On 10 May 2018, the Assistant Minister for Home Affairs, The Hon. Alex Hawke MP, announced in a world first that the Government will lead by example in the fight against modern slavery by including Commonwealth government procurement in the proposed Modern Slavery Reporting Requirement. The Fact Sheet published by the Department of Home Affairs recently also noted that Commonwealth corporations and Commonwealth companies not covered by the Commonwealth Procurement Rules will publish separate Modern Slavery Statements.
This announcement shows support for Recommendation 12 made by the Joint Standing Committee on Foreign Affairs, Defence and Trade which recommended that the Australian Government introduce a requirement to only procure from entities that complete a modern slavery statement and that Commonwealth public bodies, including the Australian Government, be required to provide a modern slavery statement.
The Australian Government will seek to introduce legislation to Parliament by the middle of 2018 to enact a Commonwealth Modern Slavery Act (MSA). This could potentially mean that legislation is passed within this calendar year. In this regard, it is important for advisers and officers involved in government procurement to start the process of gathering supply chain information and garnering relevant stakeholder support in discussions around the MSA. It is also important for private enterprises providing goods and services to government to commence this process as well for the reasons foreshadowed above.
It is envisaged that there will be four mandatory reporting criteria. Reporting entities will be required to provide information about:
- their structure, operations and supply chains;
- potential modern slavery risks;
- actions taken to address these risks; and
- how they assess the effectiveness of their actions.
Further guidance in relation to the reporting requirements and obligations will be issued by the Government in due course and support for reporting entities will be provided through a dedicated Business Engagement Unit in the Department of Home Affairs. The Unit will also administer the central repository and undertake awareness raising and training.
What will this involve?
To undertake the process properly and to give effect to the spirit and letter of the law, it will require strong commitment from the leadership team and the creation of a dedicated working group comprising management-level personnel from the procurement, legal, HR and operations teams working collaboratively on a holistic due diligence project.
Supply chains are often complex and difficult to track, particularly in organisations where there is limited ability to 'follow the money'. Questions will inevitably arise as to how far in the supply chain to investigate, what questions to ask of suppliers, how to find information about suppliers, what to do when risks are identified and how to remediate where necessary.
What to do now?
Those involved in all aspects of government procurement are now on notice as to what is on the horizon this year in terms of the MSA. At this point in time, it would be prudent to start the conversations internally within the executive management team to work up a project plan to address the mandatory reporting criteria.
Norton Rose Fulbright is at the forefront in advising and preparing clients to be 'MSA Ready'. Abigail McGregor, who leads our Business Ethics Anti-Corruption team, was the only private practice lawyer called before the Inquiry in relation to the impact that a Modern Slavery Act will have. Our work with clients operating in the UK and globally means that we bring an understanding of best practice in this area, along with the practical hurdles that need to be overcome.
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