1. Context
As the Australian Government seeks to strengthen the transparency and effectiveness of the Modern Slavery Act (the Act), a series of reviews and responses have been conducted. In May 2023, conclusions from the first statutory review of the Act, conducted by Professor John McMillan AO were published. The review highlighted the impact the legislation had in instilling awareness and mitigation of modern slavery risk across businesses in Australia. However, there was opportunity to expand and clarify the requirements of the Act, with 30 recommendations for reform put forward.
1.1 Responding to the Statutory Review of the Modern Slavery Act
The Australian Government published its response to the proposed recommendations in December 2024. It agreed, either in part or full, with 25 of the 30 recommendations and proposed a phased approach to implementation, namely to engage in public consultation, progress legislative reforms, and to prepare updated guidance and administrative changes to the Act.
A Consultation Paper released on 22 July 2025 addresses 6 of the 30 McMillan review recommendations and seeks comments on proposed changes to the current legislation.
2. Potential Changes to the Modern Slavery Act to Improve Transparency and Effectiveness
The 6 recommendations addressed in the consultation paper area:
- Amending the mandatory reporting criteria (Recommendation 8)
- Mandatory criteria in a rule or regulation (Recommendation 9)
- Clarifying difficulties with joint reporting (Recommendation 17)
- Notice requirements for voluntary entities (Recommendation 18)
- Introduction of penalties (Recommendation 20)
- Notification requirements for reporting entities (Recommendation 21).
2.1 Amending the Mandatory Reporting Criteria
The first proposed amendment involves expansion of the reporting criteria under section 16 (1) of the Act.
Currently, section 16 (1) of the Act specifies the mandatory criteria that must be covered in Modern Slavery Statements (the Statement) by reporting entities. It notes that the Statement must identify the reporting entity, the structure, operations and supply chains of the reporting entity, the risks of modern slavery practices in the operations and supply chains, and entities that the reporting entity owns or controls, and more.
The proposed changes for the reporting criteria seek to expand these requirements by:
- Amending subsection 16 (a), which previously required entities to disclose or identify the reporting entity that is captured by the Act. However, it is suggested that this requirement should be amended to require entities to disclose the names of entities owned or controlled by the reporting entity.
- Combining subsections 16 (d) and (e) to improve clarity of the requirement. These subsections currently require reporting entities to describe their actions to assess and address risks and describe how effectiveness of the actions are assessed. The proposed changes suggest clarifying the criteria and outlining clearly that reporting entities are required to disclose their actions to identify and assess risks of modern slavery practices, address modern slavery risks, and to monitor the implementation and effectiveness of their actions.
- Proposing the insertion of a new criterion, that would require reporting entities to report on the grievance mechanisms they have implemented to identify and address modern slavery risk within its operations and broader supply chain.
- Proposing the insertion of a new criterion, that would require reporting entities to disclose the internal actions, processes and procedures that have been adopted to remediate and mitigate identified modern slavery incidents.
- Amending subsection 16 (f), which currently requires reporting entities to disclose their process of consultation with entities they control or own. It has been recommended that this criterion be revised to more clearly articulate that it is in relation to how the entity consults with the entities it controls or owns as it prepares its Statement.
2.2 Compliance and Enforcement Powers of the Regulator
The second proposed change relates to section 16Aof the Act. Currently, the section provides that the Minister may request an explanation for an entity's failure to comply with the reporting requirements and/or request that the entity undertake specified remedial action. The Minister may also publish information about the failure of entity to comply with the requirement, if reasonably satisfied that the entity has failed to comply with a request
The proposed change seeks to expand the existing regulatory powers of the regulator to penalise entities for non-compliance. This could include:
- Enabling the regulator to request information or documentation.
- Establishing new regulatory powers, including powers to enforce undertakings, to issue infringement notices, to request that the entity redact information from the statement that may be contrary to the public interest, and to order a civil penalty where repeated or non-remediated non-compliance is conducted.
2.3 Penalties for Entities that Fail to Comply with the Modern Slavery Act
There are currently no penalties that apply for reporting entities that fail to comply with the reporting requirements under the Act.
The Consultation Paper proposes the introduction of civil penalties which would be applied for entities that:
- Fail to submit a Modern Slavery Statement when required to do so;
- Provide false or misleading information; or
- Fail to comply with a request for remedial action.
2.4 Clarity Around Joint Modern Slavery Statements
Currently, section 14 (1) of the Act enables a reporting entity to draft a Statement that encompasses one or more reporting entities.
A proposed change is that joint reporting procedures could be replaced with corporate group reporting. This proposal appears to contemplate that a parent entity would publish a consolidated Modern Slavery Statement on behalf of a corporate group. There would be optionality for entities to apply for an exemption, which would enable a nominated reporting entity to report on their behalf or enabling an entity to report individually.
2.5 Voluntary Disclosure of Modern Slavery Statements
Under section 6 (a) of the Act, an entity may voluntarily disclose a Modern Slavery Statement. Under section 6 (3), an entity may revoke its notice by giving notice to the Minister prior to the start of the reporting period.
A proposed change to this section would enable entities to revoke their voluntary reporting status at any time, through the provision of notice to the Minister.
2.6 Ceasing of Modern Slavery Statements
Within the current legislation, there is no existing requirement for reporting entities to notify the regulator when they are no longer publishing a Modern Slavery Statement. This may be the case where an entity is not within the reporting threshold for the following financial year and is no longer required to report.
It is proposed that a requirement be introduced to ensure reporting entities provide notification and explanation to the regulator where they are no longer required to disclose a Statement.
3. Targeted Consultations
This paper is part of the first stream of the consultation. The second phase, Stream B, will be conducted through targeted consultations with relevant specialists in Government, business and the non-government sectors.
The targeted consultations will focus on two of the more complex recommendations, including the introduction of obligations for a due diligence system (recommendation 11), and written declarations of high-risk matters (recommendation 27).
These consultations will seek to illicit further insights or responses from specialised government stakeholders, including the Australian Anti-Slavery Commissioner, to understand the complexities or implications involved in the recommendations.
4. Next Steps
The purpose of the Consultation Paper is to comment on the proposed options for change to the legislation. Interested parties, including businesses, are encouraged to respond to the Consultation Paper through completion or a survey or through provision of a written submission before 1 September 2025.
We will be monitoring the consultation closely and will provide further updates.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
