aligned on the need for a national scheme. For them, this isn’t just about improving protections for workers; it’s about reducing the administrative burden for providers that operate in multiple states; promoting consistent enforcement as a deterrent for bad operators; and managing the reputational risks of a social license to operate.

I urge both the Commonwealth and the States to take serious steps to get a national scheme operational as soon as possible. Good labour hire providers and workers will benefit. 

Turning to the Modern Slavery Act, reform is also on the table. 

I want to say from the outset, that I hear business concerns. You want regulation that is clear and fair. AI Group’s submission to the Productivity Commission’s recent inquiry says, and I quote, "Principles for good regulatory design are that regulations should be precise, consistent, stable and proportionate."

I share this view. 

AI Group’s submission continues to highlight that, and I quote again, “regulated large business implement supply chain requirements in different ways, forcing their SME suppliers to comply with multiple different quasi-regimes for the same ultimate purposes.”

I have been hearing these concerns. SME’s say they are overwhelmed by surveys and requests from larger companies, even when their risk is low.  I have heard of sole traders being asked to sign complex contract clauses that warrant there is no modern slavery in their operations. 

This approach is not good due diligence and it’s time we lean into that. The busy work of paper shuffling does not correlate with real impact. And it doesn’t help business manage material risks.

Good due diligence aligned to international standards is about understanding risk and acting proportionate to that risk. 

Over the coming months I will convene a roundtable of industry and the relevant players to address the concerns of SMEs. I invite the AI Group to contribute to that work. We need to better understand what is working and what’s not, and to sharpen our collective focus on the areas of greatest concern. 

My Office is also working to support collaboration and reduce duplication. As you put it, having different regimes for the same purpose is not efficient. Having access to shared tools or better coordination in supplier information requests is an important part of this approach. 

Responsible action from large businesses isn’t about shifting the compliance burden to smaller entities. This principle is going to be particularly important as the Attorney General’s Department commences consultation on reforms to the Modern Slavery Act over the coming months. 

The consultation is a result of the statutory independent review of the Act. In their response the Government agreed or agreed in principle to 25 of the 30 recommendations.

Most were fairly uncontroversial suggestions, focusing on clearer guidance, reporting requirements and the introduction of penalties for non-complying business.  I think it’s the case that laws should have a penalty provision for those not complying with the requirement of that law.

But penalties in themselves don’t necessarily advance action towards better practice. So, for me the priority areas are the recommendations for mandatory due diligence and the proposal for a declaration regime identifying high-risk products or regions of origin.

As it stands, the Modern Slavery Act does not require any minimum standard of risk management from large business. It also doesn’t require action to address forced labour where risks are identified.

A due diligence obligation would require action from large businesses to actively manage their modern slavery risks.

This is not a new concept.

Over the past 6 years, business reporting under the Act have been socialised to risk-based due diligence expectations through the Government’s Guidance material.

Leading businesses are already implementing this type of due diligence. The change to a mandatory regime for large businesses is not a giant leap, but an important maturing and strengthening of the system. 

A due diligence obligation enshrined in the Modern Slavery Act would: 

• facilitate a level playing field for business. This would enable companies to invest in effective action to reduce their risks and get greater outcomes for vulnerable workers
• it would create greater consistency and clarity for business
• it would align the MSA with other laws that also have ‘positive duty to avoid harm’ including worker health and safety, bribery and corruption and privacy; and
• it would help businesses respond and remain competitive in key global markets where due diligence reforms are already underway.

The European Union has introduced an EU-wide, mandatory human rights and environmental due diligence law. There are similar existing mandatory human rights due diligence laws in Germany, France, Norway and Switzerland. 

Similar laws are being considered in a range of jurisdictions including the UK, Canada, and Thailand. Meeting and aligning with international requirements would help reduce the regulatory burden on businesses operating in multiple jurisdictions.

Australian businesses operating or supplying to the EU are also likely to face heightened scrutiny under the EU’s Forced Labour Regulation. The Forced Labour Regulation empowers EU authorities to investigate any products in the European market that may be made with forced labour.  This includes Australian products and parts of products. 

Where products are found to have been made with forced labour, they will be prohibited from the EU market and may be detained at the border. 

This Regulation comes into effect in December 2027 and should be on the radar of all Australian businesses that export to the EU, especially those that operate in high risk industries or source high risk materials. European business will require Australian business in their supply chain to meet those standards. 

In Australia, the Government is considering a proposal to allow the formal declaration of particular products or industries, as carrying a high modern slavery risk. The idea is this information would help strengthen company’s action by highlighting risks that warrant special attention. 

Such declarations which are published already exist or are in development in other jurisdictions, including the US and the EU. 

Any Australian declaration of high-risk matters would need to take account declarations in other countries. In our initial discussions with business we have heard that many see value in having an official declaration of risks relevant to the Australian market. 

This would provide useful guidance and support business engagement with internal and external stakeholders, including suppliers. 

For these declarations to have real impact though, we need to have better visibility on what high-risk goods are entering the country. 

Compared to other jurisdictions, Australia has a significant blind spot around what goods are entering our country. Every day, Australia receives thousands of shipments from around the world. Yet our current import controls do not consider whether goods were made with forced labour.

Even if this were to be rectified, current laws prevent the sharing of this information with the public or across government agencies. An impactful high-risk declaration regime would require the Government to ensure a greater level of transparency of customs data. 

Without strong action, Australia risks becoming a dumping ground for goods barred from being sold in other developed economies. Without an equivalently effective response, the Australian market is likely to see an increase in goods entering Australia that have been made using forced labour. 

In conclusion, let me finish by reminding us all of why we do this.

I know there is some frustration in business about the requirement to report under the Act. 

I know from meeting with a lot of board directors in the last six months that there is a deal of anxiety around having to report a positive finding of modern slavery in their supply chains. Fear of impact on their reputation and shareprice are among these concerns. 

I would like to acknowledge that at least two of the companies in the room today have found, remediated and reported on instances of modern slavery in their supply chain. A handful of others have reported finding and addressing forced labour indicators.

This is what success looks like and it should be celebrated because it shows the system is working. It is about assisting people to live and work in freedom and dignity.

After six years of the Modern Slavery Act, it is time to make the identified improvements. Whatever the pace of reform, the direction of change is clear. 

Thank you for the opportunity to speak to you today. My Office is available to assist with any challenges you encounter responding to your obligations under the Modern Slavery Act.