On 16 July 2026, the Australian federal government announced that it would introduce a new criminal offence into the Modern Slavery Act, for companies with an annual revenue of over $100 million that fail to prevent modern slavery in their supply chains.
This announcement has been widely discussed in the media, with many touting it a band-aid fix, while others are optimistic that the proposed reforms will mean better outcomes for workers in supply chains. In all the hubbub, it’s easy to miss what this change means practically and why it matters. Here’s a quick guide on what the reforms are, what impact they’ll have on the Modern Slavery Act, and our take on whether this will make a difference for workers.
Why are we talking about Modern Slavery?
Many Australians think of slavery as a historical problem. The reality is that around 50 million people worldwide experience what we call ‘modern slavery’—any situation where a person is forced to do anything through coercion, threats, or lies. This includes practices like human trafficking, forced labour, and the worst forms of child labour.
As Australians, the goods we buy and use on a daily basis contribute to this heartbreaking reality.
According to research by Walk Free and Fair Supply, approximately $100 billion worth of goods imported into Australia are considered at high risk of being produced by slavery. In 2024 alone, this equated to about $1 in every $5 spent on imported goods. Goods such as mobile phones, appliances, and our clothes are considered some of the highest risks.
When we talk about modern slavery in supply chains, this doesn’t mean that Australian companies are necessarily committing slavery themselves. Rather, we’re talking about a situation where slavery or slavery-like practices might be occurring somewhere in their supply chain, for example, in a factory the company sources from.
The idea behind the Modern Slavery Act is that even though the company itself has not committed a crime, they have an ethical obligation to do all they can to make sure the products they sell to Australian consumers are not made using forced labour, child labour, or other forms of exploitation.
How does the proposed reform change the Modern Slavery Act?
The current Modern Slavery Act is a transparency only framework. This means that eligible companies (those earning over $100 million annually) must lodge an annual report with the government that discloses the steps they’re taking to identify, assess, and address the risk of modern slavery in their supply chains. But the Act does not include any active obligations, beyond the requirement to report.
Practically, this means that a company could transparently report that it has done nothing to address the risk of modern slavery in its supply chain, and still be considered compliant.
Since its introduction in 2018, there have been no real consequences for companies who fail to report or adequately address the criteria.
The introduction of a criminal offence is a surprisingly large jump from the low-level requirements of the current Act. Companies that previously faced little to no consequences would now face the prospect of a criminal conviction, which comes with heavy financial penalties and significant reputational harm.
The government has also proposed introducing civil penalties for failing to report or address the required criteria.
Together, these proposed reforms mean that companies must move from passively assessing and reporting risks, to taking active steps that prevent modern slavery from occurring in the first place. This would fundamentally increase the incentive to implement meaningful, preventative practices.
What if a company didn’t know there was slavery in their supply chain?
The proposed wording ‘failure to prevent’ suggests that if modern slavery is found in the company’s supply chain, they are guilty of the offence—even if they were not involved, or even aware that slavery was occurring.
Companies will have a defence if they can prove they took ‘reasonable steps’ to prevent modern slavery in their supply chain, placing the onus on the company to demonstrate that their policies and procedures are sufficiently robust.
It boils down to whether a company can show they have done enough to prevent modern slavery in their supply chain, but the question, “how much is enough?” is yet to be answered.
Will this actually make a difference for exploited workers?
Our Ethical Fashion research shows that stronger regulation of company supply chains ultimately leads to better outcomes for the workers. But every time we conduct our research, we see many companies that are reluctant to go beyond the bare minimum. Of the 70 percent of companies who had a compliant Modern Slavery Statement in our 2024 research, only 28 percent had a strong grievance mechanism for workers to raise issues. Many companies comply with the bare minimum requirements, but it is clear that they are unwilling to move beyond this without incentive.
Therefore, in order to achieve real outcomes for workers, we need to lift the minimum standards that companies are required to meet.
To ensure that the proposed reforms achieve this aim, the government should:
- Define what ‘reasonable steps’ are: the danger is that the government will treat these reforms as a band-aid fix rather than providing companies with adequate information on what is meant by reasonable steps, so they can take effective action to prevent modern slavery in their supply chains.
- Move the reforms quickly: this new reform is a surprising but positive step, but there’s a long road of public consultations, legislative drafting, and parliamentary debate ahead of us. Every day the government delays enacting reform is another day that vulnerable workers remain exposed to exploitation.
- Avoid watering down the offence: while it’s important to make this legislation practical for businesses, the main objective must be to protect workers from exploitation. The legislation will be stronger if it’s guided by the interests of affected workers, not corporate convenience.
What should I do about it?
Every Australian has a role to play in making Australian supply chains free from slavery.
You can play your part by:
- Staying informed: if you’d like to learn more about the Modern Slavery Act and stay informed as this proposed reform progresses, here are some prominent voices to follow:
You can also check out our Ethical Fashion resources to learn more about this issue.
- Making your voice heard: Contact your local MP and urge them to ensure this reform is adequately prioritised. If you’re not sure what to say, you can use our Speak Out to Your MP tool.
- Being a conscious consumer: Use tools such as the Chocolate Scorecard and the Ethical Fashion Guide when making decisions about what to buy or consume. Look out for the 2026 Report & Guide, launching in October!
Sophia Russell,
