Australia Modern Slavery Act - Proposed Reporting Requirement InterMondo supports the Australian government's proposal for a Modern Slavery in Supply Chains Reporting Requirement. In particular, we believe that SMEs have an important role and leadership potential to address slavery across supply chains and support strengthening the model to help SMEs achieve this. This is InterMondo's submission to the public consultation.

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Modern Slavery in Supply Chains Reporting Requirement
Submission to Attorney General’s Department
Prepared by: Anna Ridgway, Director InterMondo Cultural Consulting
Phone: +61 (0)435 038 152
Email: anna@intermondo.com.au
Skype: annaridgway

2. 2
InterMondo Cultural Consulting
Modern Slavery in Supply Chains Reporting Requirement Submission
InterMondo Cultural Consulting is a sole-proprietor business that works with corporate,
government and not-for-profit organisations to achieve better business outcomes when
operating across cultures. Today’s globalised world is transforming the way businesses manage
teams, find new markets and communicate with partners across cultures, including across
complex supply chains where the risks of slavery, corruption and other forms of illegal activity
are high. Organisations that can transition to different cultural behaviours where circumstances
demand it, have a greater chance of thriving in a culturally complex, constantly changing world.
InterMondo helps businesses improve how they communicate and manage their business
relationships when they operate across cultures and with culturally diverse teams.
We welcome this opportunity to join Australia’s business community in support of the
proposed Australian Modern Slavery Act in addressing modern slavery across global and
domestic supply chains.
Addressing slavery: changing mindsets, systems, processes and behaviours
across business ecosystem
Addressing modern slavery across contemporary business supply chains requires change to individual
and organisational mindsets, attitudes, systems, processes and behaviours. This change also demands
understanding of the differing values systems and behaviours that underpin slavery, clear expectations
about addressing slavery that bring government regulation, market demand and sustainability
demands together around structured support to help organisations address slavery over time.
Slavery in supply chains does not only apply to traditional, global 'first-comer' large organisations. Even
though they overwhelmingly fly under the public radar, micro, small and medium enterprises (SMEs)
form a massive and integral of Australia's contemporary business landscape, including as global
operators. InterMondo welcomes proposals to include all levels of Australia’s business ecosystem in
the proposed Modern Slavery Act (MSA) model. This submission focusses on elements of the proposed
model that would strengthen inclusion of, and government support to, SMEs as part of a more
comprehensive response that does not artificially ‘quarantine’ one section of the business community
from showing leadership and fulfilling their role in responding to modern slavery across supply chains.
This submission also considers the effects that the proposed MSA legislation may have on Australian
SMEs. It also addresses the options proposed to support the Australian business community to address
modern slavery and specifically addresses some of the questions set out in pp. 17-18 of the
consultation paper.
Proposed model for a Modern Slavery in Supply Chains Reporting
Requirement
InterMondo supports an effective approach that brings government and the business community
together in partnership to addressing slavery across supply chains. This includes the introduction of a
Modern Slavery Act (MSA) in Australia that sets business activities on addressing slavery within a
regulatory framework that includes mandatory reporting. The proposed Act should combine supply
chain transparency with practical measures that are accessible both to large corporations operating in
Australia and SMEs.

3. 3
Harnessing the power of SMEs to combat modern slavery
Andrew Forrest, founder of Walk Free and Fortescue Metals chairman, has stated: ‘By enlisting the
power of business, we can ensure that slavery is not part of what Australians buy and consume.’i
Small
and medium enterprises contribute to that power, and are part of the solution to combatting slavery
across supply chains.
The consultation paper rightly refers throughout to ‘the business community’ and its responsibility to
take action on slavery. However, it focuses on large businesses to the exclusion of the role of SMEs. It
makes an artificial separation between large corporations and the overall business ecosystem, framing
it as a series of vertical relationships with large corporations at the top. The complexity of supply chain
networks means that large corporations themselves may be in the supply chain of an SME. Indeed,
within Australia, 14 per cent of SMEs use domestic large business as their main supplierii
.
Framing SMEs in terms of their limitations instead of their capabilities represents a missed opportunity
to bring in SMEs early as part of the solution to combatting slavery across supply chains. This includes
the cascading effect of the proposed legislation on SMEs. Large businesses, as industry leaders, have
the ability to influence their supply chains. However, this is a narrow and ultimately unhelpful way of
framing the participants in addressing slavery across supply chains, for the following reasons:
• The consultation paper states that large businesses are ‘well equipped’ to show leadership on
slavery. There is no doubt that large businesses, as industry leaders, have the preeminent
ability to influence their supply chains. However, this is a narrow interpretation of leadership
that overlooks the strengths of SMEs to show innovative, flexible approaches to dealing with
slavery supply chains, including harnessing new technologies that allow efficient and cost-
effective ways to track information and make decisions about their own supply chains.
• It implies that SMEs are not equipped to show leadership and overlooks business
‘partnerships’ to tackle slavery.
• It may be difficult to contextualise the example set by large enterprises to SMEs’
circumstances. SMEs should be supported to show leadership.
In Australia, over nine in ten businesses are small businesses. These are business that employ fewer
than 20 people (including microbusinesses) or have an annual turnover of under $2 million annually.
Small businesses employ over 40 percent of the Australian workforce and represent 33 per cent of
Australia’s GDP. They account for 17 per cent of business expenditure on research and development
(R&D). Medium businesses comprise around 51,000 entities, employing 20 to 199 people with an
annual turnover of $10 million to $250 million annuallyiii
As at 2013-14, SMEs employed twice as many people as large business and contributed 56 percent of
value add to Australia’s GDP.
Government support
Ten percent of small businesses, 10 percent of medium businesses and 20 percent of large businesses
sought debt or equity finance to introduce new or improved goods, services, processes or methods in
2013-14.iv
In the same period, 92 percent and 85 percent respectively of small and medium businesses
reported receiving no government financial assistance, compared with 70 percent of large businessesv
.
This corresponds to both businesses’ knowledge about options available to them for obtaining
assistance, as well as assistance available and provided. Financial assistance would support SMEs that
a) wish to ‘opt in’ to reporting; and b) SMEs required to audit, report on and change their own systems
and processes in order to retain contracts with large business customers, but lack capability and
capacity.
The cascading effects anticipated as a result of implementing the proposed MSA are an example of
where the proposed model could do more to ensure that SMEs have access to government support.

4. 4
Managing the burden for SMEs
Two themes have emerged from the consultation paper on SMEs’ roles in the proposed MSA:
1. Large organisations are better resourced than SMEs to ‘lead’ on addressing slavery in supply
chains
2. Including SMEs in mandated reporting requirements may overburden them with compliance
requirements
Large organisations have greater resources that can be harnessed to promote clean supply chains. This
does not, however, translate to being ‘well equipped’ to deal with slavery in their supply chains. The
complexity of their operations, especially across different cultural and regulatory environments, can
make this task more complex and does not mean they hold a premium on leadership in addressing the
issue. Large organisations’ systems and processes, well documented in recent corruption scandals,
may be lacking. This leadership role should be spread across companies of different sizes, which can
set an example that other companies of similar size feel equipped to follow. Indeed, for SMEs that
already understand the operational risks of global supply chains, the proposed MSA is a formalisation
of what they are already carrying out. Businesses already operating across global supply chains would
be expected to be doing some level of supply chain due diligence, so consistent guidelines would
support SMEs to do this more effectively. Director sign off would release companies’ due diligence
information to investors and other stakeholders.
Impact of UK slavery legislation on SMEs
Following the 2015 UK Modern Slavery Act, the impact of the legislation on SMEs is starting to emerge
as large businesses start to demand auditing from their supply chain partners. Given that many SMEs
form part of larger supply chains, and may be suppliers to businesses that have reporting obligations,
these SMEs may be contacted by the end-of-chain businesses to provide evidence about they and their
own suppliers are addressing slavery. This could include:
• Requiring employees to undertake slavery awareness training
• Committing to avoiding slavery and trafficking practices as part of their contract
• Committing to supply contract terms that require them to provide information about how they
are addressing slavery
The proposed MSA model should therefore specifically include support for SMEs to prepare them to
undertake these activities. This could, over time, provide a pathway into ‘opting in’ to reporting
activities.
It is likewise probable that the proposed Australian MSA legislation would result in passing the burden
of auditing supply chains down the line, with SMEs required to provide proof of non-slavery when
carrying out their own procurement and contract negotiations with large organisations. As greater
reporting requirements for SMEs are inevitable, the proposed model should include provisions to help
SMEs allocate resources to and prepare for this.
The proposal to provide ‘comprehensive Government guidance and awareness-raising materials for
the business community…(to) help build the business community’s capacity to respond to modern
slavery’ should specifically include SMEs. Guidance and awareness-raising material should be
contextualisable to businesses’ different sizes, capacities, capabilities and needs so they carry out an
appropriate role in supply chain accountability.
Why and how SMEs should be included
How businesses can carry out this responsibility varies depending on their size. In the business
ecosystem, large businesses should play a prominent part in addressing slavery across supply chains.

5. 5
Not counting forms of global business engagement like foreign direct investment or joint ventures, the
latest Austrade overview of Australian exportersvi
reveals that over 87 percent of the value of exported
goods is in the hands of 1 percent of (large) Australian businesses, representing massive, complex
networks of employees and supply chain operators. However, 79 percent of Australian exporters are
microbusiness (about 0.6 percent of the value of goods exports) and 20 percent are SMEs (12 percent
value). All of this likewise represents massive, complex networks of employees and supply chain
operators, with corresponding requirements for due diligence on slavery. It reinforces that the broadly
reaching socio-economic damage caused when slavery permeates supply chains, goes far beyond the
raw percentage value of goods and services.
As the Consultation paper notes, businesses including SMEs are already acting to achieve transparency
across their operations and clean their supply chains, including using ethical certification schemes and
changing their policies and processes. Modern technology has made strides in digital tools that allow
businesses to access insights on businesses’ operations and to take action on choosing ‘clean’ supply
chain partners. WEConnect is one such organisation, connecting women-run businesses with women-
led and ethical suppliers and producers. Transparency One is another, helping brand owners and
manufacturers to search, analyse and monitor data about their supply chain products, following GS1
industry standards. Its partnership with the global testing, verification, certification and inspection
organisation SGS exemplifies how partnerships can help SMEs monitor their supply chains and address
sustainability issues such as slavery.
It therefore makes sense that the legislation make provision for supporting and providing incentives
for SMEs who are making efforts and often implementing innovative, cost-effective solutions to
cleaning up their supply chains. This should be recognised in proposed MSA modelling and in
government oversight and support.
Consumers are finding it increasingly easier to access information about how corporations do their
business. It should therefore be easier for businesses to look for suppliers that align with their
corporate values around sustainable business practice. This is true both for SMEs and large
organisations. The ethical risks of globalisation can put small businesses across the supply chain out of
work. But it can also offer SMEs the chance to compete with the largest companies. Preparing for and
managing slavery risk in supply chains should be no exception, with support and incentives.
Answers to consultation questions
Consultation question: Is the proposed definition of ‘modern slavery’ appropriate and simple to
understand?
The consultation paper states on p. 15 that ‘modern slavery will encompass slavery, servitude, forced
labour, debt bondage, and deceptive recruiting for labour or services. The definition of modern slavery
will exclude practices such as forced marriage that are unlikely to be present in business operations
and supply chains.’ The definition requires refinement before it can be considered appropriate and
simple to understand, including:
• Inclusion of human trafficking and organ trafficking
• Specifying different kinds of slavery (child slavery, descent-based slavery)
• clarification of ‘practices such as’ forced marriage and other terms that will not be included in
the definition of modern slavery.
Consultation question: How should the Australian Government define a reporting ‘entity’ for the
purposes of the reporting requirement? Should this definition include ‘groups of entities’ which
may have aggregate revenue that exceeds the threshold?

6. 6
If a ‘opt in’ to reporting element is included, the definition of ‘entity’ may require adjusting to
encompass the characteristics of entities that fall outside the mandated spectrum.
The definition should include groups of entities whose aggregate revenues exceed the proposed
threshold of $100 million annual revenue.
Consultation question: How should a central repository for Modern Slavery Statements be
established and what functions should it include? Should the repository be run by the Government
or a third party?
An independent commissioner should be established to:
• oversee entities’ operations and supply chain reporting
• administer the central repository of statements
• raise business and community awareness about modern slavery risks
• provide a single point of contact for businesses seeking advice and assistance on addressing
slavery.
Slavery is recognised as having a symbiotic relationship with corruption. The recent Senate Economics
References Committee Inquiry on Foreign Bribery and calls for an independent commissioner for
corporate corruption highlight the relationship between modern slavery and corruption. Opportunity
exists for governance and practice to be implemented across Australia’s legislative, regulatory and
law-enforcement communities. This should incorporate institutional capacity building within a robust
enforcement framework. Corporations have already lead the way in their own sustainability practices
and transparency reporting practices, but formal oversight of business activities on slavery in their
supply chains, together with corruption and enforcement need to be there where public accountability
demands cannot guarantee consistent corporate best practice.
To not ‘siloise’ activities, duplicate activities and to make better use of public investment, we
recommend that an independent commissioner be incorporated in a broader federal independent
commission that combines oversight of business activities on modern slavery with corporate
corruption oversight.
Consultation question: How can the Australian Government best monitor and evaluate the
effectiveness of the reporting requirement? How should Government allow for the
business community and civil society to provide feedback on the effectiveness of the
reporting requirement?
The Federal Department for Education and Training and the Victorian Government have excellent
examples of information portals that allow industry (in this case, training providers, trainers and
assessors), students, industry, parents and the general public to access key information, guidance,
examples of skills-to-work pathways, financial and other assistance, and feedback on training
providers. These are:
• Victorian Skills Gateway
• My Skills
Given the complexity of the vocational education sectors, these portals must provide complex
information in easy to access and navigate forms. These are examples of best-practice for government
portals linked with sector oversight that could be contextualised to oversight of anti-slavery activity,
as well as guidance, templates and examples of industry practice.

7. 7
Consultation question: Should Government reconsider the other options set out in this consultation
paper (Options 1 and 2)? Would Option 2 impose any regulatory costs on the business community?
We support Option 3: targeted regulatory action with the introduction of a Modern Slavery in
Supply Chains Reporting Requirement, accompanied by government guidance and awareness raising
materials to the business community and regulated by government and not through industry self-
regulation.
Under Option 3, the consultation paper proposes an ‘opt in’ option for businesses below the annual
revenue threshold below $100 million threshold who wish to comply with the reporting requirement.
We support the ‘opt in’ proposal and implementation of a reporting hierarchy that allows businesses
who are acting to address slavery in their supply chains, the opportunity to participate in a structured
reporting pathway with government oversight and formal recognition for their leadership helping give
them a competitive edge.
Awareness-raising and guidance initiatives for business
Option 3 is feasible only if it incorporates a broader based, systemic response that includes the non-
regulatory awareness-raising and guidance initiatives, outlined in Option 2.
Just as modern slavery can undermine business performance, damage business reputation and
undermine stakeholder confidence, supply chain transparency also brings opportunities, as businesses
– large organisations and SMEs – seek to differentiate themselves in the marketplace.
It is true that voluntary action and guidance require business engagement. SMEs that are already
acting to clean up their supply chains are already likely to be proactive about seeking and harnessing
available guidance and tools. However, government oversight, underpinned by clear government
expectations and reporting mechanisms can help businesses focus their efforts and provide a pathway
to ‘opt in’ to reporting and help them gain a competitive edge. The consultation paper posits that
‘businesses may also opt not to take voluntary action because this may expose them to more scrutiny
from media and civil society than businesses that take no or little action.’ When large businesses start
requiring them to do their supply chain due diligence, they will have to weigh the risks of being
exposed to scrutiny against those of potentially losing their contract.
For a range of reasons, other businesses would be unlikely to adopt mechanisms or follow guidance
to address slavery, although the reporting requirements of higher-level partners could force
businesses to action, with guidance readily available. Providing guidance and support to SMEs in the
‘uncertain middle’ could help them gain confidence to take the step of addressing slavery in their
supply chains.
The consultation paper draws attention to the fact that existing awareness raising and guidance have
made little difference to business understanding or action on cleaning up supply chains. It is true that
a range of guidance and awareness-raising materials already exist for the business community. This
does not mean that such guidance is fit for business purposes. Guidelines are often extremely dense,
academic, buried in layers of web pages or reduced to simplistic bullet points that are inadequate to
help businesses prepare for supply chain due diligence without the services of consultants or legal
advisers.
We agree that guidance should include a reporting template, best-practice examples and information
about how the business community can remedy and report instances of modern slavery identified in
their supply chains or operations.
Awareness-raising and guidance should also be contextualised to different-sized businesses across
industry sectors, and to their varying capabilities and capacities. ‘Best practice’ may not always be
achievable and may be a disincentive to businesses. It would also foster confidence and reduce the
potential for market exploitation of an information and guidance vacuum.
This is an opportunity for the government to develop models and guidance that are as ‘simple, sensible
and effective as possible’.

8. 8
The consultation paper suggests that ‘additional Government guidance may not add value to this
existing information if it is not tied to a regulatory framework.’ Indeed, businesses will get a ‘push on’
when they are compelled to start doing supply chain due diligence to fulfil the reporting mandates of
their business partners. This automatically connects guidance with a regulatory framework, giving
businesses the compulsion to act.
References
i
Andrew Forrest, Walk Free Foundation, Australia’s Modern Slavery Legislation Applauded, 24 August, 2017,
available at <https://www.walkfreefoundation.org/news/media-release-australias-modern-slavery-
legislation-applauded/>
ii
Business Council of Australia, Submission to the Inquiry into Establishing a Modern Slavery Act in Australia,
BCA p. 6, May 2017, available at
<file:///C:/Users/annaridgway/Downloads/Submission%20to%20the%20Inquiry%20into%20Establishing%20a
%20Modern%20Slavery%20Act%20in%20Aust...%20(1).pdf>
iii
Australian Small Business and Family Enterprise Ombudsman, Small Business Counts: Small Business in the
Australian Economy, Commonwealth of Australia 2016, available at
<http://www.asbfeo.gov.au/sites/default/files/Small_Business_Statistical_Report-Final.pdf>
iv
Australian Bureau of Statistics, ABS category no. 8167. – Selected Characteristics of Australian Business,
2013-14: Reasons for seeking debt or equity finance by employment size (a), 2013-14, ABS available at
<http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/8167.0Main%20Features42013-
14?opendocument&tabname=Summary&prodno=8167.0&issue=2013-14&num=&view=>
v
Australian Bureau of Statistics, ABS category no. 8167 – Selected Characteristics of Australian Business, 2013-
14: Government financial assistance received, by employment size (a)(b), 2013-14, ABS, available at <
http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/8167.0Main%20Features42013-
14?opendocument&tabname=Summary&prodno=8167.0&issue=2013-14&num=&view=>
vi
Mark Thirwell, Australian Exporters by the numbers: 2015-16, Australian Trade and Investment Commission,
29 June 2017, available at <https://www.austrade.gov.au/news/economic-analysis/australian-exporters-by-
the-numbers-2015-16>