Clause 11 of the bill as introduced sets out high-level requirements for the modern slavery statement register and how it would operate. Overall, we recommend retaining most of this framework but providing additional detail to align with similar provisions that establish registers, as proposed in new clauses 20 and 21.

We also recommend using technologically neutral language to describe the register. This includes removing the requirement for modern slavery statements to be submitted through an “online portal”, which we consider is an operational detail that would be given effect to by the administering entity based on the available tools and practices of the day.

We recommend inserting clauses 6(2) and 21(2)(b) to ensure that, where an entity provides commercially sensitive information or other details not suited to publication, this information would not be made publicly available through the register. We expect that a decision by the Registrar to agree to withhold information from the public register would be reserved for serious matters, and the Registrar would apply a high bar. We recommend an equivalent provision for the public sector’s consolidated modern slavery statement in clause 17(3).

Submitters expressed concern that the bill might require disclosure of information that would otherwise be protected by law. We consider that entities should be able to exclude matters from their reporting for certain reasons. For example, it would not be appropriate to require entities to provide information that could lead to self-incrimination, or prejudice ongoing investigations.

We recommend inserting clause 8 to specify that the regime does not require any information to be included in a modern slavery statement that would be likely to prejudice the maintenance of the law. This includes information that might prejudice the prevention, investigation, and detection of offences, and the right to a fair trial. We recommend an equivalent provision for the public sector’s consolidated modern slavery statement in clause 17(5).

The definition of “threshold revenue amount” in the bill as introduced allows for regulations to prescribe a different threshold from the figure specified in the bill. This would then override the threshold revenue amount in the bill. Submissions, including from the Legislation Design and Advisory Committee, highlighted concern with this approach, commenting that it may not be an appropriate use of a Henry VIII power.¹ Allowing the threshold to be increased or decreased in regulations could significantly change which entities the bill applies to, and therefore who could become liable for offences and penalties under the regime. We agree that setting a threshold that affects liability for civil and criminal offences is best reserved for primary legislation.

However, we consider that regulations should be able to increase the threshold revenue amount to respond to a rise in the consumers price index (CPI). If not accounted for, CPI increases could have the unintended effect of capturing additional businesses in this regime over time. We do not consider that regulations should be able to decrease the amount for any reason. We therefore recommend amending the definition of “threshold revenue amount” in clause 4 to limit when regulations could amend the threshold to only allow for CPI adjustments.

We recommend removing the requirement for the Registrar to prepare an annual report (clause 14 of the bill as introduced). We note that preparing such a report would incur additional cost, and do not consider that it is necessary to require this reporting. We also note that this reporting could be done without being required by legislation, and we encourage the ministry and the Registrar to consider reporting as an administrative matter.

We also note that a number of non-governmental organisations are active in monitoring modern slavery. Some of them may wish to prepare reports based on public information in the Register. We encourage the Government to partner with those organisations for this purpose if opportunities arise.

We recommend inserting the following clauses to facilitate information sharing between the administering department and other agencies:

• new clause 23, to provide for information sharing between public sector agencies where they hold information that is relevant to activities under this bill

• new clauses 32 and 33, to amend the Tax Administration Act 1994 so that the Commissioner of Inland Revenue may share relevant information with the ministry. This is particularly intended to assist in identifying which entities have met the threshold revenue amount.

We recommend amending the definition of “reporting period” so that reporting entities’ modern slavery statements would be due 6 months after the reporting entity’s own balance date. This would be instead of specifying calendar dates, as proposed in clause 6 of the bill as introduced. We also recommend inserting a definition of “balance date” that would clarify what this means for different types of entities.

The bill’s commencement clause provides that it would come into force 6 months after Royal assent. We heard from submitters that this would not give enough time for businesses to understand their obligations and then prepare their first modern slavery statement.

We recommend inserting transitional provisions in Schedule 1 to provide that the first reporting period would be the 12-month period that begins after the legislation’s commencement. In effect, this would allow a 24-month period between when the bill is enacted and when the first modern slavery statements could be due. For some entities, the transition period could be up to 36 months from Royal assent, depending on their balance date. Nothing would prevent businesses that already hold the necessary information from submitting a modern slavery statement before it becomes a legislative requirement. We encourage businesses to present their first modern slavery statement as soon as they can.

We recommend specifying in clause 4C that reporting entities include any entity that, together with its subsidiaries, meets the threshold revenue amount. This would address a situation where the regime otherwise might not apply simply because of how a business, and its subsidiaries, have been structured.

We recommend inserting clause 10 to allow entities that have subsidiaries to submit a modern slavery statement jointly. This would align with practice in Australia, and with other corporate reporting regimes in New Zealand. We recommend inserting a requirement into clause 6 that a modern slavery statement must include a list of any subsidiaries covered by that statement.

Submitters, including Australian regulators, pointed out an opportunity to reduce duplication and improve consistency internationally by allowing reports submitted under equivalent regimes overseas to be accepted as modern slavery statements. We consider that aligning with Australia’s similar regime would be particularly beneficial in coordinating international responses to modern slavery. We note that many New Zealand businesses already submit equivalent reports in Australia.

We recommend inserting clause 11 to enable “overseas reporting entities” to provide a modern slavery statement that was prepared in accordance with Australia’s Modern Slavery Act 2018. We also recommend that clause 11 enable regulations to specify other overseas jurisdictions where recognition of equivalent documents would also be acceptable.

If an entity is an “overseas reporting entity”, we recommend that the due date for its modern slavery statement should be the same as the due date in the other applicable jurisdiction. This may be different from entities that are not overseas reporting entities, as other modern slavery statements are specified to be due 6 months after the end of the entity’s reporting period.

We recommend inserting clause 12 to make clear that entities that are not otherwise reporting entities may voluntarily submit modern slavery statements. However, they must meet the same standards as all other modern slavery statements. We considered whether voluntary reporting should be treated differently, or held to a different standard, than required reports. However, to ensure the integrity of the regime, we consider that any voluntary reports must be held to the same standard as other reports.

Clause 10 as introduced would require entities to publish their modern slavery statement on their own website. Submitters said this appeared to be an unnecessary stipulation because modern slavery statements would also be published on the central register. We recommend removing this clause.

For the most part, the bill as introduced is silent on who would be responsible for undertaking enforcement action. If an entity does not comply, the bill as introduced allows for enforcement but not for graduated regulatory interventions common to similar regimes.

We recommend amending the bill to:

• empower the Registrar to require that entities provide information that demonstrates compliance with the legislative requirements (new clause 13)

• enable the Registrar to request an explanation or remedial action for a failure to comply (new clause 14)

• allow the Registrar to publish information about an entity’s failure to comply, if they still fail to comply after being asked to remediate under clause 14 (new clause 15). This provision is commonly known as a “name and shame” provision. This is a key feature of the current Australian regime.

We consider that, if the Registrar publishes information under new clause 15, entities should have the ability to seek a review of that decision. We recommend inserting clause 16 to establish a review process undertaken by the chief executive of the administering department. An application for review would need to be made within 20 working days of the information being published.

Submitters expressed a range of perspectives on the inclusion of offences and penalties in the bill. The inclusion of civil and criminal offences is a key difference between the current Australian regime and the regime proposed by this bill. However, we note that the Australian Government recently announced it intends to introduce civil and criminal penalties for breaches of its equivalent Act. We therefore do not consider that the New Zealand regime would be out of step with Australia for long, if at all, by the time it came into force.

We do not know yet what the Australian offence and penalty regime will ultimately include. Therefore, rather than speculating about the Australian approach, we recommend amending the offence and penalty regime in the bill as introduced to be broadly based on the New Zealand climate-related disclosures regime. This includes:

• an offence related to giving a false or misleading statement or information (clause 26A)

• an offence related to liability of directors or senior managers (clause 26B)

• pecuniary penalties (clause 26C).

We recommend specifying that offences would only apply to information given that a person knows to be false or misleading in a material way. This reflects our expectation that minor errors or omissions should not be treated as offences.

The bill as introduced would allow for directors or other persons involved in the management of reporting entities to also be held liable if an entity is convicted of an offence in the bill. Submitters raised concerns that this could capture employees who should not reasonably be caught by statutory personal liability. We recommend replacing the reference to “other persons involved in the management of” with “senior managers”, which is an existing term used in the Financial Markets Conduct Act 2013.

During our consideration, we noted that Australia’s equivalent regime does not include liability for directors or officeholders. However, Australia is in the process of reviewing its regime and we were interested in whether that review would introduce director liability. We received Australia’s consultation document on the final day of our consideration—it does not propose extending liability to directors or officeholders. Some of us consider that it would be better to align liability for offences and penalties in New Zealand with equivalent proposed liability in Australia. However, this information was received so late in our consideration that we did not have time to adequately consider the issue or address it in this bill.

The Legislation Design and Advisory Committee drew to our attention that certain provisions in the Fair Trading Act may interact with this regime. Specifically, the publication of modern slavery statements may raise issues of liability under Part 1 of that Act. We wish to make it clear that strict liability offences in the Fair Trading Act would not apply to modern slavery statements. We recommend inserting clauses 30 and 31 to amend the Fair Trading Act so offences under that Act would not apply to this legislation.

The bill as introduced includes a definition of “government agency”. To ensure the definition captures all intended entities, we recommend replacing this with a definition of “public sector agency” that includes Offices of Parliament, parliamentary agencies, the Reserve Bank, and other public sector agencies, not all of which would be appropriately described as a “government agency”.

The bill as introduced would require government entities that have over $100 million in total consolidated revenue to submit and publish their own modern slavery statements. We note that in the Australian regime, the responsible Minister prepares a single report that covers all public service departments, Offices of Parliament, and non-corporate Crown entities. We consider that an equivalent process in New Zealand’s regime would be appropriate.

We recommend inserting clause 17 to require all public sector agencies that meet the threshold revenue amount to contribute to a consolidated public sector modern slavery statement. The Minister would coordinate input from relevant public sector agencies and provide the consolidated modern slavery statement to the Registrar. We also recommend that the responsible Minister should be required to present the consolidated public sector modern slavery statement to the House.

Clause 21 of the bill as introduced would require the Minister to report to the House on modern slavery each year. We recommend removing this clause. We consider that the requirement could be undertaken administratively, should the Minister identify matters related to modern slavery that they wished to report to the House. We also expect that the Minister would report on the matters required under clause 21 of the bill as introduced in the consolidated public sector modern slavery statement that would be submitted to the Registrar in accordance with clause 17(1) and presented to the House under clause 17(6).

Under the bill as introduced, it would not be an offence for a public sector agency to contravene the reporting requirements. We note that there was some inconsistency, as this exemption was not carried over to the offence of false or misleading statement in clause 16 of the bill as introduced.

Submitters expressed concern that public sector agencies would not be held liable in the same way as other entities. We share the concern that there is potential for a double standard, and we expect the Crown to comply fully with the bill’s reporting requirements by contributing to the Minister’s consolidated modern slavery statement. However, we consider that it is appropriate to exempt the Crown from liability for offences under this bill, noting that any penalties for non-compliance would be paid using public money.

We therefore recommend clarifying that “public sector agencies” as defined in the bill would be exempt from liability. We also recommend that this matter must be considered as part of the reviews of the legislation (further described later in this commentary).

In the meantime, we expect that the Minister would hold public sector agencies to account as part of their role in consolidating the relevant modern slavery statements.

We consider that this same protection should be extended to local government entities, which are public bodies but are not captured by the definition of public sector agency. We recommend inserting wording throughout the bill to reflect this.

Part 5 of the bill as introduced would amend the Public Finance Act to require that the Crown not pay money to an entity that has been convicted of an offence or ordered to pay a pecuniary penalty under this regime. We, and many submitters, are firmly in support of this provision’s intent. However, we also share submitters’ concerns that:

• as introduced, the provisions could amount to double jeopardy

• it is unclear exactly how the public sector would give effect to the requirements and how this would be balanced with existing contractual arrangements

• there does not appear to be any pathway for a business to remediate its past actions and become eligible to receive Crown funding again

• further amendment would be needed to make the corresponding provisions clear that they only relate to Crown funds.

Given these concerns, we recommend removing Part 5 of the bill entirely. We encourage future Governments to further consider introducing a requirement aligned to Part 5 of this bill as introduced, taking these concerns into account.

We found the New Zealand Law Society’s submission particularly informative in our approach to Part 5.

Clause 23 of the bill as introduced would allow the Minister to direct the Chief Human Rights Commissioner to designate modern slavery as a priority area. The Human Rights Commission told us, and we were advised that the Ministry of Justice agrees, that this direction could undermine the independence of the Human Rights Commission. However, we do think it is important for the Minister responsible for this legislation to coordinate efforts with the Human Rights Commission to address modern slavery. Therefore, we recommend that this provision be amended. Our proposed wording, in new clause 26E, would allow the Minister responsible for this bill to notify the Chief Human Rights Commissioner of the Government’s priorities in relation to modern slavery. The Chief Human Rights Commissioner should have regard to any such notification when determining the Commission’s priorities. If the Minister takes the step of using clause 26E, we expect the Minister would also consider any need for the Human Rights Commission to be given additional resources.

Our intent is that the Chief Human Rights Commissioner’s independence would remain intact and the validity of existing processes to set the Human Rights Commission’s priorities would not be called into question or directed by the Executive. We view this provision as relevant to the purpose of strengthening and coordinating actions to combat modern slavery across all parts of society.

Submitters shared with us a particular interest in New Zealand establishing an anti-slavery commissioner. They pointed out that the UK and Australian anti-slavery commissioners serve important functions in providing guidance, monitoring compliance, and advocating for victims of modern slavery in their respective jurisdictions. We heard from the Australian Anti-Slavery Commissioner as part of our consideration, and thank him for participating in our process.

We agree that further consideration of establishing a similar function in New Zealand is important. We consider that more work should be done over the 3-year period leading up to the review of the legislation, as further information about the effectiveness of the reporting regime becomes apparent.

We considered options for the threshold for reporting entities, including whether to lower the threshold so more entities are covered by the regime. In considering this, we discussed whether this would be best achieved by progressively lowering the threshold over time. Ultimately, we do not propose amending the threshold revenue amount. However, the option of staggered implementation may warrant consideration in future if, for example, the House were asked to consider lowering the threshold revenue amount to apply to more businesses in future, or if a Government were to propose wider changes to align with evolution in the Australian regime.

We discussed the possibility of New Zealand establishing a comprehensive due diligence regime. This would mean that entities would have to take action, for example to address risks of modern slavery in their operations and supply chains, rather than solely meeting reporting and disclosure obligations.

The bill includes definitions of “due diligence” and “due diligence actions”. It encourages businesses and public sector agencies to undertake due diligence in their operations and supply chains and report on their actions and findings. We encourage all reporting entities and public sector agencies to do this and include this information in their modern slavery statements.

We understand that Australia is considering whether to move from a reporting-based regime, like the one in this bill, to a mandatory due diligence regime. We encourage future Governments to consider this as more information becomes available about other jurisdictions’ approaches.

We note that New Zealand businesses wishing to sell their products within the European Union will have to undertake due diligence within their supply chains when the European Union Forced Labour Regulation comes into effect from December 2027.

The bill would apply to any business, including an overseas business “carrying on business in New Zealand”. This is a term used in section 332 of the Companies Act 1993. Generally, it is considered to mean that a company has some form of physical presence in New Zealand. We note that this regime therefore may not apply to all online retailers that New Zealanders routinely use to purchase products. We are concerned that this may lead to unfair outcomes where New Zealand businesses are held to a higher standard than overseas companies that do not have any physical presence in New Zealand.

We consider that the bill should apply to all businesses that derive revenue from sales originating in New Zealand. We are concerned that there may be no way of holding businesses with no physical presence in New Zealand to account under this regime.

We consider that this matter should be further considered when this legislation is reviewed in future. We also consider that responding to modern slavery in supply chains linked to online retail is likely to require international coordination. It may be that the mechanism to obtain information about any modern slavery in these businesses’ supply chains lies elsewhere, outside this regime.

ACT acknowledges that the select committee has addressed a concern ACT raised at first reading about the reporting threshold. Giving the Minister broad discretion to change the threshold would have been a mistake. The change to ensure that the threshold can only be adjusted in line with the consumers price index is an improvement on the original bill.

However, ACT remains concerned that the statutory threshold will not confine the compliance costs to “big” businesses and will instead place pressure on small businesses as well.

Larger businesses in New Zealand do not operate in isolation. They purchase goods and services from thousands of smaller New Zealand businesses.

The bill specifically requires reporting entities to examine and report on their domestic as well as international supply chains. It requires information about risks and due diligence throughout those supply chains and even requires reporting on training provided to employees of other persons within a reporting entity’s supply chain.

The practical consequence is foreseeable. A business with revenue exceeding $100 million will need information from its suppliers in order to satisfy its own obligations. Large businesses are therefore likely to pass those requirements down through their procurement processes and contracts.

A small New Zealand business that is nowhere near the statutory threshold may consequently be asked to complete modern slavery questionnaires, trace the origin of products and materials, provide information about its own suppliers, give contractual assurances, participate in audits or training, establish new internal processes, and regularly provide evidence to a larger customer.

Those requirements may have no statutory force against the small business itself, but they can have very real commercial force. A small supplier may face a choice between absorbing a significant new compliance cost or losing a contract with a major customer.

ACT also remains concerned about the severity of the enforcement framework relative to the nature of the obligations being enforced.

ACT has no objection to penalties for deliberate dishonesty.

Our concern is that the bill goes further than punishing deliberate wrongdoing. A reporting entity can also face a pecuniary penalty of up to $600,000 for failing to comply with the statement requirements, without the conduct necessarily amounting to a criminal offence or involving any modern slavery.

This creates a significant risk around what are ultimately complex reporting and compliance obligations. Businesses will be required to collect and assess information across potentially extensive supply chains, and errors, omissions, or failures in that process may expose them to substantial penalties even where there was no intention to mislead and no involvement in modern slavery itself.

While the bill provides protections where an entity has a reasonable excuse or has taken all reasonable steps to comply, ACT considers that the potential penalties remain disproportionate to what may ultimately be a compliance failure.

The broader problem is that the architecture of the bill concentrates enforcement effort on whether businesses have correctly completed statements and processes rather than on prosecuting the people who actually exploit other human beings.

The test for legislation addressing modern slavery should be whether it results in fewer people being exploited, more victims being identified and supported, and more offenders being successfully investigated and prosecuted.

Producing an annual statement is not itself evidence that a victim has been rescued. Completing due diligence documentation is not itself evidence that an offender has been prosecuted. Creating another register is not itself evidence that exploitation has been prevented.

ACT considers that public resources and regulatory effort should be directed as closely as possible towards the people committing these offences, the industries and circumstances in which there is credible evidence of exploitation, and the victims who require assistance.

The bill instead establishes a broad compliance framework affecting major businesses and, indirectly, potentially a very large number of smaller businesses throughout their supply chains.

ACT supports strong action against slavery. We do not believe this bill demonstrates that the substantial regulatory and compliance costs it creates will produce sufficiently meaningful improvements for victims of modern slavery.