With the deadline of 31 March 2021 rapidly approaching for reporting entities to file their Modern Slavery Statements, we provide an update on what is happening with the NSW legislation and the potential impacts this may have for future Modern Slavery reporting in Australia.

On 24 September 2020, the NSW Government released its response (Response) to the NSW Legislative Council's Standing Committee on Social Issues' report (Report) on its inquiry into the Modern Slavery Act 2018 (NSW) (NSW Act).

The Response showed in principle support for most of the recommendations in the Report with the remainder subject to harmonisation discussions with the Commonwealth Government.

In the Response, the NSW Government confirmed they are still committed to implementing the NSW Act with a principal objective of achieving greater harmonisation with the Modern Slavery Act 2018 (Cth) (Cth Act).

For a summary of the differences between the Cth Act and NSW Act, please see our article Modern Slavery - is your supply chain ready?

While the Response provided in principle support for the Report's recommended target date of 1 January 2021, this date was subject to the NSW Government firstly having discussions with the Commonwealth Government on harmonisation. The NSW Act would then be amended, with a view to commencing components that complement the Cth Act and are not inconsistent with it, and commenced "once discussion with the Commonwealth have concluded".

With that date having passed and no indication of the current status of those discussions, a date for commencement of the NSW Act is unknown.

However, the Response is a comment on not only how the NSW modern slavery regime will be implemented, but also how the current national approach to modern slavery could be altered.

A key reform encouraged by the NSW Government is the adoption of $50 million as the national reporting threshold. This would significantly lower the current $100 million threshold under the Cth Act, capturing a much larger number of entities across Australia who would be required to submit a modern slavery statement.

With this in mind, entities throughout Australia who do fall within the $50 million threshold should start assessing their modern slavery risks as the NSW Government is making a strong push to lower the national reporting threshold. It should also be a reminder to suppliers that they need to be engaged in the process of identifying and addressing modern slavery risks as more customers and potential customers become reporting entities.

In addition to lowering the reporting threshold, the NSW Government in essence, affirmed its position regarding financial penalties for breaches of the NSW Act noting the recommendation to specify a relevant authority to conduct prosecutions for breaches of s.24 of the NSW Act.

It is noted the penalty and criminal prosecution regimes in the NSW Act are at odds with the Commonwealth Government's preferred approach of peer and reputational pressure to drive compliant behaviours. Nonetheless, the penalty regimes will be the subject of harmonisation discussions and the Commonwealth Government's view is likely to be impacted by how good or bad the first lot of Modern Slavery Statements are.

The penalty regimes, together with lowering the reporting threshold, if introduced, would be fundamental changes to the way entities currently report under the Cth Act. Whether either, both or neither of these suggestions survive the harmonisation discussions remains to be seen.

For an overview of the process of preparing a modern slavery statement, please see our article Modern Slavery Reporting - The Clock is Ticking. The full Response can be found here.

We will keep you updated as further announcements are made.

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