Large Australian companies face criminal prosecution for supply chain failures
Major Australian companies could face criminal prosecution if they fail to prevent forced labor in global supply chains under sweeping reforms that the Albanian government says will give “teeth” to the country’s modern slavery regime.
The proposed changes come after Australia was last month named by the Trump administration as one of 54 economies not doing enough to stop imports using forced labour, with the US threatening to impose an additional 12.5 per cent tariff on affected goods.
Companies with annual consolidated revenues of more than $100 million could be committing a new offense if they fail to prevent modern slavery in their supply chains, Attorney-General Michelle Rowland said on Wednesday.
Businesses will have a defense if they can show that they have taken reasonable steps to detect and prevent forced labour, slavery or debt bondage in their operations and supply chains.
The government will also impose fines on companies that fail to comply with existing obligations under Australia’s Modern Slavery Act, replacing a regime that critics have long argued relies heavily on voluntary reporting.
The reforms follow years of pressure from investors, unions and human rights advocates who argue that existing laws have failed to deliver meaningful change.
An independent review led by Professor John McMillan found Australia’s 2018 Modern Slavery Act “has yet to result in meaningful change” for victims and recommended mandatory due diligence requirements. Although the Albanian government has agreed in principle to most of the review’s recommendations in 2024, legislation has not yet been introduced.
Modeling by supply chain risk intelligence platform Fair Supply estimates that more than 21 per cent of all goods brought into the country in the last financial year. Approximately $1 out of every $5 spent on imports – were linked to supply chains where coercion, debt bondage and other forms of modern slavery are known to occur.
The Global Slavery Index estimates that around 50 million people worldwide live in conditions of modern slavery. Modeling by supply chain intelligence firm Fair Supply estimates that more than one in five goods imported into Australia come from supply chains where forced labor risks are known to exist.
This crackdown also came in the wake of increased international scrutiny; U.S. Trade Representative Jamieson Greer last month declared the failure of major trading partners to address imports using forced labor to be “unacceptable” as Washington stepped up pressure on countries to tighten sanctions.
Chris Evans, Australia’s modern slavery commissioner and former Labor Cabinet minister, said at the time that the government had not done enough to prevent forced labor in supply chains, but that the Trump administration had not acted with genuine concern for workers’ rights.
Evans said the United States Trade Representative’s office conducted a “very cursory review of the issues” that included an interview with Australian officials.
Without linking his announcement to the US decision, Rowland said Australians expected products sold domestically were not produced through exploitation.
“The proposed changes will provide greater accountability and level the playing field for the majority of Australian businesses who are already doing the right thing,” he said.
The government will consult on how the new crime should operate, including whether deferred prosecution agreements are available and what redress should be provided to victims.
The reforms were welcomed by Walk Free founding director Grace Forrest, who said Australia was already catching up with similar economies that introduced stronger corporate obligations.
“The introduction of criminal liability under the Modern Slavery Act confirms that the government is serious about holding businesses to account when they fail to prevent exploitation in their supply chains,” Forrest said.
But he warned that reforms would only be successful if investigations could be sustained.
“If the bar for conviction is too high or cases are too easily allowed to be postponed, many survivors will be left without recourse,” he said.
Modern slavery encompasses servitude, forced labour, debt bondage and other severe forms of exploitation and is a criminal offense under Australian law, including where the conduct takes place overseas.
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Rob Harris is a national correspondent for The Sydney Morning Herald and The Age, based in Canberra. He is a former European correspondent.Connect via email.
