The NSW Government has finally confirmed the path forward for the NSW Modern Slavery Act 2018 (NSW Act), with the intention to harmonise the NSW Act with its Commonwealth counterpart.
The NSW Government was required to respond by 25 September 2020 to a NSW Parliamentary report on the NSW Act (Report), published in response to an inquiry into the future of the NSW Act due to deficiencies and inconsistencies with the Modern Slavery Act 2018 (Cth) (Cth Act).
As reported in our previous article here, the Report contained a number of recommendations, including that the NSW Act commence on or before 1 January 2021 and that a harmonised reporting threshold be established between the NSW Act ($50 million) and the Cth Act ($100 million), ideally at $50 million.
Leaving it down to the wire, the NSW Government responded to the Report by letter to Parliament late on 24 September 2020.
The NSW Government's support to harmonise the NSW Act with the Cth Act is a step in the right direction for businesses who may otherwise have been subject to inconsistent reporting regimes. However, the response has sparked concern from NGOs and civil society that the harmonisation process will result in a further delay to the commencement of the NSW Act and lead to a watering down of the 'world-leading features' of the NSW Act.
NSW Government's response
In its response letter, the NSW Government confirmed its commitment to implementing a modern slavery regime in NSW and to enter into discussions with the Commonwealth Government to achieve greater harmonisation of the two regimes.
The NSW Government has responded to each of the 17 recommendations in the Report, either accepting in-principle or noting those recommendations, including:
- harmonising the reporting threshold of the NSW Act and the Cth Act (ideally at $50 million)
- retaining components of the NSW Act that complement, but are not inconsistent with, the Cth Act, including:
- establishing the NSW Anti-slavery Commissioner together with its public awareness and advisory functions
- ensuring that goods and services procured by NSW government agencies are not the product of modern slavery
- increasing support and assistance for victims of modern slavery.
- including a statutory review of the NSW Act, to be conducted in conjunction with the statutory review of the Cth Act
- amending the reporting threshold terminology in section 24 of the NSW Act from "turnover" to "consolidated revenue".
One item that is not specifically mentioned in the NSW Government's response is the issue of penalties, which remains a key area of contention between the two regimes.
There are criminal penalties available under the NSW Act of up to $1.1 million for failure to prepare or publish a modern slavery statement and providing false or misleading information, whereas the Cth Act does not contain penalties, but rather empowers the Minister to 'name and shame' companies who do not comply with their reporting obligations.
The Report was ultimately in favour of penalties as a necessary tool for compliance and stated that retaining the penalties in the NSW Act places NSW in a strong position to lead the way and advocate for the inclusion of penalties in the Cth Act.
We expect the issue of penalties will continue to be hotly debated at the discussions between the NSW and Commonwealth governments regarding the harmonisation of the two regimes.
Next steps and national harmonisation?
The majority of the responses to the recommendations of the Report are subject to the outcomes of the discussions between the NSW and Commonwealth governments regarding greater harmonisation of the two regimes.
It is unclear when these discussions will be held and whether the Commonwealth has the appetite to enter into such discussions, particularly regarding lowering the reporting threshold under the Cth Act to $50 million under the NSW Act.
This has left the commencement of the NSW Act effectively in limbo pending the outcome of these discussions and it is unlikely that the NSW Act will commence on or before 1 January 2021, as initially recommended. We hope that the harmonisation discussions move quickly and key features of the NSW Act are retained, particularly the penalty regime and lower reporting threshold.
As modern slavery legislation gains momentum in other states, with a Tasmanian bill (see here) currently before parliament with a $30 million reporting threshold, national harmonisation of effective modern slavery reporting requirements is now critical.
A full copy of the Report and the NSW Government's response can be accessed here.
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