New Zealand’s proposed modern slavery reporting regime is a step closer to becoming law, with a parliamentary committee recommending that the bill proceed after making significant changes to its compliance framework.
The Education and Workforce Committee has reported the Modern Slavery Bill back to Parliament and “recommends by majority that it be passed”, although ACT continues to oppose the legislation.
As previously reported by PASA, the bill would require large private and public sector organisations to report annually on modern slavery risks, occurrences and responses across their domestic and international operations and supply chains.
The NZ$100 million consolidated revenue threshold is set to remain. However, entities would now need to meet it in each of their two preceding accounting periods, with around 1,250 organisations estimated to fall within the regime.
Several of the committee’s amendments are intended to reduce duplication and make the reporting requirements more workable, particularly for organisations operating on both sides of the Tasman.
Entities with subsidiaries would be permitted to lodge joint statements covering the group, bringing the regime closer to Australia’s modern slavery approach.
Meanwhile, organisations that report, either mandatorily or voluntarily, under Australia’s Modern Slavery Act 2018 could also submit their Australian statement to satisfy New Zealand requirements.
Regulations could extend this recognition to statements prepared under other overseas regimes in future.
The committee said its amendments were generally proposed “to provide consistency with other legislation, including other corporate reporting regimes”, align with Australia and ensure the bill was workable to implement and comply with.
For most entities, reporting periods would now align with their balance dates, with statements due within six months of the end of the applicable period.
Although the legislation would come into force six months after Royal Assent, the first reporting period would be the first 12-month period beginning after commencement.
This means the earliest statements could be due around 24 months after enactment, while some entities could have up to 36 months, depending on their balance dates.
The central reporting requirements remain largely unchanged.
Statements would need to describe the entity’s structure, operations and supply chains, as well as any modern slavery that occurred during the reporting period; any known or anticipated risks; any due diligence undertaken; any complaints received and remediation measures; any employee training and consultation; and how the entity assessed the effectiveness of its actions and improved relevant policies and processes.
They would require approval from the entity’s governing body, be signed by an authorised person and be submitted to a central public register.
The committee also recommended a mechanism allowing the Registrar to withhold commercially sensitive information or other material considered unsuitable for publication.
Organisations seeking to use this provision would need to identify the information and explain why it should not be made public.
Separately, organisations would not be required to include information where disclosure would be likely to prejudice law enforcement, including the prevention, investigation or detection of an offence, or a person’s right to a fair trial.
The proposed enforcement regime has also been revised to introduce graduated regulatory measures.
The Registrar could request evidence of compliance, seek an explanation or remedial action and publish details of continued non-compliance where an entity fails to address the issue.
Civil penalties of up to NZ$600,000 for each contravention could apply where a reporting entity fails to meet its obligations without a reasonable excuse, while a person who knowingly provides false or misleading information could face a fine of up to NZ$200,000.
Personal liability has been narrowed from directors and anyone involved in management to directors and senior managers, and would arise only in specified circumstances.
For example, a director or senior manager could be liable for an entity’s material contravention where they knew, or should have known, that it would occur and either consented to the act or omission or failed to take reasonable steps to prevent it.
The committee acknowledged that Australia’s current regime doesn’t impose liability on directors or officeholders.
However, it received information about Australia’s latest reform proposals too late to consider whether New Zealand’s approach should align further.
The committee also removed a proposal that could have directly affected government contracting.
The original bill would have prohibited the Crown from paying money to an entity convicted of an offence or ordered to pay a civil penalty under the legislation.
While supporting the provision’s intent, the committee raised concerns about its interaction with existing contracts, the risk of double punishment and the absence of a pathway for an organisation to remediate its conduct and regain eligibility for Crown funding.
It encouraged future governments to reconsider the measure once those issues had been addressed.
The bill would remain a disclosure-based regime and would not impose mandatory due diligence requirements.
ACT maintained its opposition in a minority report, arguing that the legislation “risks confusing the production of information about modern slavery with action that actually prevents modern slavery”.
The party also warned that the requirements would likely flow through procurement processes and contracts to smaller suppliers, which could be asked to complete questionnaires, trace products and materials, participate in audits or provide contractual assurances despite falling below the statutory threshold.
The bill will now proceed to its second reading, but faces a tight timetable.
Parliament is expected to hold its final sitting on 24 September, leaving only nine scheduled sitting days, and one scheduled members’ day, for the remaining legislative stages.
