Pressure is mounting on the Turnbull government to toughen up its proposed modern slavery legislation amid concern that large businesses will skirt their obligations.

Announced earlier this month, the government plans to introduce a Modern Slavery Act into parliament by the middle of the year that would require businesses turning over more than $100 million to prepare annual reports detailing slavery risks in their supply chains.

The Department of Home Affairs is currently undertaking the final stages of stakeholder consultation before introducing a bill, but several people familiar with the talks have cited ongoing disagreement over the lack of an independent anti-slavery commissioner and the absence of financial penalties for non-compliance in the government’s proposal.

Civil society is pushing for tougher penalties, expressing concern that the legislation will have no teeth, prompting businesses to ignore the regulation.

The inclusion of an independent slavery commissioner to police the regulation is also being pushed for, a measure that Labor has called for in its own modern slavery policy.

Introduced last year by Shadow Minister for Justice Clare O’Neil, Labor has said its policy would “enforce supply chain reporting requirements” but did not specifically outline punishments for non compliance in a policy document.

Labor is also understood to be in favour of lowering the revenue threshold to increase the number of businesses covered from the just over 3,000 the government’s proposals would cover.

Labor provided in-principle support for the establishment of a Modern Slavery Act last year, but bipartisanship could be jeopardised by the policy differences, signalling a potential fight in the Senate, those close to the consultations said.

Business groups favour a ‘light touch’ model, similar to modern slavery legislation introduced in the UK several years ago, which the prospective Australian regulation has borrowed from heavily.

However, this has been criticised by civil society organisations like Baptist World Aid, who say non-compliance is rampant in the UK.

“Our preference was not for a light touch act, but one that was robust and drove as much energy towards ending modern slavery as possible, rather than just being as easy to implement as possible,” BWA Australia advocacy manager Gershon Nimbalker said.

A Chartered Institute of Procurement and Supply (CIPS) survey conducted last year in the UK found that around a third of the businesses required to complete modern slavery statements had not done so.

The UK legislation does mandate an independent modern slavery commissioner, although its first appointee Kevin Hyland resigned several weeks ago, complaining about a lack of independence from government.

Government targets business led ‘race to the top’

A Department of Home Affairs spokesperson told Inside Retail that the government had no plans to introduce an independent commissioner or introduce tougher penalties for non-compliance with its proposal.

“Businesses that do the wrong thing will be penalised by the market and consumers and will severely tarnish their reputations,” the spokesperson said.

“This will drive compliance more effectively than legislated penalties and encourage a business-led ‘race to the top’.”

There are also no plans to lower the revenue threshold, with the spokesperson saying that a significant increase in the number of companies covered would limit the ability of government and civil society to monitor the quality of statements, as well as imposing a burden on smaller companies.

Under the government’s proposal large businesses would be required to prepare reports on their structure, operations and supply chains; potential modern slavery risks; actions taken to address those risks; and the way effectiveness is measured.

Reports will be required to address slavery, trafficking in persons, servitude, forced labour and forced marriage.

$3.6 million will also be spent establishing a modern slavery business engagement unit to promote best practice and assist companies with compliance.

The government hopes to have the bill passed by the end of the year, with a grace period that would likely require businesses to begin reporting in fiscal 19.

There is concern, however, that some businesses may struggle with compliance. A local survey conducted by CIPS earlier this month found that 40 per cent of Australian procurement managers don’t think their current monitoring processes would support the production of a report.

Businesses in the agricultural sector, which have largely been shielded from the scrutiny retailers have in recent years, are expected to face the highest compliance costs.

The office of Clare O’Neil did not respond to a request to comment.

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