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Legal and Constitutional Affairs Legislation Committee
03/08/2018

BARKLAMB, Mr Scott, Director, Workplace Relations, Australian Chamber of Commerce and Industry

[14:23]

CHAIR: Welcome. Thanks very much for joining us. I am particularly pleased to have you here. We have had a lot of witnesses, but many of them have been NGOs with a certain approach. We haven't had a lot of business submitters who have been able to provide witnesses—due to various diary difficulties—so it is good to have you here. I think we have given you information about parliamentary privilege, the protection of witnesses et cetera. I now invite you to make an opening statement and then we will ask you some questions.

Mr Barklamb : Thank you to the committee for the opportunity to make a submission and to appear today. The chamber and our members, along with the ACTU, have for many years work to address child labour and forced labour, principally through our work at the International Labour Organization. Here we're looking at taking a next or different step into reporting as an exercise in transparency and communication. The business community have a role to play in tackling such behaviours not on our own but as part of wider initiatives across government and the Australian and global communities. This points to the first of perhaps three points of contention which we would raise with you—that is, what is the appropriate subset of Australian business that should be asked to report under these new rules? On balance—there was an interesting articulation of balance from my predecessor, which I didn't disagree with—what is going to be most effective and most proportionate and will see business most capable of engaging and make a contribution here? We consider the $100 million revenue threshold in the bill as introduced to represent and capture an appropriate leading strata of the Australian business community. I would very be pleased to discuss that further in questions. Business has a role to play here. That's how we're approaching the legislation. We see the bill as an initiative to support the business community in playing our part appropriately, effectively and innovatively. If this is executed correctly, we will unleash a race to the top and a recognition of new areas for the Australian business community.

There was a mention of guidance materials from those who proceeded us. We welcome the government's indication that it wants to provide guidance materials to assist new reporting entities. Many, if not most, of the 3,000-odd direct reporting entities will need that assistance. These new concepts are not easily recognised by people doing business. Guidance and information will also be necessary to support the tens of thousands of further local suppliers, and those they do business with, who will be affected by the bill. We stress this point. The impact of the initiative, both positively in addressing modern slavery and as an impost and a new administrative requirement on business, is going to extend well beyond the nominal coverage of the direct reporting entities. Utterly conservatively we say there would be at least 10 more entities for every formal reporting entity. That gets you to 30,900 on the figures we were given earlier. I noted that our colleagues talked about Qantas as having 10,000 suppliers. Whatever action is taken here goes well beyond the nominal 3,000, introducing this consideration to a vast swathe of the Australian business community at $100 million, the level set in the bill.

There has been some mention of the UK act. We say it's important for the UK and Australian regimes to be aligned as firmly as possible—with an asterisk, mind you, on the reporting threshold. The one piece of feedback we have from our colleagues overseas in the UK is that the piece of legislation was largely exercised in a manner where business could embrace it, where it wasn't opposed. The only thing that was said to be perhaps incorrect was the reporting threshold was too low. Too many medium sized enterprises that lacked the capacity to comply to do this work were drawn in, and that's why we are somewhat different to the range of other voices that are asking you to adjust the threshold downwards.

I will try to get through these reasonably quickly. We welcome that government is including itself as an entity willing to take action in this area and its activities; however, we have a couple of points to make. What the government asks of those who seek to do business with it needs to be broadly consistent with what those businesses do anyway in their reporting. The government can't be a highest common denominator that creates or demands of a business something extra, something more. It will create a difficult circumstance in doing business with government. We particularly want to see care taken that small businesses aren't in any way inadvertently excluded by this bill from tendering opportunities with government. A small business that's not a reporting entity shouldn't necessarily need to do the diligence necessary of a reporting entity to take part in government work.

We suggest the committee might urge the states to themselves submit their government business entities to this process—we see no reason why they, where they are competing with the private sector, couldn't do so—and to provide similar guidance and tendering requirements. There is a real opportunity for some cooperative federalism with the states here.

I do want to briefly turn to New South Wales. It's highly regrettable that New South Wales has introduced a parallel scheme at the point at which the Commonwealth is about to legislate. It's frankly unfathomable to us that a state would take that action. We urge the Commonwealth to do all it can—

CHAIR: I think there was a bit of local politics involved in that.

Mr Barklamb : Yes. When I say 'unfathomable', perhaps there is an all too clear reason. But, in terms of creating a national scheme to send behavioural signals to business in the community with the 13th biggest economy in the world—we have major corporate players—the idea of our federal system yielding contrasting and differing obligations for doing business in our biggest states is an extraordinary one to us. I need go no further than this: the committee should consider seeing whether this legislation should cover the field. We see no productive value from a parallel scheme in New South Wales at all.

As to the timing of the new legislation, the proposal that the first reporting requirements be in approximately 18 months is important to the transition that will be made. The preceding witness went some distance to this. Businesses will need to adjust, and businesses will need to undertake a substantial cultural change and substantial diligence and risk assessment exercises with their suppliers. We think the proposed timing of the legislation is important. We also think there's an option for an iterative approach to the legislation in regard to the review process. There is a review and we can set out iteratively on a path of adding this to our system, and learn the learnings that are there to be gained in thinking about how the legislation evolves in future.

One final point: we see there are three things that have been raised with you that are differences to the bill as introduced. The first, as I mentioned, is the threshold for reporting; the second is the creation of an anti-slavery commissioner; and the third is the introduction of some form of penalties. Penalty seems to be a doubled-up argument: either there are penalties for not reporting or there seem to be some suggestions about how effectively you report against the criteria. There's a little bit of a 3A-3B proposition there as well. We are supportive of the bill largely as introduced but we'd be happy to take questions on our approach to those issues.

CHAIR: Can I ask you what your approach is to those three issues?

Mr Barklamb : On the reporting threshold, as I said, our feedback from our UK colleagues is that far too much of the middle strata of their enterprises were drawn in that lacked the capacity to be able to report effectively, and for whom this represents a burden of compliance without necessarily a communication of anything effective or any learnings about where slavery is in their system. On the UK, I want to make an important distinction point that others may not have made. They have porous borders. We don't. They have people from various parts of Europe who are working in numbers through their community, and very different exposures to modern slavery in the ordinary course of business to those that we have. This is not an area of my expertise but I do understand there is a difference, potentially, in their criminal law in relation to some of the offences that are picked up as modern slavery in this bill, and that they needed a very criminal approach to address some holes in their law to do it.

On threshold, we say, as I indicated earlier, you are going to get much more bang for your buck than whatever nominal threshold you choose. We think $100 million represents a fair balance. My predecessors appear to be saying $60 million, because that equates to the UK. They have a completely different business community to ours. The nature of their trade and commerce and the distribution of large companies to small is different from ours. I don't see that as necessarily an argument from authority to you. It would always be open to this committee or another to review that threshold in time. You could go down but you couldn't go up very easily. We think it's an incautious approach for the widespread urging of a change in the threshold.

On penalties, the reputation of business is important. One area where I particularly differ from my predecessors, the Law Council, who gave evidence here a moment ago, is the assumption that if you are not a direct customer-facing business to the consumer community, you have no reputation to protect. I don't think that's how Australian businesses do business. I think the threat of reputational harm from not reporting is a powerful one. Businesses will not blithely ignore a reporting obligation.

If the committee or the government or the parliament were mindful to add penalties at any point, I think the preceding discussion did take us some way towards how that might work. A couple of principles might be worth thinking about, were it to go down that path. We would see no revenue being raised. You're sending a signal to the business community that you want them to report; you don't want the penalties to be triggered or enacted at any point. There needs to be a facility of approach. I mentioned learnings and journeys—that's modern soft-speak in a lot of ways. This is something where companies will have to go out, assess their risks and learn more about their suppliers. I think there was a suggestion earlier of one tranche of suppliers into the next, into the next, across a period of years. That favours an approach to penalties, which, were they to be taken up, allows those companies to learn. The penalties, you would think, would be triggered by reporting or not rather than looking too far into the substance of reporting. We've got a period of years where we'll learn about this. It may be that there are systematic or structural omissions that come to light but I don't think we should leap on those too quickly. We've got an opportunity to do learning across a period of years.

Finally, as to the commissioner role, we don't per se have a position of supporting or opposing a commissioner role being added. Our observation would be that there are various components that could be brought into that role. One is to oversee and encourage the reporting, and, were there penalties, there may be a role there. But, more importantly, there's an educative role. The commissioner, were one considered, needs to be promoter in-chief to encourage the business community to understand these areas. We also particularly think, were the threshold to be written down and you drew in a strata of the medium-sized enterprises, that a commissioner's role, were one considered, should be required to particularly work with the smaller reporting entities, for whom this is particularly burdensome and difficult. Alternatively, even with just the major strata of our economy, they are going to push down to their suppliers. So, even then, a commissioner would have a role assisting those who may not be direct reporting entities but are going to be contributing to the reports, who will themselves take on a substantial burden.

CHAIR: Thanks for that. Can I follow up quickly on a couple of those things. There was a submission made to us yesterday that there should be a list of companies within Australia who should report, and the fact that they didn't report, if they didn't, could be published. Then it became an argument of how do you draw that list, particularly when the $100 million is total revenue of that company, much of which might be earned overseas, and how do you get that. The suggestion was then made that there is already a list, under the Taxation Administration Act, of Australian companies with income of over $100 million. That would cut out, I guess, some of the international companies. Do you have any thoughts on that at all?

Mr Barklamb : I'm not familiar with the Taxation Administration Act. If you don't mind, I'll take that on notice and we'll have a look and communicate with the committee in the next week or so.

CHAIR: It was a suggestion made by Dr Zirnsak from the Uniting Church. There is already a list of Australian companies with Australian turnover of $100 million or more that could be published tomorrow.

Mr Barklamb : First, I do understand that it's global turnover that's envisaged in the bill. That might only take us part of the way. If you think about some of the world's biggest corporations, they may not necessarily turn over $100 million in Australia. But, in other places, there are certainly going to be reporting entities.

CHAIR: You'd lose a lot—the big multinationals that only made $20 million in Australia would be out—but those Australian companies which—

Mr Barklamb : I have a couple of comments on that. There would be nothing to hide here. If entities were of a size that they should be engaging with government and harnessing the opportunities for transparency that are provided, then, if it was necessary to provide a list of them somewhere, that's not inherently objectionable. What worries me a little bit is restructurings, fluctuations in revenue and adverse inferences being drawn on those companies, wherever you draw the threshold.

CHAIR: There was another suggestion made that the government should send out this list of companies and say, 'Look, we think you qualify, but you tell us if you don't.'

Mr Barklamb : That's not such a bad approach. One of the things that I'm mindful of is the equal opportunity reporting of companies employing 100 employees or more. We don't maintain a list of those. It would be a much longer list. We don't necessarily need to maintain a list to have that obligation. Particularly if we are looking at 3,000 or 4,000 entities, I don't think too many people will slip through the cracks of attention in this area without a list in the first instance to then compare them to. This might be something that, were the bill passed in something fairly close to its current form, would be asked to be examined in the three-year review as to whether there were omissions or gaps to be examined.

CHAIR: Yes.

Mr Barklamb : Can I briefly go off on another point. Complex manufactured goods interest me, including cars. There are 10,000 pieces in a car. I genuinely don't have my head around this, and perhaps colleagues from the government would, but you may have some large motor resellers—it could be electronics or cars. There are globally known and produced goods in our globalised economy. There are any number of them. I'm not clear that the Australian scheme necessarily has to take on the reliance to understand the exposures of globally complex manufacturers to the various things we're bundling as modern slavery. It may be that should be able to rely on knowable statements in other jurisdictions like the UK, Europe and California as to what's in these goods and how they're produced.

CHAIR: So, if Apple have said—

Mr Barklamb : I was trying not to, but thank you.

CHAIR: Well, if a major company said, 'Yes, our chips are okay because we've checked it out in California,' you're just raising the question of whether an Australian company who is then selling that should be able to say, 'Yes, we rely on the other company from California.'

Mr Barklamb : Yes. There's a global declaration as to what's in this Toyota. It's a known entity. So the resellers of Toyotas in Australia make reliance on that complex statement elsewhere without needing to do further due diligence.

CHAIR: The Law Council rightly mentioned Qantas and said that Qantas have 10,000 suppliers, of which they've currently got through 2,000, but it will take them some time, naturally enough.

Mr Barklamb : These are very significant practical questions. That's why we say it's only the largest strata of business that's equipped to do this.

CHAIR: Yes.

Senator PRATT: Have you had any discussions which indicate the extent to which companies will transfer their obligations to report to those supplying them within the supply chain? For example, in your executive summary you talk about supporting the capacity for voluntary reporting. For example, with a biscuit company supplying to Woolworths, Woolworths might, within its reporting, point to the fact that the supplying company has done its own report. Do you expect that to be common practice in this, and is that a good thing?

Mr Barklamb : As we understand it, the only way the principal reporting entities are going to be able to accurately report is to demand information from their suppliers.

Senator PRATT: Yes, but do they demand that information to include in their own report, or do they point to that supplier reporting in its own right, or is it going to be a combination of both? I might also have to discuss with the department how they think that will work.

Mr Barklamb : I would suggest, depending on how the legislation comes out in its final form, it would be a combination of both. Some people may seek to post all the information online from each of the suppliers. They may have a prescribed format they demand of their suppliers. Some of them might demand their suppliers become voluntary reporting entities. I don't know about the legality or operation of that. That might be something that happens in time, or indeed the suppliers might make a judgement that they're going to that much work—

Senator PRATT: They might as well report.

Mr Barklamb : They may choose to be reporting entities in time.

Senator PRATT: And they can therefore point the company that they're supplying to the reports that they've already submitted.

Mr Barklamb : Yes, although certainly we would see nothing wrong with a company compiling significant amounts of information from their suppliers and reporting on those in a summary form.

Senator PRATT: Yes, because they still have to make a judgement on whether their suppliers' reporting is adequate as well.

Mr Barklamb : Yes, and the assessment of risk that's been made by that supplier. They all make judgements based on where those suppliers source their materials, for example. You correctly point to the supermarkets. Many, many suppliers supply goods into your average supermarket in considerable numbers. There will be quite a complex management exercise, as Woolworths pointed to. One of the things which we are interested to keep an eye on in particular, because the vast strata of my members are smaller and medium-sized enterprises, is the medium-sized enterprises and how much information they're supplying the large. That's a commercial transaction and that's up to them, but it could be that a lot of the true burden and cost of this is beyond the reporting entities and the very measurable and very observable. In three years time, part of the assessment should be on the non-directly reporting entities to understand what the impact has been on them.

Senator PRATT: Thank you. I think that's a point well made. We've heard very strong evidence that says the UK regime has not been effective without penalties. Why do you think penalties aren't necessary in an Australian context?

Mr Barklamb : Were you to draw the threshold at $100 million, and have 3,000 or so reporting entities, not 14,000, as I understand the UK has—you're talking about a much larger strata and more observable strata of the business community. It is open to the parliament to set obligations on any part of our economy without necessarily penalty and sanction to make it happen. I think I mentioned earlier that we disagree quite strongly with our predecessors; we think that reputation is important throughout the business community, even those who are largely business to business. We'd make the observation that everything, ultimately, relates back to a consumer. I think the example was raised about building products manufacture. The building products used to build a new commercial building in Canberra that's going to be occupied by the Commonwealth Bank—soon the Commonwealth Bank will have to answer for the building products. We think it's available to do that.

My intelligence from the UK—the people I've spoken to don't necessarily see the scheme as having failings; it depends who you're hearing from and where the analysis is coming from. It's also not been in for too many years, so it's that iterative path; the learnings are proceeding. They also didn't go into the detail, that I think section 16 of the act goes into, as to what they want people to report against. Like is not necessarily being compared with like there. Part of my introductory answer was to say, 'If the committee or the parliament is mindful to include penalties, here are some ideas about what they should and shouldn't do.'

Senator PRATT: If our key objective is to make sure that we've got compliance with participation in this regime, what is the best way of doing that?

Mr Barklamb : Promotion; information; partnering with organisations like mine and those we represent; a sensible, phased introduction and decent lead time, which the bill provides for; and ensuring that the government appropriately communicates to the business community what their expectations are in the bill. We have an option then, I believe, that will get considerable bang for our buck, to use a terrible term, out of the legislation as introduced without necessarily needing to amend it to add penalties.

Senator PRATT: Are you confident that all companies with an obligation to report will report?

Mr Barklamb : We would be confident that the vast majority would. What we would need to do is think about why someone might not report, and make an assessment of that.

Senator PRATT: What kinds of reasons might they be?

Mr Barklamb : A lack of information or ignorance is the one that government has the opportunity to correct. An organisation may not choose to report if it was about to change structure to become smaller. It doesn't matter where you set your threshold; companies may forecast a downturn or a change of structure that would render them a non-reporting entity. I have heard, in other contexts, ideological opposition to the equal opportunity reporting, but that's a very isolated case of people who just flatly look at that kind of obligation and say, 'No, I don't believe it and I'm not going to do it.'

Senator PRATT: I think you'd be hard pressed to say you're ideologically in favour of modern slavery.

Mr Barklamb : Yes. In terms of eliminating causes of non-reporting, we think there's an opportunity for sophisticated communication, with the assistance of our networks and those we represent, and for the business community to get pretty complete engagement with this. People will embark on, as I said, an iterative journey. You won't get all the information straightaway.

Senator PRATT: You say it is an iterative journey, but companies are not obliged to participate, even though it says they must participate. There's no way of identifying them if they haven't participated or formally calling them out, other than through public debate, for failing to report. Why should they not be penalised for failing to look at their supply chain?

Mr Barklamb : We believe they will be penalised by public reputation, by omission. Nothing would stop any member of the parliament from naming companies in parliament for failing to report. Nothing would stop whatever mechanism is used to administer the system. I'm not clear that there couldn't be adverse comment if there were a failure to report and engagement through that process. We certainly don't see it as consequence-free to not do something the parliament asks the major strata of Australian business to do.

Senator PRATT: Despite the fact that it appears to be the case in the UK that companies that were supposed to comply and put in reports did not.

Mr Barklamb : Of those that omitted, I've not seen it broken down by the size of the revenue. I suspect that it would be towards their revenue threshold, not the major marks and companies of the UK.

Senator PRATT: Do you think we'll achieve 100 per cent compliance?

Mr Barklamb : We have numerous areas of government regulation where we don't get 100 per cent compliance, even where we have penalties. With a correctly focused system that does not inappropriately apply reporting obligations to organisations that are too small, we can certainly get close to 100 per cent compliance—towards the goal.

Senator PRATT: Is there a particular concern that the companies that don't report just inadvertently do so or that they're avoiding the question of whether they choose to look at having slavery in their supply chains?

Mr Barklamb : In an initial period of introduction—if there's an 18-month period—regardless of whether there are penalties, there should be wide communication with corporate Australia. They need to look, they need to understand and they need to embark on that journey, as I said, using that awful modern term. To look down the track, you would assume that, in the initial reporting period, there would be patchy performance at reporting. People are going to have different levels of sophistication. They're going to learn from each other. After that point, like I said earlier, I would find it very difficult to believe that too many major corporations or major organisations are going to look this in the face and ignore it.

Senator PRATT: How easy is it for companies to currently cooperate and look at elements of their supply chain? For example, companies will compete in terms of price from different suppliers et cetera. You might be going from competing with your other companies, in terms of working with suppliers on price, for example, to needing to engage with them on drilling down into the details of their supply chain. How's that going to work in practice?

Mr Barklamb : I must admit the limits of my knowledge. Competition law is not my area of work. I don't want to comment on anti-competitive practices. I think you're pointing to a quite relevant consideration. I can see the point, but I don't want to comment on how it might operate. We would like to talk about industry based guidance, and that's where the organisations that I represent come into play—the industry associations in particular—to work with industry and provide a forum where people can gather and talk about what they require from their suppliers and share practices without it being an anti-competitive exercise.

Senator PRATT: Yes.

Mr Barklamb : So we think government support for industry-driven modes and tools would be quite a useful exercise that may remove that concern or may remove in part that concern.

Senator PRATT: Good. How sophisticated are those discussions currently? And how much of a boost will this legislation be to deepening different industries' insights into the existence of slavery practices in their supply chains?

Mr Barklamb : I think I mentioned in my introduction—and I'll take us back to that point—that, if you confront an Australian businessperson with the idea that they are exposed to human trafficking, child marriage, deprivation of liberty and child labour, by far the majority of them would be incredulous or say: 'We've got nothing to do with that. That's not how we run our business.' This is really an encouragement to think further, to think about exactly how your business operates and how your suppliers operate. Apologies, I may have slightly lost track of your question there.

Senator PRATT: No, you're on the right track.

Mr Barklamb : The change of mind, the realisation, is a journey, as I said. I think it would be fair for me to say that not too many of my member associations are massively embarked on that. But as their members take on these obligations and with the assistance of our organisation and what we're learning from engaging with the legislation through exercises like this, that will be the catalyst to go further.

Senator PRATT: Yes. Do you think companies will be surprised at what they find in their supply chains or reassured or they haven't really thought about it adequately currently?

Mr Barklamb : There are companies that operate in areas where these concerns have been known for some time. Globally, a lot of attention is paid to clothing and mining, and there was mention earlier of sophisticated electronics. You may be aware of the concern about fishers in Asia, for example.

Senator PRATT: Yes.

Mr Barklamb : So there are some industries where there's been a lot of work and realisation. There are other industries where there's very little realisation of their exposures, and then there other industries that would fall within these revenue thresholds, like law firms—the people who were here earlier. They will potentially be reporting entities, but they'll have to think very creatively about where those risks might exist. It doesn't naturally compel itself in their work. One of the major Australian business figures has professed surprise to find exposures within their operations. So this really behoves every business that is a reporting entity to think, to examine and to come to their own realisation about where risks exist. As I said, some are aware of their exposures. There's probably a second group that has exposures that are material or significant and that needs to go away and have a particular look. And then there are other reporting entities where risks are low but they will need to go and make the assessments.

Senator PRATT: Thank you.

Senator MOLAN: Every business has got to think more about it, and I think you're quite right in that respect, because many of us are not aware of the overall presence of this or the risk that's involved. There will be many businesses below the $100 million threshold that have a much greater risk of being involved in this than there are above it. For example, a fashion business that has a turnover of $10 million a year might buy direct from suppliers overseas for the simple reason that it's in a sector where it may buy T-shirts or shirts or whatever that may not be getting picked up by Woolies or the big companies, validating their own supply chain. If that's the case, when you're looking at reporting, wouldn't it be better to combine some form of threshold with a sectorial view? So in certain areas you may need to go well below $100 million or whatever the final threshold is. Is that feasible?

Mr Barklamb : Let me talk about feasibility first, and then perhaps a little on the premise of the question. We would hope, in something like clothing, that clothing are well embarked on in this area globally, through ethical clothing efforts and through the efforts of EU and UK in particular. There's an ILO initiative in Asia called Better Work, which works in garment factories in particular, which a range of Australian fashion labels are engaged with, and more will engage over time. What you would hope for in something like fashion is that you've got these international models, you'll get leadership from the direct reporting entities, and you'll get leadership from those who supply them—the importers, in this case. For these smaller organisations, wherever you drew the threshold, there would always be potential exposures below it. What you would hope for in something like clothing is you might get an initiative of the Retailers Association, or somebody like that, in time to work with the clothing retailers that would create a model that would support two groups: smaller suppliers into reporting entities; and, as you say in your example, smaller fashion organisations that are importing and are themselves occasioning risks of modern slavery exposures. So the trick will be the learning of the industry as a whole, led by the direct reporting entities and those who supply them, and that will give you a model to work with the smaller ones, hopefully, in time. But that will apply regardless of where we draw the threshold.

Senator MOLAN: Certainly, and drawing the threshold will be the key to it. If it's accepted that what you're saying is that a business organisation may assist within the fashion industry to go lower, then to put that in the legislation so that the clarity of that in the legislation somehow ensures it happens—I don't know whether you can do that. If you try and do that, you then extend the bill out, and it may take us longer to get to where the bill should go, or else because we think it's difficult we do the bill without doing it. It just seems to me that if you combine technology and the ability to report you can take it down much lower. It was described to us by one witness—and it appealed to me—as a log-on website with a common reporting procedure. So if you are a $1½ million business in Tumbarumba or somewhere that imports items from somewhere—that certainly exists, to my knowledge—you answer the first three questions, and you determine that you've finished. But if you find yourself in the fashion industry, in a mum-and-dad business that does travel and buy overseas, then you go down to sections C and D. And if you're Coles or Woolies, you go all the way through the report. You then can be industry specific, and you can minimise the costs by using technology, and yet you achieve what you have said a number of times, which is to make us go on a journey that makes us think about this issue.

Mr Barklamb : I wonder whether that might slightly cut across innovation. What we've got at the moment is an openness, notwithstanding it is more prescriptive than the UK model. It does challenge the organisations to understand their business and their risk exposures and to come up with different models of trying to identify and address them. It might be, for example, that a major organisation like a retailer might create an online tool that they demand their suppliers overseas complete and then might audit against that. Somebody else might say, 'No, I'm going to send my own buyers out and I want the assurance that my people have eyeballed that business in China or wherever.' I think potentially we will find different approaches in different businesses, even within the one industry, and that should create a healthy dynamism of competition and learning from one another.

If I sound slightly sceptical, I'm just worried that if you create an online portal, per se, that is of one model, you will really put people into that one particular approach, and that will limit their thinking and their creativity. It's not a poor idea or anything like that. I think it's exactly the sort of thing that you would consider at the three-year review stage, based on your understanding of how the different organisations that are comparable have gone about it in their different business models to think about whether that does spit out a learning for smaller businesses, which was the start of the question.

Senator MOLAN: The problem I would have with what you're saying—to do it after the three-year model—is it will get to the three-year model and we won't know anything more about the organisation than now. If we don't start indicating what an objective reporting organisation might be, if we don't at least indicate the kind of technology that may make reporting feasible and if we don't go sector specific then, in three years' time, we will say, 'Well, should we have this or should we have that?' It seems to me we need to specify the objective of penalties and reporting. If we're going to go for the three-year model—and that is highly likely because there is a push to get this out on the road as soon as possible—then, it would seem to me, within the legislation, we need to be specific about where we're going to go at the three-year mark so we know what data we're collecting. If we don't, we will be in exactly this position, where you and one other organisation has said 'Trust us. Our guys are good guys and they will all report.'

Mr Barklamb : The last bit is a bit different. I thought we were talking substance not whether you report.

Senator MOLAN: We are talking both. You have to talk both. Because if we just capture those who don't report, that's fantastic—'I will report tomorrow', says the businessman.

Mr Barklamb : We would urge that the three-year review look at the substance of what's been captured, the extent to which people are innovating, where new ideas are coming from, how people are working to capture the information. We would want a three-year review that was something other than just the simple mechanics of the legislation; it would be how effective it is delivering on its stated aims.

Senator MOLAN: Sure. Correct me if I'm wrong here but I thought we were concerned that, in the UK model, the level of reporting was relatively low? Is that not the case? I thought I got that from a witness the other day.

Mr Barklamb : Yes. I would have to go away and look at the reports of the Modern Slavery Commissioner in the UK.

CHAIR: Someone reported: 'We think we're subject to this, so we have had a look and everything's okay.'

Mr Barklamb : Being mindful of that is the government's drafting of section 16, which does actually demand that you go into further detail and go some step down.

Senator MOLAN: But there are no sanctions for not doing it.

Mr Barklamb : No.

Senator MOLAN: I trust you guys, but the most reluctant organisation to have sanctions for reporting and substance was a similar organisation to yours.

Mr Barklamb : Yes.

Senator MOLAN: And I can understand that. But if we're going to stop slavery—

Mr Barklamb : Let me put it this way: if there were to be sanctions, it be more about whether you've reported or not, whether you've conducted an examination of your business, as is broadly intentioned by the act. If it becomes too much of a checklist and too prescriptive in detail, our people will embark on a learnt compliance behaviour so it will become an exercise in filling out forms. That does not necessarily encourage a creative interrogation of your business beyond your borders to genuinely understand where the risks lie. It would be our concern that it would become too compliance based and it would become an exercise in paperwork rather than genuinely understanding where the risks are.

Senator MOLAN: The converse is true. I won't make any more comments, but the converse is true if we don't do that. We have been given any number of examples over the last couple of days where people either token replied or assessed that they could get away with doing nothing.

Mr Barklamb : That shouldn't be the goal. If we come back and have the conversation after some period of operation then we have to look at a different prospect.

Senator MOLAN: That's correct. But the only point I would make again is that, in the legislation that starts that three-year journey, we should understand where we want to be at the end of the three years, in that information that we collect should be in the legislation now.

Mr Barklamb : One suggestion you may wish to consider in your report would be to broadly sketch the things that you've heard that you would like to have examined in the three-year review, to signal to government early these are things from what we heard that we're interested in, and thinking about where we may or may not recommend changes to the legislation. Beyond that, we think the following are areas for monitoring through the introduction and through the three-year period.

Senator MOLAN: Does that go into the legislation?

Mr Barklamb : That wasn't my proposal.

CHAIR: Didn't you say section 14C actually does address that?

Mr Barklamb : I will dig it out. Section 16 is a contrast to the approach in the UK.

CHAIR: We should have that.

Mr Barklamb : Thank you for picking that up, Chair. Section 16 is headed 'mandatory criteria for modern slavery statements'. Section 16(1) has a series of things that a statement must do. That is in contrast to the UK. In the UK it's simply, 'You must make a statement.' So there is already a degree of indication. We're going a step down the road towards what we want the statements to pick up.

CHAIR: We'll have a closer look at section 16. Obviously you've read it. That's been very useful, Mr Barklamb.

Senator PRATT: Thank you. That was very helpful.

CHAIR: We do appreciate the perspective you and your organisation bring to the inquiry. Thanks very much for that. We will now get all of the answers by calling the department.