In mid-February 2017, Attorney-General George Brandis asked the Joint Standing Committee on Foreign Affairs, Defence and Trade to inquire into establishing a Modern Slavery Act in Australia. The inquiry called for submissions exploring:
- The nature and extent of modern slavery (including slavery, forced labour and wage exploitation, involuntary servitude, debt bondage, human trafficking, forced marriage and other slavery-like exploitation) both in Australia and globally;
- The prevalence of modern slavery in the domestic and global supply chains of companies, businesses and organisations operating in Australia;
- Identifying international best practice employed by governments, companies, businesses and organisations to prevent modern slavery in domestic and global supply chains, with a view to strengthening Australian legislation;
- The implications for Australia’s visa regime, and conformity with the Palermo Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children regarding federal compensation for victims of modern slavery;
- Provisions in the United Kingdom’s legislation which have proven effective in addressing modern slavery, and whether similar or improved measures should be introduced in Australia;
- Whether a Modern Slavery Act should be introduced in Australia; and
- Any other related matters.
In April ICS made the following submission to the committee:
28 April 2017
SUBMISSION TO THE INQUIRY INTO ESTABLISHING A MODERN SLAVERY ACT IN AUSTRALIA
Joint Standing Committee on Foreign Affairs, Defence and Trade
About the Institute for Civil Society
The Institute for Civil Society is a social policy think tank which seeks to:
- Promote recognition and respect for the institutions of civil society which sit between the individual and the State such as clubs and associations, schools, religious bodies, charities and NGOs.
- Promote recognition and protection of traditional rights and freedoms such as freedom of association, freedom of expression and freedom of conscience and religion.
- Promote a sensible and civil discussion about how to balance competing rights and freedoms.
Terms of Reference of the Inquiry
The Committee is established to inquire into, and report on, whether Australia should adopt a Modern Slavery Act, comparable to the United Kingdom’s Modern Slavery Act 2015 (UK MSA).
The Institute for Civil Society (ICS) considers slavery—including forced labour, wage exploitation, involuntary servitude, debt bondage, human trafficking, forced marriage and other slavery-like exploitation—as a human rights violation requiring immediate attention. ICS welcome the opportunity for the Australian Parliament to reaffirm its opposition to all forms of modern slavery and continue to criminalise the practice, help individuals affected by modern slavery, and address structural and systemic factors enabling modern slavery to flourish. One way of doing this is to encourage Australian companies to exert pressure through their supply chains to eliminate modern slavery practices.
The essence of modern slavery is that a person is not free to refuse or leave their work and is exploited as a consequence. The Walk Free Foundation has stated:1
‘Modern slavery covers a wide spectrum of crimes, but the common thread is any situation of exploitation where a person cannot refuse or leave because of threats, violence, coercion, abuse of power or deception. A person’s passport might be taken away if they are in a foreign country, they may experience or be threatened with violence or their family might be threatened. In some cases this can be accompanied with horrific sexual exploitation. … [T]he term “modern slavery” is used to refer to human trafficking, slavery and slavery like practices such as servitude, forced labour, forced or servile marriage, the sale and exploitation of children, and debt bondage.’
According to the International Labour Organization (ILO)2 over 21 million people remain in forced labour worldwide. Over 11.5 million of these are in Australia’s neighbourhood, the Asia-Pacific. This modern slavery generates a staggering US$51 billion in our region alone; a figure which explains the slave-economy’s enduring existence. The Global Slavery Index (GSI) provides a much higher estimate, and estimates that in 2016, 45.8 million people were in some form of modern slavery worldwide.3
Modern slavery could affect the person assembling the smart-phones Australians use, or making one of its components, or digging the rare minerals from the ground that it needs to function. Slavery may be behind the food we eat, the clothes we wear, or the building products used in our homes, offices, or in public infrastructure projects.
In line with global standards in comparable liberal-democracies,4 Australia should introduce a Modern Slavery Act.
Definitions – Slavery vs Non-Forced Labour Wages and Conditions
To keep measures against modern slavery focussed and capable of practical implementation, we consider that a distinction needs to be continued in legislation and policy between slavery (including servitude and forced labour) on the one hand and oppressive sub-standard wages and labour conditions on the other. While appropriate wages and working conditions are the proper subject of Australian domestic and foreign policy, it would dilute the force of the campaign against slavery to include non-forced working conditions in the definition of modern slavery.
We consider that the current definitions of “slavery”, “servitude” and “forced labour” adopted in the Commonwealth Criminal Code provide a good basis for definitions to be used in other measures against modern slavery including any obligations on private sector entities in relation to supply chains.
Supply Chain Investigation and Annual Reporting
Australia already has criminal prohibitions on slavery, servitude and forced labour, forced marriages and human trafficking in the Commonwealth Criminal Code, most recently updated in 2013. The prohibitions on slavery and human trafficking apply to conduct occurring outside Australia. But the effect of these offences on conduct outside Australia is significantly limited by the difficulties of gathering evidence overseas and mounting a successful prosecution on the basis of such evidence, from Australia.
One of the key advances in the UK MSA was to add to the criminal prohibitions by requiring large businesses to investigate and report publicly on slavery and slavery-like conditions in their enterprises and supply chains. This brings a form of commercial pressure and sanction to bear on modern slavery practices. It publicly exposes the practice of modern slavery, raises the profile of the issue for companies—and their customers and suppliers—and will over time influence consumer buying choices and corporate policies about procurement, and which enterprises and practices should be in their supply chains. If implemented effectively, it will lead larger Australian businesses to remove or limit any association they have with modern slavery.
In line with the UK MSA, an Australian MSA should require large businesses to:
- investigate periodically whether there are any slavery-like conditions in their own enterprise or in enterprises in their supply chains;
- determine what steps, if any, the business will take in relation to the results of the investigation;
- annually make a public report describing:
- the investigations undertaken;
- what, if any, evidence was found of slavery or slavery like conditions and in relation to what places, enterprises and persons;
- what the steps the business intends to take to remove, limit or stop identified slavery or slavery like conditions in its enterprise or supply chain; and
- what steps the business has taken since it last reported to remove, limit or stop identified slavery or slavery like conditions in its enterprise or supply chain.
The requirements for the annual report should be specific and detailed as to the nature of investigations, evidence found, intended steps and implemented steps. This will limit the risk of pseudo-compliance through reports containing only vague PR platitudes about slavery. By requiring annual reports with updates as to further investigations and evidence found and steps actually undertaken since last reporting, large businesses are more likely to incorporate modern slavery investigations and reporting and appropriate action into their ongoing compliance plans and their procurement and sourcing programs.
It must be acknowledged that there are practical limits to how much an Australian company can investigate in its supply chain and influence what goes on in its supply chain. Much will depend on the economic power of the company vis a vis its suppliers and how remote the practice in the supply chain is from the company and how well concealed. But if there is no incentive on Australian companies to investigate and act, the issue of modern slavery can drop so far down the priority list that no effective action is taken. That is why a statutory obligation to investigate and publicly report annually is a good start to pushing this issue up the priority list of Australian companies to encourage practical action.
The threshold for a company being obliged to investigate and report will be determined in collaboration with business, but the UK’s threshold of £36 million annual turnover (approximately AUD 60 million) would seem a suitable starting point.
In the UK, the report must show ‘the steps [the company] has taken to ensure there is no slavery or trafficking in its supply-chains or its own business, or (state) that it has taken no such steps.’ In other words, provided companies supply a report, they have met their obligations, even if their report says they are doing nothing to address slavery in their supply-chains.
In that situation, consumers and civil society at large become responsible for pressuring the companies to provide a statement that adequately shows steps taken to address modern slavery in their supply chains. While the strength of this consequence may prove inadequate—if, for instance, companies are not pressured by civil society to seriously scrutinise their supply chains or they ignore such pressure—a trial period of 2-3 years may prove useful as it allows companies time to adapt to the reporting requirements, and will show whether publicity, public opinion and civil society are adequate means to move companies to effective action against modern slavery. If the arrangement is considered not to be producing effective action by companies, sanctions could be introduced to require evidence of proactive steps being taken by companies to address slavery in their supply chains.
A Central Public Repository for Supply Chain Reports
A central, independent repository should publish the anti-slavery reports of all Australian companies that are obliged to report.
Australia could learn from the UK and address deficiencies around reporting that have become apparent since 2015. Under the UK MSA company reports must be published on the company’s website and there is no requirement as to prominence or format. Finding reports and understanding them is complicated and time-consuming.
In the UK, civil society projects like the Transparency in Supply Chains (TISC) Report aim to increase openness by asking companies to pay a small membership fee to allow them to publish their reports on an online repository.5 While the aim of having all reports in a central location is sound, companies are not obliged to join the TISC Report—they may instead join a competitor civil society registry, or choose to only publish on their company website. The result is not greater transparency, but confusion. A central public repository where all companies are obligated to publish their statements would significantly streamline the process of reporting, while allowing NGOs, interest groups, and individuals access to all anti-slavery statements in the one space.
Public Sector Oversight: Supply Chain Investigation and Reporting Obligation
There needs to be public sector oversight of the supply chain investigation and reporting obligation. Companies may need some assistance in developing investigations and reporting. They may need some encouragement or sanctions if they fail to report.
This oversight responsibility must be included in the MSA. It could be given to a government department Secretary or to a new statutory Commissioner. In the UK, the Commissioner oversees anti-slavery responses, practices, reporting, and legislation.
Supply Chain Investigation and Reporting Obligations Should Also be Implemented via Government Procurement Policy
Public procurement in Australia in 2015-16 was worth in excess of $59 billion.6 This value was divided over 70,338 contracts. Of the total value, over $49 billion was paid in contracts of $1 million and above (over 3,500 contracts).
The proposed company reporting requirements under a Modern Slavery Act—for companies with an annual revenue in excess of $60 million per annum—would doubtless apply to several of the larger companies involved with significant public procurement contracts. A substantial number of the 3,500 contracts over $1 million, however, might involve companies that may not be obliged to provide an anti-slavery statement under the proposed MSA obligation.
The Commonwealth Procurement Rules7—issued under section 105B(1) of the Public Governance, Performance and Accountability Act 2013 (PGPA)—stipulate that:
‘The Australian Government promotes the proper use and management of public resources. Proper means efficient, effective, economical and ethical.’ (s 6.1)
‘Ethical relates to honesty, integrity, probity, diligence, fairness and consistency.’ (s 6.5)
The Institute for Civil Society recommends that the Commonwealth Procurement Rules be amended to include a requirement in government procurements for contracts over $1 million that tenderers must demonstrate that slave-like conditions do not affect the goods or services to be supplied under the government contracts, including through the supply chain for those goods or services.8 This could be achieved by obligating companies seeking government contracts over $1 million to provide an anti-slavery statement like that required of larger businesses under the proposed MSA.
The rationale for requiring an anti-slavery statement for companies with a lower turnover than $60 million per annum who are bidding for government contracts over $1 million is that the expenditure of public money attracts a higher level of accountability and scrutiny including on ethical grounds than does general commerce.
Under the PGPA, procurement officials are required to pursue the best ‘value for money,’ by considering ‘the relevant financial and non-financial costs and benefits of each submission,’ (s 4.5) including:
‘Environmental sustainability of the proposed goods and services (such as energy efficiency and environmental impact).’ (s 4.5E)
ICS propose that just as environmental impact is considered an integral procurement policy, the human or social impact—in this case referring to modern slavery—of government contracts should be considered as well.9
International Examples of Government Procurement Policies
As noted in the report of the 2013 Joint Standing Committee on Foreign Affairs, Defence and Trade: ‘Inquiry into Slavery, Slavery-like conditions and People Trafficking,’ a number of countries including Norway, Denmark, and Sweden—as well as the EU—have looked at public procurement policy in the context of modern slavery. Along with these examples, the United States also has regulation of federal procurement practices to screen out products believed to be produced by child labour or forced labour.
In the United States, the Federal Acquisition Regulation (FAR)10 references the ‘List of Goods Produced by Child Labor or Forced Labor’11 published by the US Department of Labor. It provides details on specific products and countries from which these products are believed to involve child or forced labour—for example, bricks from Afghanistan, or footwear from Bangladesh.
The FAR stipulates that ‘offerors’ under federal government contract must certify that they have:
‘[Not supplied] any end product on the List that was mined, produced, or manufactured in a country identified on the List for that product.’ (s 22.1503.4C.1)
Or they must certify that they have:
‘[M]ade a good faith effort to determine whether forced or indentured child labor was used to mine, produce, or manufacture any end product to be furnished under the contract that is on the List…’ (s 22.1503.4C.2i)
Institute for Civil Society
ABN: 46 611 668 243
2 International Labour Organization: http://www.ilo.org/global/topics/forced-labour/lang–en/index.htm
4 California Transparency in Supply Chains Act 2010; French Duty of Vigilance Law 2016; UK Modern Slavery Act 2015.
5 Transparency in Supply Chains (TISC) Report: https://tiscreport.org/
6 Statistics on Australian Government Procurement Contracts: https://www.finance.gov.au/procurement/statistics-on-commonwealth-purchasing-contracts/
7 Commonwealth Procurement Rules: https://www.legislation.gov.au/Details/F2017L00136/Download
8 This recommendation is in line with several submissions to the 2013 Joint Standing Committee on Foreign Affairs, Defence and Trade: ‘Inquiry into Slavery, Slavery-like conditions and People Trafficking,’ and 2017 Joint Committee on Law Enforcement: ‘Inquiry into Human Trafficking.’
9 This recommendation is in line with several submissions to the New South Wales’ Legislative Council Select Committee: ‘Human Trafficking in NSW.’
10 US Federal Acquisition Regulation: https://www.acquisition.gov/?q=browsefar
11 List of Goods Produced by Child Labor or Forced Labor: https://www.dol.gov/ilab/reports/child-labor/list-of-goods/