Modern Slavery is an abhorrent, poorly recognised, but not uncommon, practice effecting an estimated 40 million people globally. The global anti-slavery organisation, Walk Free, estimates that in Australia around 15,000 people are living in modern slavery conditions. Although conditions in particular countries and industries increase the risks of modern slavery occurring, no country is immune to its insidiousness and all businesses and organisations can be affected, if not directly, then indirectly through their supply chain.
What is modern slavery?
Modern slavery is where coercion, threats or deception are used to exploit a person and undermine their freedom. The Commonwealth Modern Slavery Act 2018 (“Commonwealth Act”) includes the following types of exploitation in its definition of modern slavery:
- Trafficking in people
- Forced labour
- Forced marriage
- Debt bondage
- The worst forms of child labour
- Deceptive recruiting for labour or services
Modern Slavery Legislation in Australia and NSW
Australia has recognised the need for organisations to address modern slavery in their operations and supply chains. Our publication on Managing the Risk of Modern Slavery provides general information on modern slavery and the requirements of the Commonwealth Act.
New South Wales passed the Modern Slavery Act (NSW) (“NSW Act”) in 2018 prior to the Commonwealth Act being passed. The NSW Act was inconsistent with the Commonwealth Act in a number of aspects and for this reason the NSW Government delayed its commencement. After several years of review, debate and public consultation, on 19 November 2021, the New South Wales Parliament passed the Modern Slavery Amendment Act 2021 (NSW) (“Amendment Act”) which made amendments to the NSW Act and several others including the Crimes Act 1900 and the Local Government Act 1993. The amended NSW Act came into force on 1 January 2022.
For most NSW organisations the NSW Act will not make any difference to their modern slavery reporting obligations. However, NSW state and local governments and government agencies that are explicitly excluded from the reporting requirements of the Commonwealth Act will be affected by the NSW Act. The NSW Act applies to NSW “government agencies” and councils are specifically included in the definition of a “government agency” along with government sector agencies, NSW government agencies and public or local authorities.
Unlike the Commonwealth, NSW will appoint an Anti-slavery Commissioner. Their powers and responsibilities include monitoring government policies and action in combating modern slavery, issuing codes of practice, referring information relating to instances or suspected instances of modern slavery to the police or other agencies and maintaining a public register that identifies government agencies failing to comply.
As the Anti-slavery Commissioner monitors the effectiveness of the legislation in addressing modern slavery and recommends NSW policy and legislative changes, and with the 2022 review of the Commonwealth Act, the obligations on local councils (and other reporting entities) could change.
NSW Modern Slavery Reporting Obligations
State and local governments, and government agencies have new modern slavery reporting obligations as a result of the NSW Act and amendments to other legislation.
The amendments to the Local Government Act 1993 will require local councils, after July 2022, to include statements in their annual reports detailing:
- the action taken in relation to any significant modern slavery issue raised by the Anti-slavery Commissioner during the year concerning council operations; and
- the steps taken to ensure that goods and services procured by and for the council during the year were not the product of modern slavery.
Under the NSW Act, Government Sector Finance (GSF) agencies under the Government Sector Finance Act (2018) must include similar statements in their annual reports, and NSW State owned corporations are required to publish a Modern Slavery Statement under the Commonwealth Act.
Government agencies may also be required to provide the Commissioner with specific information to include in the modern slavery register. We will need to wait until the government produces Modern Slavery Regulations to know what these may entail.
Councils’ obligations in Circular 22-09
In April 2022, the Office of Local Government released additional guidelines – Circular 22-09 Councils’ obligations under the Modern Slavery Act 2018 to provide additional guidelines to councils.
It states that from 1 July 2022, councils will be required to take reasonable steps to ensure that goods and services procured by and for the council are not the product of modern slavery within the meaning of the Modern Slavery Act 2018 (NSW).
In addition, commencing from the 2022/23 financial year, each council will be required to publish in their annual reports:
- a statement of the action taken by the council in relation to any issue raised by the Anti-slavery Commissioner during the year concerning the operations of the council and identified by the Commissioner as being a significant issue, and
- a statement of steps taken to ensure that goods and services procured by and for the council during the year were not the product of modern slavery within the meaning of the Modern Slavery Act 2018 (NSW).
NSW Modern Slavery Due Diligence
The Auditor General has a role under the NSW Act, to conduct risk-based audits of activities of government agencies to determine if the government agency is ensuring that goods and services procured by and for it are not the product of modern slavery. The Auditor-General will consider if the agency has exercised due diligence in relation to the procurement of goods and services. This will entail a determination of how reasonable the steps taken by the agency were to ensure the primary supplier of goods and services is responsible for implementing processes to eliminate or minimise the risks of goods and services being produced by modern slavery.
Businesses that deal with local councils and the NSW government will need to ensure that they also have stringent due diligence processes in place to satisfy NSW councils’ due diligence obligations.
Modern Slavery Due Diligence
Modern slavery supply chain due diligence will require having a robust framework comprising of key elements to address modern slavery risks. The following diagram describes such a framework.
Actions Councils Should be Starting Now
Councils will need to begin to develop their modern slavery risk governance framework, develop risk strategies and assess their modern slavery risks now, to ensure that they are in a position to satisfy the reporting requirements for the 2022-2023 period and to meet any audit requirements of the Auditor-General.
- identifying and assessing the risks of modern slavery in their supply chains, and their operations – at minimum, focussing on higher risk categories such as clothing;
- ensuring whistleblowing and grievance policies and practices cover modern slavery and allow anonymous reporting of human rights violations;
- developing and implementing effective due diligence procedures to ensure that the goods and services that they procure are not the product of modern slavery;
- updating procurement policies and practices to address modern slavery and embedding ethical purchasing into the council’s business processes;
- updating council’s statement of business ethics to address modern slavery;
- reviewing supply contracts and including appropriate clauses to deal with the ethical performance of suppliers, expressly prohibiting modern slavery;
- ensuring contracts also include other contractual provisions such as the right to audit suppliers and/or request additional information;
- working with suppliers to ensure they understand their obligations to implement processes to eliminate or minimise the risks of goods and services being produced by modern slavery;
- provide training and awareness of modern slavery to staff and suppliers;
- co-operating with the Anti-slavery Commissioner in disclosing information and providing assistance and support in respect to modern slavery and its victims.
How we can help
We have hands-on experience in helping organisations understand and minimise modern slavery risks.
We are here to help you comply with your council’s modern slavery obligations. For example we can assist with:
- conducting staff and supplier awareness training and briefings on modern slavery in Australia;
- conducting a modern slavery risk assessment of your supply chains and operations;
- developing due diligence procedures to minimise the risks that council is procuring goods or services that are produced by modern slavery practices;
- conducting supplier surveys to gain visibility into their practices;
- integrating modern slavery risk management into your existing risk and procurement policies and practices;
- reviewing your contracts and policies and recommending changes to address modern slavery risks; and
- conducting internal audit / independent reviews of your modern slavery practices.
Want to know more? Contact us to discuss your needs.