The offence will apply to companies with annual consolidated revenue exceeding $100 million.
The Government will also provide for a defence, if a company can demonstrate it took reasonable steps to prevent modern slavery, Attorney-General Michelle Rowland said in a statement today.
It will further introduce civil penalties and enforcement powers "to address non-compliance with existing obligations under the Modern Slavery Act".
The Government plans to consult with stakeholders to "inform the details of the proposed offence and enforcement options to further ensure the reforms are practical, effective and fit for purpose, including consideration of a deferred prosecution agreement scheme and remedies for victims".
In addition, the Government will launch "practical guidance and education initiatives to assist companies to better identify, manage, and remediate modern slavery risks in their supply chains".
Rowland said that "Australians rightly expect that the products they buy are not made on the back of modern slavery, which is why the Albanese Government is delivering a legislative framework with teeth".
"The proposed changes will introduce greater accountability, levelling the playing field for the majority of Australian businesses already doing the right thing."
Australian Anti-Slavery Commissioner Chris Evans welcomed the proposed changes, which he says will send "the right signal to business that they should be treating modern slavery with the seriousness it deserves".
"Beyond the proposed measures, I want to see reforms that build on the investment already made in due diligence by businesses, prioritise remedy for victims, and push businesses beyond performative compliance."
The ACTU also welcomed the strengthened laws, which it says "are a significant step towards stamping out slavery, forced labour and debt bondage".
ACTU president Michele O'Neil said that the peak union body looks forward to "working with the Government through the consultation to make these laws as strong and effective as possible".
"A standalone criminal offence will have limitations if it is solely up to police to enforce it, given the extent of this global issue.
"Workers and their unions also support a civil right for complaints against a company for failing to combat modern slavery in its supply chain."
Greens foreign affairs spokesperson David Shoebridge said today that an offence would represent "a genuine step forward, giving the law some teeth after years of a voluntary code that was able to be ignored by the worst offending companies".
"The McMillan review went further than this package, recommending a complete ban on importing slavery-made goods, this is something the Greens will continue to push for," he said, referring to an independent statutory review of the Modern Slavery Act after its first three years in operation by Professor John McMillan, which tabled a report in Parliament in 2023 (see related articles here and here).
The Government responded to the review and agreed with most of its recommendations in December 2024 (see Related Article), and it began consulting on ways to strengthen modern slavery laws in July last year (see Related Article).
It also established the role of the federal Anti-Slavery Commissioner in 2023, and appointed former federal Workplace Relations Minister Chris Evans (see related articles here, here and here).
Shoebridge continued "It's no secret that the missing piece here is a power for individuals who have experienced modern slavery to make complaints and have remedies available to them against companies that benefited from it".
"While the Attorney-General says remedies for victims are something the government says it will 'consider', we want to be clear that this needs to become a funded commitment."
The Business Council of Australia said today that adding criminal penalties to the Modern Slavery framework "prioritises paperwork over fixing the problem and will significantly add to the already substantial red tape burden faced by business".
BCA chief executive Bran Black said that the peak business body supports the objectives of the framework, "however, the priority should be practical guidance and effective implementation of existing reporting requirements, not the imposition of vastly more red tape to Australia's already staggering compliance burden".
"Undermining a robust system with a hastily conceived new offence doesn't help end modern slavery," he said.
"The priority should be implementing the existing framework properly, not creating a new offence that raises more questions than it answers."
The BCA said it would like to see "closer alignment with comparable international regimes on terminology, due diligence expectations and disclosure requirements would also reduce duplication and keep resources focused on addressing modern slavery risk".