Whilst the eradication of slavery is almost impossible through legislation alone, modern slavery legislation in countries offers a means for the private industry to assist the government in its efforts of discarding the practice. Despite its first world status, Australia is not exempt from the effects of slavery. From 2004 to 2018, it was suspected that over 350 individuals were a victim to this practice.
The Act was passed by the Australian Government in 2019. This Act sought to place an onus on large entities to scrutinize their business operations and ensure that slavery does not occur within their domestic or global operations or supply chains. A main feature of the Act was the requirement for these large entities to produce an annual report stipulating the actions to prevent the risk of modern slavery.
The Modern Slavery Act required that a review be taken three years after the commencement of the Act. The objective of the review is to consider the operation of the Act over the first three years and consider options for improved operation and compliance.
The Review acknowledges that a great deal has occurred since the Act began operating on the 1st of January 2019. Over 4000 modern slavery statements have been published, covering activities of an estimated 6200 entities from 42 different countries. These statements are published by the Modern Slavery Statements Register and since its inception had been accessed in over 1.2 million searches. There is now frequent dialogue between government, the business community, civil society groups and academic institutions about the Act’s requirements. If the goal of the Act were to enhance knowledge about modern slavery and foster communication among actors to ensure that the private sector contributes to eradicating modern slavery, this box should be ticked. Given that modern slavery is not a commonly known topic, legislative requirements for reporting on this was a needed intervention.
Despite the positive impact the Act had on fostering communication on modern slavery and providing knowledge through transparency requirements, the Review importantly questions whether the Act does enough to combat the drivers of modern slavery. The drivers of slavery include factors such as poverty, economic shocks, gender inequality, disability, lack of access to education, exploitative business practices and unregulated labour migration. Combatting these factors effectively results in a positive difference in confronting modern slavery on a global scale while reducing its prevalence. While the Act aims to this necessary impact in both direct and indirect ways the review questions whether more can be done by increasing the transparency premise.
A related line of inquiry proposed by the review is whether the reporting requirements should be amended. Currently the reporting threshold is that entities conducting business in Australia that have an annual consolidated revenue of at least AU$100M have a mandatory reporting obligation. The rationale being that this focuses on businesses who have the capacity to meaningfully comply and have the market influence to clean up and address their global supply chains. However, a debate exists as to whether the threshold should be lowered. By lowering the threshold, entities that recently may not fully understand or acknowledge that modern slavery practices can enter their operations and supply chains, will be included in the requirements of reporting. This may drive more meaningful change in modern business practices. Furthermore, the reporting thresholds are generally set at lower thresholds in other countries. For example, the UK threshold is approximately AU$63M.
The Review notes that perhaps a different criterion could be adopted as opposed to annual consolidated revenue. Some European laws for applying a reporting or due diligence obligation is that it employs a specified number of full-time employees.
A concern raised in the Review was that of the reporting cycles completed for the second cycle, a large number of companies had not accepted. The low acceptance rate was largely due to companies not complying with the requirements when compiling or uploading their statements. Despite the increase in the rate of compliance from the first reporting cycle to the second reporting cycle of 13% (the rate of compliance in the first cycle being 59%, whereas the rate of compliance in the second being 72%), in the second cycle 679 statements were initially not accepted for publication and 957 statements published were assessed as non-compliant.
While the Act meaningfully fosters cooperation between the private sector and government, the review questions certain aspects of the Act. These range from the effectiveness of combatting the drivers of modern slavery, the reporting threshold, and the stringent reporting requirements. Given the increase of global slavery numbers over the last year, it is important to see the effect the Act has had on the current statistics of slavery victims in Australia.
How Ardea can support you:
Ardea International works with Australian business supporting them with reviewing and drafting their modern slavery statements. We also provide gap analysis on modern slavery practices to allow companies to benchmark their performance and establish a roadmap for improvement.
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