Government delivers more 'teeth' to modern slavery act

Large corporates with annual consolidated revenue of over $100 million will face a criminal offence where they fail to prevent modern slavery in their supply chains, the government said.

Companies would be able to defend themselves if they can demonstrate they took reasonable steps to prevent modern slavery.

"This will ensure companies which have adequate processes and steps in place are afforded appropriate protections," Attorney-General Michelle Rowland said.

"Upcoming consultations will help inform the details of the proposed offence and enforcement options to further ensure the reforms are practical, effective and fit for purpose, including consideration of a deferred prosecution agreement scheme and remedies for victims."

Australian Human Rights Institute director Justine Nolan has said the current Australian Modern Slavery Act raises awareness in educating people on the problem but has fallen short in following through and being effective.

Nolan noted it has become more about ticking a box and getting the processes in place rather than being impact or outcome focused.

The government also intends to introduce civil penalties and associated enforcement powers to address non-compliance with existing obligations under the law.

The government will complement the reforms with practical guidance and education initiatives to assist companies to better identify, manage, and remediate modern slavery risks in their supply chains.

"Australians rightly expect that the products they buy are not made on the back of modern slavery, which is why the Albanese Government is delivering a legislative framework with teeth," Rowland said.

"The proposed changes will introduce greater accountability, leveling the playing field for the majority of Australian businesses already doing the right thing."

The reforms will also encourage effective risk management while maintaining a practical and proportionate framework for business, Rowland added.

Last month, over 100 signatories including institutional investors, businesses and unions sent a letter to the Attorney-General advocating for reform to address underlying risks in modern slavery.

Investors such as Australian Ethical, Colonial First State, Future Group, IFM Investors, and more came together to call on the government to ensure the reform is both "meaningful and pragmatic".

The Responsible Investment Association Australasia (RIAA) welcomed the reforms and said it looks forward to participating in upcoming consultations to ensure the reforms are practical, efficient and effective.

"Modern slavery is not only an ethical concern but also a material business and investment risk. Investors increasingly understand that modern slavery poses significant regulatory, legal and financial risks to investments," RIAA said.

"Companies connected to forced labour or exploitation face risks to long-term business sustainability, reputational harm and legal and regulatory scrutiny. In this context, unmanaged modern slavery risks can undermine business resilience, credibility, and access to capital."

RIAA added institutional investors play a vital role in identifying, assessing and addressing modern slavery risks across portfolios and supply chains.

"Responsible investors will be key to the success of the proposed reforms and to ensure Australia's modern slavery regime delivers better outcomes for people affected by exploitation," RIAA said.