Thursday, December 21st, 2017
This month, the Australian Joint Standing Committee on Foreign Affairs, Defence and Trade published the findings from its inquiry into introducing a Modern Slavery Act, ‘Hidden in Plain Sight’, following an Australian government consultation paper containing a proposed model for the Act, released last summer.
In its preamble, the inquiry report pays homage to the UK Modern Slavery Act, commending the leadership the UK has shown in its efforts to combat exploitative labour practices globally. The committee also models the proposed Australian Modern Slavery Act on the UK Act.
Noting that Australian laws already contain much that the UK Act legislates for, the Committee recommends borrowing two additions: the establishment of an independent anti-slavery commissioner, and a transparency in supply chains clause. The supply chains clause would require companies over a certain threshold (annual revenue of $50million or over, in an effort to match the £36million UK threshold) to issue an annual statement reporting on incidence and risk of slavery in their supply chains, and what they will do to prevent it. The inquiry also recommends that, with a single addition, slavery and human trafficking statements include the same content as set out in the UK statutory guidance.
Meanwhile, in New Zealand last week, Labour MP Dr Liz Craig tabled a Transparency in Supply Chains Bill similarly laying out proposed requirements for companies to publish slavery and human trafficking statements on the UK model. Although there is a helpful addition proposing that the statement is included in annual reports.
In so far as these developments take us in the right direction, they are to be welcomed; but the shortcomings of the UK Act must also be recognised, addressed, and not replicated elsewhere.
A recent UK National Audit Office report highlights the poor levels and quality of reporting since the passing of the Act, pointing out that 20% of FTSE100 companies either did not produce a statement or produced one that did not comply with the statutory guidance, and that as of October 2017 the Modern Slavery Registry produced by the Business and Human Rights Resource Centre contained only 3100 statements of the 9000-11000 the Home Office estimates are required. It also noted that the quality of the statements has been variable, and that therefore they do not provide equal levels of assurance to those scrutinising them. These findings chime with those in our own study released in October.
The NAO report points to two significant barriers that have exacerbated these problems. First, no central list has been published by the Home Office on businesses expected to comply with the legislation, without which it is impossible to ensure all companies required to report are doing so. And second, although the Home Office has the power to apply for an injunction in the event of non-compliance, no penalty regime has been enforced for these companies. Even though the guidance that prescribes what businesses should include in their statements is not itself mandatory, at present there are not even any penalties for not producing a statement at all.
Unfortunately, some of these failings are being copied into the proposed New Zealand and Australian laws. For instance, the Bill tabled in New Zealand similarly allows the statement to write that the company has ‘taken no steps during the accounting period to ensure that slavery and human trafficking is not taking place’. Moreover, in the Australian Committee it was suggested that there ought to be no penalties for failing to report the prescribed content, although this could be changed after the three year review into the proposed act.
On the other hand, the Australian Committee inquiry goes further than the UK Act in recommending the government legislate for and fund the creation of a central repository for statements and a list of companies that are required to report. The reporting requirement will also have teeth as it is suggested that the list is backed up by a penalty regime for those companies that fail to report. Let us hope that if this recommendation is adopted, the UK and other governments introduce a similar provision, creating a mutual culture of building on good practice and ensuring legislation is effective in tackling forced labour in supply chains.