On 2 June 2026, the US Trade Representative proposed a 12.5% tariff on Australian exports, citing concerns that Australia wasn't doing enough to prevent forced labour in its supply chains, as reported by ABC News. US Trade Representative Jamieson Greer put it bluntly:
"The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable." — Jamieson Greer, United States Trade Representative
Prime Minister Anthony Albanese called the tariff "unjustified," pointing to Australia's "robust, comprehensive and world-leading legislation addressing forced labour and modern slavery." Six weeks later, on 16 July 2026, the Australian Government answered with its own move: reforming the Modern Slavery Act to introduce a new criminal offence for large companies that fail to prevent modern slavery in their operations, according to Baker McKenzie's analysis of the announcement.
For small business suppliers, none of this is background noise. Your business almost certainly isn't legally required to lodge a Modern Slavery Statement yourself. But your larger customers - retailers, construction head contractors, and government agencies - now face real criminal and civil exposure if they can't prove they've done due diligence on their own supply chains. That pressure is landing on your desk as questionnaires, contract clauses, and audit requests.
Key Takeaways
- The Modern Slavery Act only directly requires companies with $100 million-plus revenue to report, but small business suppliers are increasingly asked to complete due diligence questionnaires by bigger customers.
- On 16 July 2026, the Australian Government announced reforms including a new "fail to prevent" criminal offence and civil penalties for large reporting entities - pressure that flows straight into supplier contracts.
- A proposal under discussion would lower the reporting threshold from $100 million to $50 million in consolidated revenue, pulling more mid-sized businesses directly into scope (not yet law).
- Platforms like Sedex let you complete one supplier questionnaire and share it with multiple customers, instead of repeating the same paperwork for every big client.
- Ignoring a customer's modern slavery questionnaire is one of the fastest ways to put a contract at risk - respond honestly, even if your processes are still developing.
What is the Modern Slavery Act and does it apply to my small business?
The Modern Slavery Act 2018 doesn't directly apply to most small businesses in Australia. It currently requires entities with consolidated annual revenue of $100 million or more to prepare and lodge an annual Modern Slavery Statement - if your business sits below that threshold, you have no legal obligation to report to the government.
That distinction is getting blurrier in practice. The July 2026 reforms introduce a new criminal offence for large reporting entities that fail to prevent modern slavery in their supply chains, alongside new civil penalties for non-compliance. Those large entities now have a strong incentive to make sure their entire supply chain is clean, and the way they do that is by pushing contractual obligations down onto suppliers - including small businesses.
In effect, you're not directly regulated by the Act, but you're indirectly regulated by your customers' contracts. Your large customers need to show they've taken "reasonable steps" to prevent modern slavery, and they'll look to you for evidence of ethical sourcing and fair labour practices. Compliance has quietly shifted from a legal reporting exercise for big business into a commercial condition of doing business with them, for everyone in the chain.
Why are small business suppliers suddenly getting modern slavery questionnaires?
You're receiving these questionnaires because your larger customers are under real pressure to manage their own legal and reputational exposure. With a "fail to prevent" criminal offence and civil penalties now on the table, large reporting entities can't credibly claim ignorance about labour conditions in their supply chains - they have to actively demonstrate they've identified and addressed the risks.
The practical result is that big customers push due diligence obligations down the chain: detailed questionnaires, extended codes of conduct, and audits. This isn't a goodwill exercise - it's risk management. If a modern slavery issue surfaces later and a large customer never collected supplier data, they have no defence. Collecting your answers builds the record they need to show reasonable steps were taken.
The proposed US tariff adds an international layer to this. Large exporters want to show US authorities their supply chains are clean, and that scrutiny flows to local suppliers even if you never touch the US market directly - because your customer might. A growing number of small business suppliers are reporting the same pattern: more documentation requests, more subcontractor verification, more audits, regardless of their own revenue or headcount.
Pro tip
Pro tip: Map your subcontractors and key suppliers before your next questionnaire lands, not after. A one-page list of who you buy from and what conditions they operate under turns a stressful compliance request into a 20-minute form-fill instead of a scramble.
What do the 2026 reforms actually mean for suppliers?
The reforms announced on 16 July 2026 reshape the risk large reporting entities carry, which changes how they deal with small business suppliers. The centrepiece is a new criminal offence for companies that fail to prevent modern slavery in their supply chains, alongside new civil penalties for existing non-compliance with the Act - both create direct legal exposure that boards and executives now have to actively manage.
To defend against the new offence, large entities will lean on a "reasonable steps" defence - proving they took appropriate measures to identify and prevent modern slavery. That defence only holds up with evidence, which is exactly what your questionnaire responses, policy statements, and audit results become.
There's also a threshold question in play: the current reporting trigger is $100 million in consolidated revenue, and some reform proposals under discussion would lower that to $50 million. This is not confirmed law - it's a proposal - but the direction of travel is clear, and more mid-sized businesses will likely fall directly into scope over time, with knock-on pressure for their own suppliers.
Existing large reporting entities still have to lodge their annual Modern Slavery Statement by 31 December 2026. That date matters to you too: it's when your customers finalise their statements, and the run-up to it is typically when supplier data requests intensify. The Australian Anti-Slavery Commissioner's Initial Position Paper, released in January 2026, has separately recommended shifting the whole regime from disclosure-only reporting toward mandatory, risk-based due diligence - a direction that would only increase what suppliers are asked to demonstrate.
How do I respond to a modern slavery questionnaire from a customer?
Respond promptly, honestly, and thoroughly - ignoring the request isn't a viable option, since silence is often read as a red flag and can put the contract itself at risk. Treat the questionnaire as a chance to show you take the issue seriously, not a bureaucratic hurdle.
Start by understanding your own supply chain: who your subcontractors and key suppliers are, and what conditions they operate under. If you outsource any part of production or service delivery, check those partners hold to reasonable labour standards too. Keep basic records - contracts, invoices, and any compliance certificates suppliers can provide - so you're not starting from zero each time.
Write a plain-language policy statement covering fair wages, safe working conditions, and a clear prohibition on child or forced labour. It doesn't need to be a legal document - a short, honest statement that matches what you actually do is more useful than a polished one you can't back up.
When filling out a questionnaire, answer accurately and completely. If you don't know something, say you're working to find out rather than guessing or leaving it blank - customers consistently respond better to transparency than to a form that looks too polished to be real. Keep copies of every completed questionnaire and supporting document; that record is valuable the next time a customer audits you or a contract comes up for renewal.
Which tools make supplier due diligence less painful?
A handful of platforms exist specifically to reduce the admin load of answering the same modern slavery questions for every large customer. They centralise your data, cut down on duplicate paperwork, and present your compliance position in a format customers already recognise.
Sedex lets a supplier complete one ethical and social self-assessment questionnaire (SAQ) and share it with multiple customers through the platform, instead of filling out a separate form for every big client that asks. EcoVadis is a sustainability and ethical scorecard that many large enterprise customers already require suppliers to complete - it combines human analyst review with automated data checks and assigns a score customers can use to compare suppliers. Prewave is an AI-driven risk-monitoring platform that scans public data, news, and social media in 50-plus languages to flag supply-chain risk events mapped back to specific suppliers; it's typically bought by the large reporting entity to monitor its own supply chain rather than by the small business itself, but it's worth knowing it exists - it's often what's generating the questions you're being asked.
| Tool | Who typically buys it | What it does for a small supplier |
|---|---|---|
| Sedex | Suppliers and their customers | Complete one self-assessment, share with multiple customers |
| EcoVadis | Suppliers, required by enterprise customers | Standardised scorecard many big customers already accept |
| Prewave | The large reporting entity | Context for how your customer may be monitoring your risk profile |
Whether any of this needs a dedicated platform or just a simple spreadsheet and a policy document usually comes down to how many large customers you're answering to, and how often.
What mistakes do small businesses make with modern slavery compliance?
The most common mistake is ignoring the questionnaire altogether, usually out of confusion rather than defiance - but silence reads as a lack of transparency, or worse, something to hide. Always respond, even if the honest answer is that your processes are still developing.
Pro tip
Common mistake: Don't copy-paste generic modern slavery policy language you found online. Large customers and auditors can usually spot boilerplate, and a policy that doesn't match your actual practices is worse than admitting yours is still a work in progress.
A related error is not actually knowing your own supply chain. Many small businesses assume they know who they buy from but have no visibility into subcontractors or second-tier suppliers, which leaves them unable to answer detailed questions when they arrive. Mapping it out, even at a basic level, is the foundation everything else sits on.
Overpromising in a policy statement is another trap. If your statement claims regular audits of every supplier but you don't actually run them, you've created a gap an auditor will find. A modest, accurate policy you can consistently uphold beats an ambitious one you can't. The same discipline that helps businesses pass a WHS audit or handle a gig economy compliance check applies here: write down what you actually do, then do what you wrote down.
If you're not sure whether your current documentation would hold up against a customer's audit, that's exactly the kind of gap-check we help clients close at GrowthGear - turning a vague policy statement into something you can genuinely stand behind, whether you're a construction subcontractor or a professional services firm supplying a much larger client.
Where to Start This Week
| If you... | Do this |
|---|---|
| Haven't mapped your supply chain | List your key suppliers and subcontractors, and note what conditions they operate under |
| Just received a questionnaire | Respond honestly and promptly - a partial, honest answer beats silence every time |
| Supply several large customers | Look at a shared platform like Sedex to avoid repeating the same paperwork |
| Don't have a policy statement | Write a short, plain-language one that matches your actual current practices |
| Are unsure if the reforms apply to you | Check your revenue against the $100 million threshold - it's not a direct trigger for most small businesses, but your contracts already are |
For a broader look at building compliance habits into how your business runs day to day, our AI implementation playbook and the process discipline in auditing your business's AI readiness both cover the same underlying skill: documenting what you do, consistently, before someone asks you to prove it. On the workforce side, contractor and subcontractor workforce management is worth a look if you're managing this across multiple sites or trades, and our take on AI governance frameworks digs deeper into the due-diligence thinking now expected of larger buyers - which is reshaping how compliance shows up in enterprise sales contracts more broadly.
Frequently Asked Questions
Not directly. The Act only requires entities with $100 million-plus revenue to lodge statements, but you may be contractually required to comply by large customers regardless of your own size.
Ignoring the request can put your contract at risk. Customers often read silence as a red flag for poor risk management, which can affect contract renewal or new business.
The current threshold is $100 million in consolidated annual revenue. Entities below this level have no legal obligation to lodge a statement, though a lower $50 million threshold is under discussion.
It's a legal defence available to large entities facing the new "fail to prevent" offence. They must show they took appropriate, evidenced measures to prevent modern slavery in their supply chain.
It's when existing large reporting entities lodge their annual statement. Expect supplier data requests to intensify from your customers in the months leading up to that date.
It's a proposal under discussion, not confirmed law. The direction of travel suggests more mid-sized businesses will eventually be covered, which would increase pressure on their own suppliers too.
Sources & References
- ABC News — reported the US Trade Representative's proposed 12.5% tariff on Australian exports over forced labour concerns, including Jamieson Greer's and PM Albanese's public statements (2026)
- Baker McKenzie — analysis of the Australian Government's 16 July 2026 announcement of a new "fail to prevent" criminal offence and civil penalties (2026)
- Moody's KYC — on proposed amendments that would lower the reporting threshold from $100 million to $50 million in consolidated revenue (2026)
- Australian Anti-Slavery Commissioner — Initial Position Paper recommending a shift from disclosure-only reporting to mandatory, risk-based due diligence (2026)
- International Labour Organization — "Profits and Poverty: The Economics of Forced Labour" found forced labour generates US$236 billion in illegal profits globally each year (2024)
