The Modern Slavery Bill (Bill) has cleared an important milestone, with the Education and Workforce Select Committee (Committee) reporting back and recommending that it be passed – but with a number of significant amendments.
The Bill, jointly sponsored by Camilla Belich MP and Greg Fleming MP, would require entities with consolidated revenue exceeding $100 million to publicly report on how they identify, address, mitigate and remediate modern slavery within their operations and supply chains. See our previous Insights on the Bill here and here.
While the core reporting framework under the Bill remains largely unchanged, the Committee has recommended a range of amendments intended to improve the regime's workability, increase alignment with comparable frameworks in New Zealand and Australia, and provide greater clarity as to how the regime will operate in practice. Many of these changes respond to issues raised by submitters during the select committee process, including Russell McVeagh.
This article discusses the amendments most likely to affect businesses preparing for the regime, along with the key policy issues the Committee has deferred for future consideration.
Key changes
The Committee recommended several amendments, many of which will be welcomed by businesses preparing for the new regime:
- Group reporting: Entities with subsidiaries would be able to submit a single modern slavery statement covering the group, provided the statement identifies the subsidiaries included. This aligns with the Australian regime and avoids the duplication that would have arisen from requiring each group entity to prepare separate statements.
- Reporting period aligned with balance date: The Committee has replaced the original fixed reporting period with a reporting period tied to the entity's own "balance date" (which may be 31 March, or a date defined by other legislation or adopted by the entity with approval of the Commissioner of Inland Revenue), with statements due six months after the end of the reporting period. This is a significant practical improvement, particularly for entities that already report under equivalent overseas regimes.
- Mutual recognition with Australia: The Bill would enable entities that also report under Australia's Modern Slavery Act 2018 to submit their Australian statement in satisfaction of New Zealand requirements. Regulations may extend this to other prescribed jurisdictions in future.
- Reporting on modern slavery: The Bill would replace references to "modern slavery incidents" with the broader concept of "modern slavery" and expand the definition of due diligence to include eliminating and addressing risks, in addition to identifying, assessing, preventing and mitigating them. A modern slavery statement must report on, in respect of the reporting period:
- "any modern slavery" that occurred within the operations and supply chains of the reporting entity and each of its subsidiaries (if any); and
- any due diligence actions taken.
These changes may broaden the matters that entities are expected to consider and report on, particularly where modern slavery arises through ongoing practices or conditions rather than identifiable incidents.
- Protection of sensitive information: The Bill would not require disclosure of information in a modern slavery statement where doing so could prejudice the maintenance of the law, such as by resulting in self-incrimination or prejudice to ongoing investigations. The Bill would also create a mechanism for the Registrar to agree to withhold commercially sensitive information and other information not suitable for publication from the public register, with decisions expected to be reserved for serious cases.
- Reporting threshold: The $100 million reporting threshold would apply only where an entity has met that threshold in each of its two preceding accounting periods, in alignment with how thresholds are assessed in other New Zealand reporting regimes (ie financial reporting standards). The threshold would be assessed on a consolidated group basis to prevent businesses from falling outside the regime because of their corporate structure. Regulations would be able to increase the threshold to reflect CPI increases, but any other threshold change would require amendment through primary legislation.
- Voluntary reporting: Entities that are not otherwise required to report under the regime would be able to voluntarily submit modern slavery statements. To maintain the integrity and consistency of the regime, voluntary statements would be subject to the same requirements and standards as mandatory reports.
- Graduated enforcement framework: The Bill would introduce a graduated compliance regime, empowering the Registrar to require information demonstrating compliance, request explanations or remedial action, and publish details of persistent non-compliance (subject to a review process). The amendments would also introduce a revised offence and penalty regime broadly modelled on New Zealand's climate-related disclosures framework, with liability limited to knowingly false or misleading statements in a material way (ie minor errors or omissions should not be treated as offences). To avoid overlapping liability, the Committee also recommends amending the Fair Trading Act 1986 to ensure its strict liability offences do not apply to modern slavery statements.
- Director and senior manager liability: The Bill would continue to impose personal liability on directors and senior managers in certain circumstances. The Committee narrowed the scope of liability by replacing the broader category of persons involved in an entity's management with the existing Financial Markets Conduct Act 2013 concept of a "senior manager". Although the Committee considered whether director and senior manager liability should be removed, it ultimately retained those provisions despite noting that Australia's current regime does not impose equivalent liability.
- Application to the public sector: The Bill would also apply to public sector entities, including Government departments, Offices of Parliament, public sector agencies etc that have over $100 million in total consolidated revenue. The Bill proposes that all public sector agencies that meet the threshold revenue amount contribute to a consolidated public sector modern slavery statement prepared by the Minister responsible for the Bill (when enacted). However, public sector agencies would be exempt from liability from offences under the Bill, noting that any penalties for non-compliance would be paid using public money.
- Non-payment of Crown money to an offending entity removed: Despite recording that the Committee was "firmly in support" of its intent, the Committee has removed the part of the Bill that would have amended the Public Finance Act 1989 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 the Bill, given the substantive concerns raised by submitters (ie in respect of implementation difficulties and double jeopardy concerns).
- Transitional provisions: The Bill would commence six months after enactment, and the first reporting period would be the first 12-month period beginning after commencement. In practice, this means entities may have up to 36 months between enactment and the deadline for their first modern slavery statement (depending on their balance date).
Matters considered but not included
The Committee also considered a number of broader policy proposals but decided not to include them in the Bill. These included:
- An anti-slavery commissioner: The Committee acknowledged the role that anti-slavery commissioners play in jurisdictions such as Australia and the United Kingdom, but considered that further work should be undertaken in the next three years before deciding whether a similar function should be established in New Zealand.
- Staggered implementation of the regime: The Committee did not recommend lowering the current $100 million reporting threshold but noted that a staged approach to expanding the regime could be considered in the future, particularly in the context of alignment with future developments in Australia.
- Mandatory due diligence obligations: The Committee considered, but did not recommend, moving beyond a reporting-based regime to require mandatory due diligence. Instead, the Bill encourages due diligence through reporting, including by defining "due diligence" and "due diligence actions" and requiring entities to report on any due diligence actions taken. The Committee also noted overseas developments, including possible reforms in Australia and the European Union Forced Labour Regulation, which will require some New Zealand exporters to undertake supply chain due diligence from December 2027.
- Broader application to overseas businesses: The Committee expressed concern that the Bill may not capture some offshore businesses selling into New Zealand, particularly online retailers without a physical presence here, but considered that this issue would require further policy development and international coordination.
The Committee recommended reviewing the Bill three years after commencement and again five years later, with those reviews tasked with considering the effectiveness of the regime and whether further reforms are necessary or desirable. The reviews will examine a range of issues, including victim support, the possible establishment of an anti-slavery commissioner, the entities that should be subject to the regime, and other proposals that were not progressed at this stage.
What's next
The Bill will now proceed to its second reading. The Government has previously indicated that it intends to enact the Bill before Parliament rises for the election on 24 September 2026. If enacted on that timetable, the Bill would come into force in 2027, with reporting obligations applying from the first full reporting period following commencement.
If you would like to discuss how the Bill may apply to your organisation, please get in touch with one of our experts.