Australian companies could face criminal charges over forced labour in global supply chains

Large Australian companies could face criminal prosecution if they fail to prevent forced labour in their global supply chains under sweeping reforms the Albanese government says will give the country’s modern slavery regime “teeth”.

The proposed changes come after Australia was singled out by the Trump administration last month as one of 54 economies that had failed to do enough to stop imports made with forced labour, with the United States threatening an additional 12.5 per cent levy on affected goods.

Attorney-General Michelle Rowland said on Wednesday that companies with annual consolidated revenue above $100 million could commit a new criminal offence if they fail to prevent modern slavery in their supply chains.

Businesses would have a defence if they could demonstrate they had taken reasonable steps to identify and prevent forced labour, slavery or debt bondage in their operations and supply chains.

The government will also introduce civil penalties for companies that fail to comply with existing obligations under Australia’s Modern Slavery Act, replacing a regime that critics have long argued relied too heavily on voluntary reporting.

The reforms follow years of pressure from investors, unions and human rights advocates who argued the existing laws had failed to drive meaningful change.

An independent review led by Professor John McMillan found Australia’s 2018 Modern Slavery Act had “not yet caused meaningful change” for victims and recommended mandatory due diligence requirements. While the Albanese government accepted most of the review’s recommendations in principle in 2024, legislation is yet to be introduced.

Modelling from Fair Supply, a supply chain risk intelligence platform, estimates more than 21 per cent of all goods brought into the country last financial year – about $1 in 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 about 50 million people worldwide are living in modern slavery. Modelling by supply chain intelligence firm Fair Supply has estimated more than one in five goods imported into Australia come from supply chains where forced labour risks are known to exist.

The crackdown also follows mounting international scrutiny, with US Trade Representative Jamieson Greer last month declaring the failure of key trading partners to address imports made with forced labour was “unacceptable” as Washington stepped up pressure on countries to tighten enforcement.

Australia’s modern slavery commissioner Chris Evans, a former Labor cabinet minister, said at the time the government was not doing enough to prevent forced labour in supply chains but said the Trump administration was not motivated by a genuine concern about worker rights.

Evans said the United States Trade Representative’s office had only conducted a “very cursory examination of the issues” involving one interview with Australian officials.

Without linking her announcement to the US decision, Rowland said Australians expected products sold domestically were not produced through exploitation.

“The proposed changes will introduce greater accountability, levelling the playing field for the majority of Australian businesses already doing the right thing,” she said.

The government will consult on how the new offence should operate, including whether deferred prosecution agreements should be available and what remedies should be provided to victims.

The reforms were welcomed by Walk Free founding director Grace Forrest, who said Australia was beginning to catch up with comparable economies that had already imposed stronger corporate obligations.

“Introducing criminal liability into the Modern Slavery Act confirms the government is serious about holding businesses to account for failing to prevent exploitation in their supply chains,” Forrest said.

She cautioned, however, that the reforms would only succeed if prosecutions remained achievable.

“If the bar for convictions is too high or deferred prosecutions are too easily permitted, too many survivors will be left without recourse,” she said.

Modern slavery encompasses slavery, forced labour, debt bondage and other forms of severe exploitation and is a criminal offence under Australian law, including where conduct occurs overseas.

Australian Council of Trade Unions president, Michele O’Neil, said it was a “significant positive step”.

“Holding big companies accountable for preventing modern slavery in their supply chains is good for workers and good for the many Australian businesses that do the right thing,” she said but warned a standalone criminal offence would have limitations if it ws solely up to police to enforce it, given the extent of the issue globally.

Be Slavery Free, a coalition of civil society campaigning against human trafficking, forced and child labour, warned the changes still left the systemic change Australia needed undelivered.

“We asked the government for a new road. What we got is a promise of a fence at the top of the cliff, and the same old, inadequate ambulance service waiting at the bottom for the people who fall through the gaps,” co-director Carolyn Kitto said.

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