Legal experts warn that the Australian subsidiaries of big foreign companies are side-stepping new laws against modern slavery, creating an uneven playing field for businesses.
The Law Council of Australia said the Modern Slavery Act requires Australian companies that turn over $100 million or more and their subsidiaries to report on any risks of modern slavery practices in their operations and supply chains.
The Commonwealth legislation, however, does not impose the same obligations on Australian subsidiaries of foreign parent companies that generate more than $100 million.
“This creates an uneven playing field between Australian headquartered companies and foreign headquartered companies,” outgoing Law Council president Arthur Moses said.
The warning comes after UK-based supermarket giant Tesco halted production at a Chinese factory suspected of using forced labour to produce charity Christmas cards for the chain after six-year-old Florence Widdicombe discovered a message written in one of the cards that her family bought at Tesco. The message was from a prisoner in China who claimed to be working against his will.
The United Nations has estimated there are more than 40 million victims of modern slavery worldwide, with more than half thought to be living in the Asia-Pacific region where the supply chains of many large Australian businesses are based. It is estimated there are more than 1500 victims in Australia.
Mr Moses said reporting requirements apply to subsidiaries of Australian companies even if a subsidiary is turning over less than $100 million. That rule does not apply to Australian subsidiaries of foreign companies.
“As things stand, the Act does not capture the Australian subsidiaries of a foreign parent company with global consolidated revenue that exceeds the reporting threshold,” Mr Moses said.
“For example, a Chinese parent company with $100 million revenue, with a subsidiary in Australia with $50 million revenue, would not need to report. But an Australian parent company with $100 million revenue, with a subsidiary in Australia with $50 million revenue, would need to report.”
The Law Council has also called on the Federal Government to share foreign intelligence about the use of forced labour in other countries so that Australian companies are made aware of any risks in their overseas supply chains.
Mr Moses said he has written to Home Affairs Minister Peter Dutton to raise the issue.
He said while the government is right to impose modern slavery reporting obligations on companies, “it is only fair that the government establishes a protocol whereby it can share intelligence with companies that have supply chains overseas”.
“This will assist companies to discharge their obligations in carrying out risk assessments,” he said.
Mr Moses said the mandatory modern slavery reporting scheme will affect about 3000 companies whose statements will need to be approved at board level and be submitted within six months of the publication of their annual reports.
NSW was the first Australian jurisdiction to pass modern slavery legislation with a mandatory reporting threshold of $50 million but the Act has not yet commenced. Its introduction was stalled in July after the NSW government referred it to a parliamentary inquiry to be reviewed.
Both the Commonwealth and NSW acts require businesses to identify and report on the risk of modern slavery – including forced labour and servitude – in their supply chain in Australia and overseas. The NSW Act goes further, applying to businesses with $50 million in turnover (if they have employees in NSW), establishing an anti-slavery commissioner, and including penalties for non-compliance.
Assistant Minister for Customs, Community Safety and Multicultural Affairs Jason Wood said the government is considering the issues raised by the Law Council of Australia in relation to the Modern Slavery Act.
Source: Thanks smh.com