Australia’s Potential New Modern Slavery Laws: Criminal Offences, Reasonable Steps and Supply Chain Compliance

On 16 July 2026, Australia’s Attorney-General Michelle Rowland announced that the Federal Government will introduce a new criminal offence for companies that fail to prevent modern slavery in their supply chains, alongside civil penalties and stronger enforcement powers for non-compliant reporting under the Modern Slavery Act 2018 (Cth). It’s the most significant change to Australia’s modern slavery framework since the Act came into force in 2019, and for any business with revenue over $100 million that has treated its annual modern slavery statement as a compliance checkbox, it’s worth understanding exactly what’s changing and why.

What Changes Are Being Proposed to Australia’s Modern Slavery Act?

The reforms have two distinct components:

A new criminal offence for failing to prevent modern slavery. This applies to companies with annual consolidated revenue over $100 million, the same population already required to report under the Act. Where such a company fails to prevent modern slavery, including forced labour and debt bondage, in its supply chains, it could face criminal liability. A defence will be available where the company can demonstrate it took “reasonable steps” to prevent modern slavery, a due-diligence-style standard modelled on the “failure to prevent foreign bribery” offence introduced into the Criminal Code in September 2024.

Civil penalties for non-compliant reporting. Separately, the Government plans to introduce civil penalties and stronger enforcement powers for companies that fail to meet their existing reporting obligations under the Act. Currently, this means publishing an annual modern slavery statement that addresses seven mandatory criteria, ranging from describing supply chain risks to detailing the due diligence and remediation actions taken.

Together, these changes mark a real shift in how the Act operates. Since 2019, it has mainly been a disclosure regime: companies report on their risks, but face few real consequences if their actions fall short. That’s earned it a reputation for having no real teeth, often described as relying on naming and shaming rather than enforcement. The new reforms attach genuine legal and financial consequences to both poor reporting and a lack of real action.

Why Is Australia Reforming Its Modern Slavery Laws Now?

The timing of this proposal isn’t coincidental. In mid-2026, the US Trade Representative listed Australia among roughly 60 countries facing a possible 12.5% tariff for failing to adequately prevent the import of goods made with forced labour, citing enforcement gaps under Section 307 of the US Tariff Act of 1930, a piece of US legislation nearly a century old. Prime Minister Anthony Albanese publicly rejected the tariff threat as unjustified, pointing to Australia’s existing modern slavery laws. But weeks later, the Government announced exactly the kind of reform the US had implicitly called for.

The Government hasn’t officially linked the two. But the director of the Australian Human Rights Institute, Justine Nolan, has said publicly there’s likely “some correlation” between the tariff threat and the timing of the reform announcement. Read alongside years of separate domestic pressure (the 2023 McMillan Review’s 30 recommendations for strengthening the Act, repeated calls from the Australian Anti-Slavery Commissioner, and a live Federal Court case testing whether a retailer can prove its products aren’t linked to forced labour), this looks less like a single trigger and more like external trade pressure accelerating a reform that was already overdue.

This timing matters in practice. When a reform is partly driven by trade pressure like this one, governments tend to move faster and give businesses less time to adjust, compared with reforms that come purely from a slower domestic policy review process. In other words, if your business reports under the Act, or supplies into a business that does, it would be wise not to assume you’ll have years to get ready.

What Does “Reasonable Steps” Mean for Businesses?

The single most important phrase in this announcement, for any business currently reporting under the Act, is “reasonable steps.” Under the current regime, an entity can technically comply by publishing a statement that honestly describes weak processes, because the Act requires disclosure, not action. Under the proposed offence, a company will need to be able to demonstrate, as a defence to a criminal charge, that it took reasonable steps to actually prevent modern slavery in its supply chain.

That’s a meaningfully different bar. It moves the compliance question from “did we describe our risks and processes accurately?” to “can we produce evidence that our processes actually worked to identify and address risk?” Based on how the equivalent “adequate procedures” defence has operated under the foreign bribery offence, we’d expect “reasonable steps” to be assessed against things like:

• Documented, risk-based supplier due diligence, not a generic questionnaire sent once a year
• Contractual protections with suppliers that are genuinely enforced, not just included as standard wording
• Evidence of ongoing monitoring and audit activity, particularly for higher-risk tiers of the supply chain
• A clear remediation pathway when risks or incidents are identified
• Governance oversight, meaning board and executive visibility of modern slavery risk, not something delegated entirely to a compliance team once a year

For mining and construction businesses in particular, this lands squarely on exactly the areas where modern slavery risk tends to concentrate: PPE and uniform manufacturing, electronics and components, offshore fabrication, and lower-tier subcontractors several layers removed from direct oversight. A statement that accurately says “we haven’t mapped our tier 2 and tier 3 suppliers” may currently satisfy the Act’s disclosure requirement. It would not obviously satisfy a “reasonable steps” defence once the new offence is in force.

Preparing for Compliance: Practical Steps Businesses Can Take Now

The details of the offence are still to be settled, but businesses don’t need to wait for final legislation to start closing the gap between what they report and what they could actually prove. Practical steps worth starting now include:

• Mapping supply chains beyond tier one. Most modern slavery risk sits with subcontractors and suppliers a business doesn’t deal with directly. Understanding who sits at tier two and tier three, and where they operate, is the foundation for everything else.
• Prioritising by risk, not by size. Not every supplier needs the same level of scrutiny. Focus first on the sourcing categories and regions where forced labour risk is highest, such as raw materials, PPE, and offshore manufacturing.
• Reviewing supplier contracts. Check whether existing agreements include meaningful modern slavery clauses, and whether those clauses are actually followed up and enforced, rather than filed away after signing.
• Building a remediation pathway. Have a clear, documented process for what happens if a risk or incident is identified, including how affected workers are supported.
• Keeping records as you go. A “reasonable steps” defence will likely depend on being able to show evidence, not just describe intentions, so documenting decisions and actions as they happen will matter more than a once-a-year summary.
• Getting leadership engaged early. Board and executive awareness of modern slavery risk, not just sign-off on a statement, is likely to be part of what regulators expect to see.

None of this requires the final legislation to be settled first. If anything, the businesses best placed when the offence takes effect will be the ones that started treating their modern slavery statement as a live risk management tool well before they had to.

What Businesses Should Watch Next

A few things are worth tracking over the coming months as consultation continues:

• How “reasonable steps” gets defined. Whether the Government issues specific guidance, similar to the UK’s approach or the adequate procedures guidance for foreign bribery, or leaves it to case-by-case interpretation, will significantly affect how businesses should prepare.
• The design of enforcement mechanisms, including whether a deferred prosecution agreement scheme is introduced. This would give companies a pathway to remediate rather than face prosecution outright, similar to arrangements used in other corporate criminal offence regimes.
• Whether the $100 million threshold moves. It currently mirrors the existing reporting threshold, but reform advocates have previously argued for a lower bar to capture more of the supply chain.
• Read-through from the US tariff situation. If the US proceeds with tariffs regardless of these reforms, or if further trade pressure emerges, expect the reform timeline to compress further rather than extend.

For now, the clearest practical takeaway is this: businesses that have been treating their modern slavery statement as an annual disclosure exercise have a genuine window, while consultation is underway, to close the gap between what they’ve been reporting and what they could actually demonstrate if asked to prove “reasonable steps” were taken. That gap, between saying and showing, is precisely what this reform is designed to close.