Joint standing committee on foreign affairs, defence and trade: inquiry into establishing a modern slavery act in Australia

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The Australian National University Corporate Accountability Project (ANU CAP) welcomes the opportunity to provide a submission in response to the fifth and sixth terms of references of the inquiry into establishing a Modern Slavery Act in Australia.

The ANU Law Reform and Social Justice (LRSJ) is a program at the ANU College of Law that supports the integration of law reform and principles of social justice into teaching, research and study across the College. Members of the group are ANU law students, who are engaged with a broad range of projects with the aim of exploring law’s complex role in society, and the part that lawyers play in using and improving law to promote both social justice and social stability.

ANU CAP is a student research group formed within the LRSJ program that aims to increase access to information and raise awareness on issues of corporate accountability. Our submission will first explore the sixth, and then the fifth term of reference of this inquiry. This submission will only focus on the Transparency in Supply Chains provision (s54) of the United Kingdom Modern Slavery Act 2015.

We make the following submissions:

  1. A Modern Slavery Act similar to the United Kingdom Modern Slavery Act 2015 (hereafter, UKMSA) should be enacted in Australia because:
    • The Criminal Code Act 1995 does not adequately address modern slavery in corporate supply chains;
    • The UKMSA has achieved some positive results; and
    • Australia should take the initiative to be a leader in the elimination of modern slavery in the Asia-Pacific Region.
  2. If a Modern Slavery act similar to the UKMSA were enacted in Australia, ANU CAP recommends that the following amendments be made:
    • Mandatory minimum disclosure requirements be enacted;
    • A central repository of disclosure statements be established, and made available to the public; and
    • An Independent Anti-Slavery Commissioner to be created.

If we can provide further information, please do not hesitate to contact us at:
corporateaccountability.law@anu.edu.au

On behalf of ANU Corporate Accountability Project,
Angela Chen, Sophia Collins, and Maddalena Easterbrook

I INTRODUCTION

Modern slavery is an issue that affects Australians directly, and as consumers and investors. The investigation, detection, prosecution and prevention of modern slavery in complex global supply chains are becoming increasingly difficult. In response, there is a growing global trend in jurisdictions such as the UK, California, the EU and France, adopting “soft” and “hard” legal frameworks to encourage corporations to be more transparent and accountable for modern slavery in their supply chains.

Australian law prohibits modern slavery. However, there are many gaps in these laws, which could be better addressed by introducing a Modern Slavery Act in Australia, similar to the UKMSA.

A Modern Slavery in Australia

Modern slavery unquestionably impacts the lives of enslaved individuals. However, this immoral practice also impacts the Australian community to an intrinsic degree. As consumers of, and investors of products created or tainted by modern slavery, Australians are complicit in funding this slavery. The 2016 Global Slavery Index discovered that Australia had an estimated 0.018% of the population or approximately 4,300 individuals subjected to some form of modern slavery. These individuals were mostly “migrant workers on temporary work visas especially within retail, cleaning services, construction and agriculture.” While this is a small percentage of the population, any element of modern slavery in Australia, or in the supply chains of businesses doing business in Australia, should not be tolerated.

The Trading Lives: Modern Day Human Trafficking report found that Australian companies were perpetuating modern slavery overseas by importing a significant amount of goods from countries with a “high risk of forced labour or child labour” such as Bangladesh, Cote d’Ivoire, Ghana, India, Malaysia, Nepal, Pakistan, Philippines, and Thailand. Enacting legislation similar to the UKMSA would allow Australian consumers and investors to make ethical, informed choices about the companies they want to support. In this way, such legislation would allow the Australian community to take a strong stand against these practices.

B Current Provisions in Australia That Address Modern Slavery

In Australia, modern slavery is a criminal offence. It is mainly regulated under Division 270 and 271 of the Criminal Code. Penalties for offences within both divisions range from 4 to 25 years of imprisonment. Division 270 criminalises “slavery and slavery-like conditions” such as servitude, forced labour, deceptive recruiting for labour or services and forced marriage. Division 271 criminalises “offences relating to trafficking in persons” such as human trafficking, organ trafficking, harbouring victims, debt bondage and so forth.

C The ‘Transparency in Supply Chains’ Provision in the UKMSA

The Transparency in Supply Chains (hereafter, TISC) provisions of the UKMSA reflect a global trend towards increased corporate social responsibility. The TISC provisions aim to ‘increase transparency’ about forced labour and human trafficking in corporate supply chains and create ‘competition to drive up standards’ amongst commercial organisations. The provisions require commercial organisations to publish on their website, and give to anyone who requires access to a copy, an annual ‘slavery and human trafficking statement’ detailing the steps taken ‘to ensure that slavery and human trafficking is not taking place’ either ‘in any part of…[the organisation’s] own business’ or ‘in any of its supply chains.’ Even if an organisation has taken no such steps, it still must publish a statement. A ‘director, designated member or partner’ must sign the statement before it is published. These provisions are globally significant because of their broad application, applying to any commercial organisation supplying goods or services in the United Kingdom with a total annual turnover greater than £36 million.

II WHY A MODERN SLAVERY ACT SHOULD BE ESTABLISHED IN AUSTRALIA

A Inadequacy of the Criminal Code in Addressing Modern Slavery

The current Criminal Code is insufficient to address modern slavery, particularly in corporate supply chains. Statistics from the Australian Federal Police (AFP) highlight that, since 2004, there has been a gradual increase of slavery and trafficking related referrals. However, this is paralleled with comparatively low participation in support programs and prosecution rates. The significant gap between reporting and not reporting is indicative of a much larger and unconsidered issue of constructive prevention that cannot be addressed by the provisions of the Criminal Code.

A total of 691 referrals were made during the 12-year period from 2004 to 2016. However, only 311 clients joined the Support Program during the same period. Comparing both figures to the estimated 4300 individuals in Australia currently enslaved, there is still an immense number of individuals who do not (or cannot) report or do not know that they are being subject to modern slavery practices. If Australia implemented an Act similar to the UKMSA, it would change the dialogue about modern slavery in Australia, and encourage a culture of corporate accountability. Furthermore, by increasing dialogue about modern slavery, it is hoped that the barriers of “fear, shame, unawareness of rights” that many victims struggle with when deciding whether to report their working conditions are overcome.

This will also help resolve the practical challenges in investigating modern slavery in other jurisdictions, such as communication barriers and limited resources to conduct investigative and enforcement measures. The recommendations in s 54 (5) of the UKMSA provide corporations with guidelines to identify, confront and tackle the root of modern slavery in their supply chains. It also invites corporations to draw up a strategy customized to their organisation and take initiative to be proactive in this resolution process.

B The UKSMA Has Achieved Some Positive Results (So Far)

When considering what type of a Modern Slavery Act Australia should implement, it is important to consider the benefits and disadvantages of the largely “soft” nature of s 54 of the UKMSA. The advantage of s 54 being mostly voluntary and thus free from strict liability is that it encourages businesses to be transparent about the existence of modern slavery within their supply chains or corporate structures. It also allows consumers, shareholders, and other stakeholders to take control of the process by using provisions in the UKMSA as a framework to hold corporations to account.

The Hult and Ethical Trading Initiative (ETHI) Report: Corporate Leadership in Modern Slavery (hereafter, the Hult and ETHI Report) found that the establishment of the UKSMA has seen a 58% increase of communication between companies and their suppliers about their expectations. There was also a 50% increase in companies seeking collaboration and advice from external organisations.

Importantly, engagement from senior levels of leaderships (such as CEOs, COOs and CFOs) on this issue has more than doubled since the introduction of the UKSMA. This improvement is significant because senior executives have the power to change the corporation’s attitude, approach and commitment towards the issue by increasing staff engagement in activities or training sessions that seek to address and raise awareness about modern slavery. From the Hult and ETHI Report, activities that were most popular amongst corporations were specialised training for the board and employees (s54(5)(f)), risk assessment (s54(5)(d)) and reviewing of effectiveness of management of modern slavery risks (s54(5)(e)). On the other hand, due diligence process (s54(5)(c)), business statements on modern slavery (s54(5)(a)) and policies (s54(5)(b)) that allow victims to report modern slavery incidents and remediate from these grievances were the least popular. While engagement in the latter activities is desirable, its lack of popularity does not necessarily point to the failure or inadequacy of the s54 (5) of the UKMSA. Rather, it may be more accurate to say that its full potential has not been reached yet.

C Australia Should Take the Initiative to be a Leader in Modern Slavery Elimination in the Asia-Pacific Region

Australia is ranked alongside the UK, US, France and many EU countries as having the lowest percentage of its population in modern slavery. We believe that the establishment of a Modern Slavery Act will further strengthen Australia’s capabilities in becoming a strong global leader in the elimination of modern slavery, particularly in regards to our geographical location in the Asia-Pacific. Two-thirds of the estimated 45.8 million people in modern slavery are located in the Asia-Pacific Region, with 11.5 million of those in forced labour. However, 12 out of 15 of Australia’s top trading partners in the 2015-16 financial year were nations within the Asia-Pacific Region. Thus, the introduction of an Australian Modern Slavery Act will allow Australia to lead in stopping the proliferation of modern slavery within the region.

III RECOMMENDATIONS

A Mandatory Minimum Disclosure Requirements

A key concern with Part 6 of the UKMSA is that ‘the Government has not been prescriptive about the layout or specific content’ of transparency statements. This is problematic for several reasons. First, it means that companies may publish statements that lack the requisite specificity to be an effective indicator of their policies and practices on slavery and human trafficking. It is also problematic because companies may choose to focus their statements solely on those areas in which they are implementing policies, and fail to discuss areas in which they have no policies in place. Companies may therefore appear to be acting ethically, whilst doing little to combat human trafficking and slavery in practise. This undermines the ability of consumers and investors to use this information to make informed, ethical choices. In particular, it makes it more difficult for these groups to understand how companies compare to one another in terms of the implementation of policies and practices that combat human trafficking and slavery.

The California Transparency in Supply Chains Act (hereafter, ‘TiSCA’) can provide an example of legislation that overcomes these issues. The TiSCA came into effect in 2012, and has similar aims to Part 6 of the MSA. The TiSCA is far less extensive in application than the MSA. Namely, the TiSCA only applies to retailers and manufacturers who conduct business in California with annual gross receipts in excess of $100,000,000. However, while the TiSCA is less broadly applicable than Part 6 of the MSA, it is superior in terms of its minimum reporting requirements. The TiSCA outlines five areas of disclosure: verification, audit, certification, internal accountability, and training. Companies must, at a minimum, disclose ‘to what extent, if any’, their policies and practices respond to these areas. This ensures organisations produce statements that refer to these important areas. It also means consumers and investors can more easily compare the action companies have taken, and use this information to make more ethical choices.

Inclusion of minimum reporting requirements would improve the effectiveness of the transparency provisions in the UKMSA, and therefore should be considered for any Modern Slavery Act implemented in Australia. The areas listed in s 54 (5) of the UKMSA may be regarded as a guide for the type of minimum requirements that would be suitable to include in Australian legislation. The areas of information listed in this section are:
a) ‘The organisation’s structure, its business and its supply chains;
b) Its policies in relation to slavery and human trafficking;
c) Its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
d) The parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
e) Its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
f) The training about slavery and human trafficking available to its staff.’
The lack of mandatory minimum disclosure requirements in the UKMSA has been criticised since its enactment, and commentators have encouraged amending the Act to ‘require the disclosure of the information which is now merely permissive’ .
Australia should take this opportunity to be a leader in the implementation of legislation that not only applies broadly, but also stipulates minimum disclosure requirements.

B Online Central Repository of Disclosure Statements

Not only are the mandatory minimum disclosure requirements outlined in the UKMSA lacking in stringency, but many companies do not comply with these requirements when releasing statements. It was found by the Business and Human Rights Centre that only 22 out of the first 75 statements released by corporations under the UKMSA were approved and signed by a director, and published on the home page of the organisation’s website. Moreover, 33 companies failed to comply with requirements. Only 19 companies adopted all 6 suggestions provided by the UKMSA under s 54(5) in their statements and only 9 statements sufficiently “met the minimum requirements”.

It is clear that a major issue with s54 (5) of the UKMSA being a discretionary provision is that corporations are not making an active effort, or any effort at all, to meet the minimum requirements and produce a detailed analysis of their supply chains or corporate structures and strategy to resolve any risks of modern slavery. As demonstrated in the statistics stated above, even if the corporations make an effort to publish a statement, this does not necessarily translate to effective and detailed reporting.

Although the enforcement provisions in the UKMSA lack strong sanctions, they are designed for civil society to use in order to place pressure on businesses to take action on modern slavery. It therefore frustrates the intention of the UKMSA where the media, shareholders, investors, and particularly consumers, cannot monitor which companies are acting on modern slavery. This is particularly difficult when many subject to this law (1) do not publish disclosure statements, (2) publish statements but do not properly comply with reporting requirements, or (3) publish and comply with reporting requirements, but their statements do not show the true extent of their policies and practices to eradicate slavery. Without a central repository or register mandated by the government that shows which companies are required to produce or publish a statement, civil society will struggle to hold companies to account. This is unfair for the companies that are fulfilling their obligations under the legislation, as the reporting requirements outlined in the UKMSA are meant to recognise both the good and bad players. A central repository would also increase the ease with which consumers and investors could access this information, and therefore increase the likelihood that they will incorporate this information into their everyday decision-making. Ultimately, the absence of a central repository undermines the creation of a level playing field, which may render the legislation as ineffective in regards to enforcement.

C Introduce an Independent Anti-Slavery Commissioner in Australia

The introduction of an Independent Anti-Slavery Commissioner (Part 4 of the UKMSA) in Australia will also complement and add to the effectiveness and accountability to current Australian activities. Currently, Australia has implemented “whole-of-government strategies and joint government and non-government activities” through an Interdepartmental Committee (IDC) to address ‘human trafficking, slavery and slavery-like practices’ . This policy touches on many areas of the role of the Independent Anti-Slavery Commissioner as outlined in s 41(3)(a)-(f) of the UKSMA. Adoption of this provision would not require Australia to do much more than what it is has already committed to, but would improve the impartiality and efficacy of these policies.

The Australian government has:
• Funded for the investigation and legislation of slavery and human trafficking matters led by the AFP and the Courts, which fulfils the “investigation” and “prosecution” part of s 41(1)(a) of the UKMSA;
• Funded IDC’s to undertake research on slavery and “trafficking trends in Australia and our region”;
• Funded for the “provision of information, education or training” led by many IDC, civil society groups and governmental programs such as the Support for Trafficked People Program, Australian Red Cross, Australia-Asia Program to Combat Trafficking in Persons, AFP, Australian Criminal Intelligence Database and more;
• Established the “National Roundtable on People Trafficking as a “consultative mechanism between the Government and NGOs on trafficking issues” which fulfils s 41(3)(e) of the UKMSA and;
• Worked in partnership with public IDC authorities, NGOs, civil society groups and more on the anti-slavery issue as mentioned above, which fulfils most of s 41(3)(f) of the UKMSA.

Despite the programs that Australia has implemented alongside the provisions in the Criminal Code that aim to prevent, detect, investigate, prosecute and provide victim support, there is still a significant lack of opportunity and independence for governmental groups to scrutinise the government and civil society agency policy and Commonwealth legislation on modern slavery. It is the main responsibility of the IDC’s report to Parliament on the effectiveness of their own bodies in implementing the anti-slavery and trafficking strategy, but there seems to be no expert central body or commissioner to give advice, make recommendations and empower IDC’s to resolve the gaps and duplicity across agencies. Introduction of an Independent Anti-Slavery Commissioner will thus increase the impartiality and efficacy and “strengthen collaboration” between IDC agencies, NGOs and individuals working on addressing the modern slavery present in Australia.

IV CONCLUSION

Inevitably, there is criticism of the UKSMA. However, this should not deter Australia from adopting a Modern Slavery Act of its own. Australia has much to gain from introducing similar legislation, which draws on the strengths and improves on the weaknesses of legislation in the UK, California, and France. We believe that Australia should develop a Modern Slavery Act that is suited to the Australian context and consistent with present international standards and efforts to combat modern slavery.

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