3. Lessons for NZ government procurement from a NSW modern slavery enquiry

Today, some news from our friends across the Tasman in Australia.

New South Wales (NSW) has recently completed an enquiry into modern slavery risks in NSW government procurement of electric vehicles.

There were two main takeaways.

1. Good intentions and lots of activity don’t necessarily reduce the risk of harm, especially if expertise is not available at key decision-making moments. This links to my previous article that highlighted we cannot regulate our way out of this problem.

2. Agency-by-agency approaches struggle with complex high-risk supply chains. This links to the challenge of complexity and the need to act with leverage highlighted previously.

With NZ moving toward legislation, this enquiry provides lessons for the government procurement system and for the upcoming legislation:

• Government procurement must shape the system. Passive coordination will allow fragmentation to define the system before capability does. Targeted actions will set the tone for the system and developing a coherent approach to things like due diligence will address the risk of relying on decentralised agency-by-agency compliance.

• Name and own priority supply chains. Centrally identifying and mapping risks in supply chains reduces the burden on agencies and allows all-of-government approaches for sourcing to be developed over time. We cannot wait for agencies to discover risks independently. Working together around common risk information gives government leverage as a buyer, with flow on benefits to the private sector.

• Capability must be built once, and shared. Developing capability centrally benefits the whole system. This can allow for subject matter expertise to be deployed at key points of planning, sourcing, evaluation and management. Build a centre of expertise that, when deployed, leaves that knowledge behind every time.

NSW enacted a Modern Slavery Act in 2018 and established an independent Anti-Slavery Commissioner in 2022 when the Act came into effect.

The Commissioner has just completed a probe into modern slavery risks in NSW government procurement and whether government agencies were taking the ‘reasonable steps’ expected of them to manage these risks. The probe produced a series of three reports:

• Report 1 focussed on what ‘reasonable steps’ are under NSW legislation and the best-practice framework developed for identifying, manage and remediate modern slavery harms in supply chains.

• Report 2 analyses the steps taken by Transport for NSW in its procurement and management of Bus Procurement 4 (BP4), a panel for the provision of buses and related services.

• Report 3 conducts a review of NSW government modern slavery risk management practices in the procurement of EVs (electric vehicles) and related infrastructure. It makes recommendations for improving practice across the wider government procurement system.

In essence, the BP4 panel was utilised as a test case for the overall approach taken to address modern slavery by the NSW Government.

EVs and related infrastructure were selected as they are globally recognised as having high-risk supply chains, and are widely and increasingly procured across government, often via all-of-government approaches.

The review tests the effectiveness of the wider regime, incorporating the Act itself and initiatives undertaken by the Office of the Anti-Slavery Commissioner (OASC), government procurement and agencies including guidance and tools, capability building and response mechanisms.

So, this is more than buses. And the findings are of particular relevance to New Zealand, who is progressing legislation and has yet to adopt a consistent government-wide approach to addressing modern slavery.

So what can we learn?

The three reports point to two connected lessons:

(1) Even when risks are identified, practice can slip into ‘paperwork mode’ unless capability and accountability show up at decision points.

(2) Agencies cannot manage these risks effectively on their own. This needs coordinated and system-wide effort.

Overall, it was found that genuine effort did not translate into effective risk reduction.

EV and lithium-ion battery supply chains are well documented as high risk, and BP4 was correctly identified as high-risk. This led to modern slavery measures being included across the procurement process.

However, implementation was inconsistent and incomplete, largely because modern slavery expertise was not available at key stages.

For example, limited expertise during sourcing meant that red flags in supplier responses were not identified or escalated. In practice, this looked like suppliers given generic answers about labour standards that weren’t followed up with targeted requests, or escalation when answers didn’t stack up.

The Commissioner warned that this can result in ‘a modern slavery paper chase that comes to be seen by buyers and suppliers alike as a mere compliance exercise, a red-tape tick-a-box process with no meaningful impact on the vulnerability of workers to modern slavery.’

Ouch.

In addition, the absence of an effective slavery-free sourcing strategy, reliance on supplier self-declarations and gaps in remediation processes have weakened NSW Government’s collective leverage in the establishment and exposed it to cases of actual harm during the contract.

There is a lot of really great learning in these reports.

When taking a wider perspective, the Commissioner found that decentralised, agency-by-agency approaches have led to fragmentation, inconsistent practice and increased modern slavery risk. This has resulted in no effective all-of-government mechanisms to track risk, assess effectiveness or drive continuous improvement, particularly in common-use categories of goods and services.

The practical impact is that suppliers can be asked the same questions in different ways by different agencies, while government cannot establish where the biggest risks are at a system level and whether approaches are working. It also makes it harder to build leverage with suppliers because expectations are not consistent.

To address these systemic issues and accelerate capability development, the reports point to the need for central leadership.

Functions suitable for centralisation include:

• Managing priority supply chains, including identifying risks and developing risk-reducing sourcing strategies.

• Building shared procurement and contract management expertise to support agencies.

• Standardising supplier due diligence.

• Engaging with affected stakeholders, particularly connecting with lived experience and worker voice.

A centralised function should be considered alongside the new Modern Slavery Act. Where, well that is to be determined.

If modern slavery risk management is left to develop agency-by-agency, it will result in uneven practice, inconsistent supplier expectations, and a compliance-focussed effort that doesn’t reliably reduce the risk of harm.

And isn’t the whole point of taking action?

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