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Legal and Constitutional Affairs Legislation Committee

KITTO, Ms Carolyn, National Director, STOP THE TRAFFIK

KITTO, Mr Fuzz, National Director, STOP THE TRAFFIK

LOONE, Mr Peter, Chief Technology Officer, STOP THE TRAFFIK


CHAIR: Welcome. The committee has received a submission from you, which it has numbered 48. Mr Loone, you have made your own submission, which we have numbered 49. I think you may have been here when we made the general comments about the rules, and I think we have provided you with material on parliamentary privilege and the protection of witnesses. I now invite you to make an opening statement and then we will ask you some questions.

Mr Kitto : Thank you for the privilege of this. We work in countries around the world where this is just not a possibility; so the privilege of the democratic process in Australia is something that we highly cherish, from the experiences we have globally. We would also like to say thank you to the government for introducing this bill. Certainly it has been a flagpole around which people have gathered. We work with industries, businesses, government and NGOs. We work with people on the ground in many of the countries that are in the supply chain of major businesses in Australia, and never has this been talked about more than since the announcement of this inquiry and the tabling of this legislation.

We commend the government on that and on many good things. We will highlight a couple of things that we think are important. Firstly, this is about people. Having had the privilege, the joy and the sorrow of being with people who have been enslaved, who are enslaved or who have been released from slavery, what we think is so important about this bill is that we have the capacity to affect the lives of hundreds of thousands, if not millions, of people. So the first thing we always say is that we think this is about people and it exciting that we have the capacity to do this.

All three of us will make some comments. We will start with three stories to ground this and, hopefully, give you an appreciation of it. Last year, and around November, I was at a conference in Bangkok. There I met a person from Myanmar who came from a very poor family. Because of climate change, they believed, their rice production was declining rapidly. They were only just on the edge; they were in abject poverty. They put all the resources they had together to try and get this family member to Thailand to get a job and send money back home—this is a common one. The trade is in people, but the currency is hope. Most people get trapped in slavery because of abject poverty and because of power imbalances that happen in systems around the world.

So this person got into Thailand, only to find out that the agent who had handed him over from Myanmar handed him to a new agent who demanded $2,000. He said: 'I don't have that money. We gave $1,000. We were told we could pay off another $1,000 over five years.' The agent said: 'No, that was for him. You owe us $2,000. We have your papers. You cannot go back home. You have to go into the job that we give to you.' They gave him a job on a fishing boat. That man never set foot on land for 17 years. At the end of 17 years, he had no money, nothing to take back home—and, of course, they all thought he had died in the process.

Ms Kitto : I first met a woman named Pria when I visited India around six years ago, and I have remained friends with her since that time. She had been recruited into a forced labour scheme in the spinning, weaving and dyeing mills of Tamil Nadu. It is a well-known scheme known as the Sumangali Scheme. She was recruited a 48-our train trip away from her village, where they promised her family they would give her $500 if she worked in that factory for five years. This region of India produces 25 per cent of the world's cotton knit fabric—our underwear, sweatpants and so on. When I met Pria, she told me that, because of the working conditions in the factory, she had developed stomach pains and eventually had emergency surgery, in which two kilograms of cotton fibre was removed from her stomach. It drastically affected her life. When I asked her what she wanted me to do with her story, she didn't ask for compensation—although she probably should have. She simply said, 'Tell the world what's happened to me so the rest of the world will look and stop this.'

Mr Loone : I lived in Laos for seven years between 1995 and 2002. I worked on several programs, including setting up the internet. One of my strongest memories is of working on a condom distribution program throughout the country. We had to go and interview people at all the truck stops, where the prostitutes were working, about the best way to distribute condoms to their industry. At one of the stops I met a woman called Ngo. She was Vietnamese. Her English was reasonably good. She spoke to me about what was happening there. She had been in the country for about two years and had another year left on her contract. When I spoke to her about her contract, her contract was about a loan to her family to buy a tractor; she had to work as a prostitute at that truck stop near the border with Laos until it was paid off. She had no view that that was slavery, she had no view that there was any other way; she felt an obligation to her family to do that. Ironically, the program we were working on was about distributing condoms, not about trying to stop slavery.

I went back to that country three weeks ago and those situations are still occurring. I have friends there who are still talking to those people and seeing that behaviour—not only there but across that region. It is slavery, but they don't see it as that.

Mr Kitto : We want to commend many of the good things which we see in the legislation. There are three things which we think will tighten it up and make it robust so we can deal with these particular situations. Again, we have the capacity. We are a consuming country. Because we are a consuming country, we have the power; and we have seen from the work that we do in South-East Asia, India and Africa what can happen when international attention is put upon this and companies are helped to clean up their supply chain. Our change theory, very quickly, is that these are slave traders—let's call them what they are—in a $168 billion industry, the second largest illegal trade in the world and the fastest-growing one, and we as consumers have the capacity to starve slave traders from selling slaves. That is the capacity we have as a consuming country. That is why we believe the supply chain is such an important area.

We want to highlight three things. The first one is the independent commissioner. From reading the submissions, the absolute need for this seems to be coming through again and again. We were in New Zealand three weeks ago with the department that oversees modern slavery there, which is the New Zealand Department of Business, Innovation and Employment. We were also sponsored by the American embassy in New Zealand. The ambassador there was an abused person in his childhood and therefore talks passionately about this. What we said to them was that what we have seen in Australia—and what they recognise as a modern slavery act—is a flagpole to gather around; it is a chance to come together and put into action the things which have been talked about. We think an independent commissioner is absolutely key to this. As we said in our submission, there are many departments in the government which will have modern slavery in their areas. Sadly, we have seen the resignation of Kevin Hyland in the UK. The reason he cited for his resignation was the lack of independence. We don't want to dwell on that; it is there, and many others have said this. But there is another area also—

Ms Kitto : One of the things that people who know more about technology than I do tell me is: 'Whenever Microsoft or Apple bring out a version, don't buy it. Never buy the first version; there'll always be bugs.' As we have outlined in our submission, we think the UK Modern Slavery Act—and probably the California Transparency in Supply Chains Act—is version 1. Since that time, we have had version 2; and we are heading to version 3 with what is happening in France and Switzerland at the moment. We would love to suggest that we create the fourth version and remove all the bugs. However, we think we should be learning from these former iterations and at least be aiming to be a generation 3 Modern Slavery Act.

For that to happen, we believe penalties are important. We have experience in relation to this. The chocolate industry has known since 2001 of the issues of human trafficking, modern slavery and the worst forms of child labour in its supply chain. We outlined these in our first submission to the joint parliamentary inquiry. The chocolate industry, although knowing that, negotiated with the US congress that, instead of a binding agreement to address this issue, there would be a voluntary non-binding code. I think that that story—and that experience over the last 17 years—shows us that we are actually in a context where industry needs encouragement to take these steps. We are talking about some of the biggest companies in the world. It is only in recent years that the right kinds of steps and collaboration have started to be taken. In fact, today, in Cote d'Ivoire in West Africa, from which around 40 per cent of the world's cocoa comes, there are still estimated to be 2.2 million children in the worst forms of child labour. That is a situation the chocolate and confectionery industry said they would fix by 2004.

We don't see ourselves as a 'name and shame' charity or advocacy group. In fact, we see ourselves as being about 'naming and faming'. We are about working with business and civil society to say: what does good look like and how can we work on it more effectively? Some people have said to us: when you get this repository of reports then you as a civil society can analyse them all and call out the ones that are doing the wrong thing. Respectfully, we don't think that is the job of civil society. We think it is the job of civil society to help business move forward in positive ways. We actually think it is the government's role and responsibility to call out bad behaviour and noncompliance with legislation and regulation. We would much rather spend our time and energy on pulling together groups like Woolworths to talk about what a good mediation program looks like, who is doing best practice in the world and what we can learn from each other.

There need to be changes in business culture, procurement systems and standards. Penalties can come in many, many forms. I heard just last week of a penalty process that existed in the ASX whereby, if a company was in breach of ASX rules, they actually had to pay for training and they had to put money into a fund for the government to provide training to the sector in general. The penalty could be financial. The penalty could be being named in parliament. But, for this act to have the impact that it needs to have, there need to be consequences for noncompliance. We would prefer that those consequences be a carrot rather than a stick, but we know that some businesses will need the stick. The race to the top will not happen without encouragement and incentive.

Mr Loone : The third point we just want to make in our preamble is about risk. We try to keep a very diverse board at STOP THE TRAFFIK Australia, and I'm the nerd on the board, brought on to help the organisation use technology to try to improve our mission of stopping slavery. My day job is working with government agencies in Canberra to try to introduce systems that help them optimise their business and to deliver better outcomes for those government agencies.

When I read this draft act, I get very excited. The thing that excites me the most is the very cover page. It is a bill 'to require some entities to report on the risks of modern slavery' and how they are addressing those risks. It's a bill about risks, which for me is the right approach, because I don't think anyone in this room thinks that we're going to get rid of modern slavery as soon as we introduce the bill. It is about reducing the risks and getting organisations to demonstrate how they're reducing the risks. Being a public servant, I've been through the risk management courses, and we get taught very early on that there are two key components to risk: there is likelihood and there's impact. The beauty of this bill and this domain is that we know very clearly where the likelihood of slavery is. It's not an unknown. What I get surprised by as an IT person looking at systems that can help people manage their risk is that we don't seem to address the fact that we know those risks. It is a bill that talks about compliance. It's a bill that talks about a group of companies above $100 million who have to report. But it doesn't talk about the risk of slavery and how we address those specific risks in a way that's going to make a difference.

Let me give you a quick summary of three companies. Let's say you're in a suburb. You're looking at a street, a group of shopfronts, and you've got three shops: you've got a community bank, you've got a deli and you've got a new fashion label. The community bank may have a $300 million turnover, the deli may have an $80 million turnover, and the new fashion label may have a $25 million turnover. When I look at those three shops side by side and I think about risk, my understanding of slavery is that the risk is in the second two, the deli that might be doing an $80 million turnover and the fashion label that might be doing $25 million. Those examples can be repeated over and over again throughout our whole industry, yet the bill at the moment is going to require that community bank to write a report, and those other two will not be involved.

What we want to do is talk about the risks and create a system, as part of the implementation of the Modern Slavery Act, that allows the identification of those risk industries—we heard from Woolworths earlier, and they understand where those risk industries are—and to provide a way of assessing the response to those specific risks per industry. In doing so, we don't create an unequal playing field. In fact, we do the reverse. Within an industry, we can actually create a level playing field. So everyone in those industries that are high risk has to do the same level of compliance. At the same time, those people who are in low-risk industries—which are in fact most of the companies in Australia—have minimal requirements to report, so they have a lower risk.

At the moment, that bank will get a requirement to report against the Modern Slavery Act—presumably sometime in the next 12 months, hopefully—and they'll have to put a committee together to say: 'Well, how do we do this? I'm not sure. Who's a specialist in modern slavery?' Maybe they've got one, as Woolworths does. Maybe they don't. They'll have to think about all the things that might have to happen. They'll spend days and days and days of people's time trying to work out how to report when in fact they are at low risk of having slavery in their supply chains. Meanwhile, those two shops right beside them, high-risk organisations, don't do anything.

That's the core element of my submission. We decided to make it a separate submission to the main STOP THE TRAFFIK submission—and we appreciate that it was accepted as such—because we think this idea of a risk based assessment and using technology to implement that in a way that lowers the cost of compliance for most companies is an essential consideration for the implementation of the bill.

CHAIR: But surely the community bank which has turnover of over $100 million has a capacity to do that, whereas the $40 million turnover fashion shop probably employs one or two people and is not in a position to do it. The government obviously wants this bill to be accepted and to work. Presumably the $40 million clothing factory would be getting its goods from a wholesaler who is over $100 million and would be required to do this anyhow. Ms Kitto, it's the same for you and your penalties thing; I could ask the same question or a similar question of both of you. For smaller big business, this is a major change. Not so much for Woolies, who are set up for it, and Qantas because they've got to do it in the US, but for the smaller big businesses it is a major change in what they're doing. To start throwing around penalties from day 1 just seems to take away the cooperative approach that's been adopted by all parties—by business and NGOs and everyone—in getting this into Australia. That's a sort of question to both of you if you care to comment.

Mr Loone : I'll start with technology. In terms of the risk, we 100 per cent agree. In fact, that's the core of what we're trying to respond to, because we have such passion about exactly what you're saying. Firstly, we don't think companies that have a low risk of slavery in the supply chain should spend a lot of time doing this. Secondly, we think those people who have lower turn-over organisations should have a way of reporting that's not high cost. The concept that every person will have the same cost despite their risk being dramatically different isn't really an outcome focused process. Labelling a group of people above a certain revenue isn't about the outcome of stopping slavery; it's about creating a compliance system. We want to say that, if you are a high-risk industry, you should have higher costing compliance. However, we also say that by using technology we can lower what those expectations are.

We know some organisations like Woolworths, who we've just heard from, do a fantastic job of having maybe half a dozen people working on this and creating policies and tracking their supply chains, and we get excited about that. In the case that I've just given, where we might have a new fashion label, they may be importing goods or they may get their goods made in a country that has concerns about slavery. We don't know where their cotton comes from. That may still be a risk for them. We need to understand what industry they're in and give them a way of reporting that is low cost. My personal view, based on systems that we've deployed in other places across the last 20 years, is that you should be able to turn this into something that might take anywhere between 10 minutes and two hours for the majority of organisations, because it's a process of elimination. Once you've answered one question, you can eliminate other questions.

CHAIR: For a start they'll have to go and see some expensive lawyers to work out how to do this.

Mr Loone : That's exactly the point; you're exactly right, and this is why to say to industry, 'We want you to create a PDF and we've got these things we want you to report on'—even for the companies above a $100 million, it's creating an imbalance. You may not be an expert in slavery but suddenly you have to create an expertise in slavery because the government has turned up and said, 'Because you're above $100 million turnover you now have to report on something,' even though you may or may not be high risk. We want to turn it around. We want to give more guidance and take a risk based approach.

I really enjoyed listening to Woolworths because what they were talking about was that they understand the high-risk industries and they're responding relative to those industries. They're not treating all their suppliers the same. And they're actually listening to the act. It was an interesting statement—'We are going to change our policy based on what the act guides us towards.' It's an opportunity for government to really be influential in helping organisations to not just create a report but look at their industries and set up those rules. In part of my submission I've put a very high-level workflow that reports on how you can take a risk based approach and take away the costs of compliance by limiting what people have to respond to. We think this risk assessed approach alongside, potentially, the reports of the highlighted organisations can be very low cost.

CHAIR: You've been a public servant, Mr Loone.

Mr Loone : I have been a public servant, and I continue to work with the public service on delivering capabilities that can do this. And there are lots of examples around that show how we can reduce that supply.

CHAIR: Okay. Ms Kitto?

Ms Kitto : If I had $10 for every small fashion label that contacts me and says, 'How do I get an ethical supply chain?' STOP THE TRAFFIK would have no problem funding itself. The reality is, if you're talking about fashion and a company isn't concerned about this, then they're living in la-la land because somebody will find it in their supply chain and will potentially do the name and shame. The cost of compliance—

CHAIR: But don't they all buy from a bigger group—from a wholesaler or something?

Ms Kitto : No, many of them buy directly.

CHAIR: But from a factory in Bangladesh?

Ms Kitto : Yes.

CHAIR: Shows what I know about the fashion industry!

Ms Kitto : Yes, it's actually a surprisingly complex industry. Many of them will have a buyer. We've been very involved in the Baptist World Aid fashion report. Five years ago only about 15 per cent of Australian fashion labels knew where their buyers were sourcing from. We have been promoting to the fashion industry that one of the best practices that it can do is to engage in traceability and transparency. Now 30 or more per cent of Australian fashion labels publish the factories that they source from, and they're all sending auditors for quality control.

CHAIR: So it's already happening.

Ms Kitto : It's already happening; they're just not doing the social control. If you're going into a factory to check if the T-shirts are the weight that you've been told they are, why wouldn't you go and check that there's not child labour and that there's not labour exploitation happening in that same factory? There's actually no reason why a small fashion label cannot do this simply by adding small steps to its business as usual. We've taken fashion labels—really small ones and really large ones—to places like Bangladesh and India to look at the supply chain issues, and it is entirely doable at whatever size you are.

The other thing that we think this will potentially drive in industries like the fashion industry is one of the things that's already started to happen, and that is that fashion businesses are talking about collaborating. The reality is that Australian fashion buyers are small. If you go into a factory that Wal-Mart is sourcing from, you might be two per cent. If you waltz up and say: 'Hey, we want you to change your working conditions. No children, no labour exploitations, living wages, et cetera,' they're going to say, 'Find another factory.' However, what is starting to happen in the fashion industry now is some of Australia's bigger fashion labels are joining with medium and small fashion labels and saying: 'We're sourcing from the same area and sometimes the same factory. Why don't we combine our impact? Why don't we combine our knowledge about auditing processes? Why don't we combine what we're asking these factories to do to make sure modern slavery isn't in the supply chains?'

CHAIR: Thank you. Senator Pratt, we have another 10 minutes for this session.

Senator PRATT: I just wanted to ask briefly in relation to what you've said, Mr Loone, about risk and putting a risk based framework in place. You gave an example of a deli, I think. I'm just trying to distinguish here between industries, because I can see what Ms Kitto is saying in relation to risk being embedded in small retail chains, and they've got their own suppliers. But in relation to something like a small deli, surely their suppliers are going to be the same as Woolworths's, and Woolworths is going to need to drill down into their supply chains.

Mr Loone : Yes, it's hierarchical and there's a lot of sharing of suppliers in some cases, and in other cause there's not. I know my local deli imports some of their own products from different places. So there's a combination, which is in part why this idea of having a blanket view of what reporting should look like, whether it's a $30 million deli or a $100 million deli or a $200 million deli—

Senator PRATT: I'm sure most deli owners in Australia would like to turnover of more than $1 million.

Mr Loone : They would love to. But it really comes down to understanding what those risks are for that particular company and finding a way to limit their costs of compliance by only asking them to report on exactly what their risks are, or at least understanding what the broader risks are. This is where we think that assessment which allows for a risk assessment and a response around risk assessments can be quite valuable rather than necessarily asking everyone to write a report and hit all the buttons that are in the current legislation.

When I read that, it does two things for me. It's exciting, because there's a lot in there to ask for. However, if I was a business owner—and I have been a small business owner previously—I'd be asking: what does that mean; and what does compliance really look like? Some of those questions are little bit vague. It's a question of: how are you going to measure success when answering those questions? What they're trying to do is take a blanket view of all industries and groups. By taking a risk based approach, you change the general view of what has to appear in a report to: what are the questions you have to ask for your industry? If you're not in that industry, don't answer those questions. If you are, these are your specific questions. If you're in no high-risk industries, there are probably only two questions: do you use a labour hire firm; and do you meet certain legislation? You can be in and out of there within five minutes, and that may be 30, 40 or 50 per cent of the market.

A risk based approach changes the idea of compliance by saying, 'Let's not think about the total cost compliance of all companies and goods at all'—the same thing—and, 'The cost of compliance should be about the size of risk. If your risk is low, your cost compliance should be almost nil. But, if you are a high-risk industry, your cost of compliance should naturally be higher because you have to demonstrate.' The only way you're going to get a race to the top is getting like organisations having to do the same thing.

Senator PRATT: In that context—aside from the thresholds for which reporting is required—if this committee pursues the idea of an independent advocate or commissioner to work with industry and have engagement, you wouldn't want to limit the engagement of that advocate only with industries that are over the reporting threshold. What kind of advice are smaller retailers and overseas manufacturers looking for and needing to identify issues that might exist within their own supply chain?

Mr Kitto : It might be helpful for senators to know that the US labor department produces a list every year of where slavery and child labour have been reported. The EU has a similar list. So good colleagues and compatriots have that list already. We believe that the Department of Justice also did a research project on this—it was never released. The only thing that's sustainable is reality, and we think a threshold is a very lazy way of doing it. Let's work with what we know is happening—and we've got enough research around the world to know where it's happening. One of the big questions has been about the threshold. We don't have capacity in government to do it, because we've talked numerous times with members of Home Affairs to help them to understand how we can use technology far more effectively. If we have a digital platform that people report into, it creates a database and we can produce reports out of that that the government has been dying to have about different threshold sizes, areas et cetera. The more we put into that, the more accurate algorithms we get about what trends are happening.

Senator PRATT: In that context, let's take an example that's already been before this committee—I think we had evidence that Ferrero Rocher's has been slow in identifying the use of child labour in its chocolate supply chain. You can imagine that that affects everyone from the corner deli, who hasn't got a reporting obligation, to both Coles and Woolies who might have traced back to different elements of it within their supply chain. Where is it that we see the identification of a risk in a product like that turn into change on the ground for an international company like Ferrero Rocher to change its practices? Because, at the moment, I can see that there might be a risk identified with that; however, it's not until someone calls out, 'We've actually found child exploitation, child slavery and labour here,' that we're going to create a tipping point that changes that practice.

Mr Kitto : Ferrero is a good example. We work a lot with them. We've worked with the chocolate industry the last 10 years. For them, it's not just cocoa; it's also hazelnuts, particularly coming out of Turkey. They got nowhere until they brought in Save the Children to help them to do that, to actually help them to see. The title of the report, Hidden in plain sight, was really helpful. It is not just the detail of what the tipping point is here or what the line is. What we're going to start to see, if we get a robust act, is the culture change. It's culture that changes and brings about sustainable change. What we're starting to see and what our colleagues in the UK tell us about the Modern Slavery Act is that, as weak as it is up there, it's started a culture change where people are now starting to talk about it and there's the language to talk about it. So it's not just the line or the detail of what's here; it's how do we get the shift so that people start to see what is hidden in plain sight. The other part is: the more people we have reporting, the more accurately we're going to know the answer to that question.

Senator PRATT: I guess I'm concerned that reporting in and of itself won't identify the problem. It might only be by comparing people's reporting across particular lines of products that you'll see a pattern of risks start to emerge, and those kinds of things.

Mr Loone : It's in fact the data behind that. On that flow chart you've got there, one opportunity is in the cocoa industry. If you have everyone who's selling chocolate reporting on the percentage of their products being certified, then you have a very clear indication about what's happening and you can create that race to the top. Without that level of detail, which you can put into a simple assessment tool, you're not going to get the ability to report on that type of information and get that race to the top. Likewise, on the question of what's going to happen in three years time when you do your review, if you don't have real data about what's happening in the environment based on questions that are specific and measurable, then, at the end of three years, you'll go: 'How'd that go? Well, we've got lots of reports. What are we going to do with them? Well, we could compare them in size.' That's about the only measure currently required in the act.

Mr Kitto : The other thing is that what's come through there says we don't have the capacity to do so many companies. We've been talking so much this year with compliance companies and risk based companies. Our conversation with LexisNexis is probably an excellent example of this.

Ms Kitto : LexisNexis evaluates the risk. It's particularly around fraud and financial risk but also the reputational risk of companies. They have a database where they add 40,000 new companies and modify the reports of 30,000 new companies every month. That's the capacity of what we can do.

Senator MOLAN: I am just trying to summarise your view on risk. I say to myself: 'Practicality? Yes, absolutely.' Capacity could be a real problem, particularly as we're going to need enough people to read the reports when they start flooding in.

Mr Loone : If they're PDFs, yes.

Senator MOLAN: Right. There needs to be a system which, like LexisNexis, does something clever for us, so not turnover in the first instance—and I love that statement: 'We're designing a compliance system that has nothing to do with slavery.' Your questionnaire was good. Would you focus on industries in the first instance and narrow it down a little bit, with perhaps a turnover if the job becomes too big, until we do a review but start off with a standard questionnaire—the first one—which filters 90 per cent of the people out, and the rest goes down as it works?

Mr Loone : That's exactly right. In fact, we had an idea that we've been throwing around—this is probably a bit too early but I'll throw it out there anyway. You've got a very good system for reporting and you've got statements people have to make in this report. We think that's not risk assessment; that's doing a report. In parallel, you could do a low-effort risk assessment capability that might go down to $25 million turnover or revenue but it may end up being just a few questions. We may start small; we may start with only two or three industries. We may start with cotton, cocoa and seafood. It's only when you filter through that next level that you get the next level of questionnaires that get a lot of detail, because we know they're the highest risk, and then, over time, you build up that capability. The advantage of having that risk assessment tool is that you don't have to have someone reading a report. In fact, you automatically get reports published about the comparisons of what's happening in those industries. You've hit the nail on the head; it's about identifying those industries—not trying to boil the ocean on day 1 but to create a risk assessment capability that will not only give buyers more view of what their suppliers are doing but also give the committee, over three years, a lot of information to make decisions about what to do next.

Senator MARSHALL: Chair, I'll have to seek your indulgence for a bit of preamble before I get to the point of my question. When I first came to the Senate, 15 or 16 years ago, with the former Liberal senator Judith Troeth, we did a lot of work in the space of the clothing, textile and footwear industries. We built on work that had been done 20 years prior to that by different Senate committees into the issues of slavery, underpayment and sweatshops not only here in Australia but overseas. We watched the development of industry codes, ethical standards and voluntary codes of practice. Some of our biggest companies signed onto these codes. There were beautifully formed and worded policies and there was fine champagne drank at events for signing. The reality is that nothing actually changed, because they were voluntary codes. Suppliers simply shifted around their arrangements and deliberately hid from the companies, which I think quite deliberately didn't then bother to look any further, because they'd already drank the fine champagne at the ceremony. I'm completely sceptical about voluntary codes because I have watched them and the Senate has watched them, and they've completely failed vulnerable people.

The legislation is a great step forward, and the government should absolutely be congratulated for it. The point I'm making, and I'll give you another chance to reinforce: if we're really going to make it work and have an impact, a regulator needs to be able to reach into the boardrooms, the companies and the processes to ensure that they are real and they are genuine. You would have seen by the questioning of Woolworths—and I absolutely commend them for the work they're doing—that I wanted to be assured that they weren't, again, going to be beautifully formed, written and presented policies at the top level where we could all feel good; that what they were doing actually meant something and was real and when you look at it you know it's verifiably real. There was a question there somewhere for you!

Mr Loone : The first point there is: what if you could look at Coles, Woolworths and every other grocer out there and have an online report of what percentage of their chocolate products are certified slave free. It could be a graph or a table—however you want to present it—in real time. If they change their supply chains, they update the system. That will drive a race to the top because consumers will look at it. One of the most common questions my daughters—I have two daughters, aged 16 and 17—have for me when I rant on about slavery is: 'Okay, where do I buy my clothes? Do I buy from this fashion label, this one or this one?' I say, 'Well, how about that one?' 'No, not interested. That's not the one I like. Which one of these three?' 'I don't know.' I can delve into them, but none have the same measurements against each other. We need to create that alignment within industries that's going to drive consumer behaviour. As much as I like the idea of a regulator reaching into the boardroom and shaking someone around, the fact is that what's going to shake them more is when people stop buying their products. The core of our foundation, STOP THE TRAFFIK, is creating inspiration so that people want to buy products that have slavery removed from them. This is an opportunity for the Australian government to take leadership globally on that front.

Ms Kitto : Senator Marshall, I think what your question or comment points to—I agree with you totally, having spent many months in source countries for the Australian fashion industry, that this legislation in and of itself is not going to change things. It will create a gathering point around which conversation can happen. In the end, the change actually happens when there's a culture change in an industry. That's why we like to work with industries as a whole as much as we can. We work with chocolate, fashion and others because it actually requires a shared responsibility for the change. It requires civil society, like us, to know what is happening on the ground, how slavery works and what you can do. It requires businesses to say, 'We're actually going to work on this.' It requires workers to become part of the solution. It requires local communities to know what's happening in their communities around trafficking. It requires government to have the kinds of legislation that are actually going to support the work that everyone else is doing and to take their role seriously. This act will bring a rallying point. It will also bring change if it has a rallying person, if it has penalties and if it's able to be implemented by businesses in a way that makes sense to them.

Mr Kitto : Senator Marshall, thank you for your interest and your work in this over those years. You would have noticed, in the context of what we're talking about, that it's an evolving reality at the moment. Things are changing. People are becoming more aware of this around the world. I spoke at the World Cocoa Conference in Berlin back in April. A statement came out of the conference, the Berlin declaration—they name it after where they meet. They said: 'We can no longer go on with business as usual. We now realise that we've come to the point where we've got to do something about this. The biggest problem is poverty. We've got to work on a living income for the cocoa farmers. That's the No. 1 thing. The second thing is that we've got to be able to trace where it's coming from, what's happening and what the realities are.'

There's a role for government within this to be able to do that. The things that Carolyn was saying that we work on—this is a shared responsibility. It's not just the act, but we think the act is a key linchpin of being a rallying point to raise the conversation and to help this evolution to continue on, which is why we think the three-year review is excellent. We think that it's important to stage some of these things so that we get the culture change and so that industry learns to cope with this. There needs to be some grace, certainly in the first few years, while that culture change is happening and while we embed this in Australian society, because it's so much a part of the Australian values of giving a fair go and treating people equally. These things have happened because our economic policy is that manufacturing and a lot of our sourcing in agriculture has gone offshore. We have a responsibility, as the United Nations have stated. Companies have a responsibility right through their supply chains. This is evolving, and that's the reality, but we think that if we can get a robust act in then we've got a higher platform to jump further off for the next stage of the evolution to happen.

CHAIR: Yesterday, someone suggested that penalties should be included but that there be an amnesty for one year. I then raised the question, 'What about an amnesty for three years?' which would have a similar impact to what I assume is the government's intention in three years to see whether this is working. If some of your fears are justified and it's not working properly, then I think the government's intention is pretty clear: it would bring in penalties once everyone has got into the culture of thinking about this. I'm wondering about the thought of penalties versus amnesties for one, two or three years.

Mr Kitto : It's interesting you should say that, because when I was in Germany I went to the parliament and met with two of the politicians heading up the modern slavery act in Germany. What they have done there—Chancellor Merkel's party, the Christian democrats—is said to industry: 'Here's what we see as the standard for due diligence. We'll give you three years. If more than 50 per cent of you are not doing this, we'll make it legislation.' It's very interesting to see what's happening around the world. This is why we use the privilege of talking with partners around the world on this to see how it's evolving and what's happening. That's a parallel to what you're talking about, which is 'Let's stage this in, see what's happened, review it and then take it to the next step of growing the capacity,'—which we have,—'through legislation.'

CHAIR: Do you have a link for that German experience?

Mr Kitto : I'd be pleased to put you in touch with the politicians that I was talking to.

CHAIR: I was more looking for a link where we might be able to read what you're saying.

Ms Kitto : It would be in German.

CHAIR: I'm sure our secretariat can speak any language that's needed.

Mr Loone : I think most of it would support what you're saying—that is, the idea that there needs to be a lead-in period, whether that's one or two years. We think three years would probably be a little too long, but there has to be a lead-in period, because companies will be working out what this means, particularly the more complex—

CHAIR: Three years is better than the 200 years it has already been happening.

Mr Loone : It is, definitely.

Mr Kitto : We've learnt from 200 years too.

Ms Kitto : Currently in the bill under section 25(2) it's very explicit that penalties are not on the table.

CHAIR: Not in this bill, but there is a review in three years, and why do you think the review is there?

Ms Kitto : Perhaps the review in the bill could state that one of the things to be reviewed will be penalties.

CHAIR: I don't think you have to be terribly clever to work out that that's what I'm sure it meant. In fact I haven't fully read the second reading speech, but—

Mr Kitto : We never assume that.

Ms Kitto : Now this is on the record in Hansard that it will be, that's great.

CHAIR: We've gone a bit over time, but thanks very much for that. We very much appreciate your assistance and also your written submission.