New laws aimed at stamping out modern slavery in Australia and overseas have been introduced in Federal Parliament.

The Labor opposition has labelled the proposed reforms "toothless", but plans to grant them bipartisan support.

Key points: Modern Slavery Business Engagement Unit to be set up

Modern Slavery Business Engagement Unit to be set up 3,000 businesses affected with an annual turnover of $100 million or more

3,000 businesses affected with an annual turnover of $100 million or more Businesses need to identify any modern slavery in their supply chain

If passed, the laws will mean around 3,000 businesses in Australia with an annual turnover of $100 million or more will need to identity any modern slavery in their supply chain, and report it to authorities.

"Businesses will then have to detail what steps they have taken, and will take, to address these risks," said Assistant Minister for Home Affairs Alex Hawke.

"This bill will enable large businesses, consumers, civil society and government to work together to eliminate modern slavery in supply chains."

A Modern Slavery Business Engagement Unit, costing $3.6 million, will be set up the reporting requirements and support the 3,000 affected Australian businesses.

Modern slavery includes where people are forced into prostitution, or forced to work for low wages in construction, sweatshops or food supply chains. It can include also underpayment of wages, denied visa extensions by employers or being forced to live in squalid accommodation.

Opposition wants penalties for not reporting

Opposition justice spokesperson Clare O'Neil said the bill was weak because it did not set a penalty for businesses that refused to report on slavery in their supply chain.

"It shouldn't be optional to decide whether you follow the law or not," she said.

"The penalties Labor is calling for are not for businesses that find slavery in their supply chain, because businesses who find slavery and do something about it should be applauded," she said.

"We are talking about businesses that can't even be bothered complying with the modern slavery act, because if they can't be bothered making a report, then I think they should be penalised."

A department spokesperson told the ABC penalties were not needed to ensure business followed the law, but the law would be reviewed in three years to see if it was working.

"Business feedback indicates the primary driver for compliance will be investor pressure and reputational costs and benefits," the spokesperson said.

"This will drive compliance more effectively than legislated penalties and encourage a business-led 'race to the top'".

Labor also criticised the bill for not establishing an independent modern slavery commissioner, similar to the United Kingdom model, and will lobby for such a role to be created.

"We want this bill to go ahead with bipartisan support, so we are pushing for a bill that does what it says it is trying to do, which is to tackle modern slavery," Ms O'Neil.

Message needs to be sent

Keren Adams from the Human Rights Law Centre agreed the bill needed to be strengthened to force businesses to comply.

"Without financial penalties — and with no independent Commissioner to help enforce them — the new laws will lack the necessary teeth to make sure the worst offenders lift their game."

"The Government must urgently address the weaknesses in this bill and send a strong message to brands that profiting from abuse will not be tolerated."

Modern slavery takes many forms

The United Nations estimates 25 million people are exploited in global supply chains, including in the agriculture, manufacturing and construction industries, and about 4,000 of those are thought to be in Australia.

Modern slavery abroad takes various forms. It can refer to people forced into prostitution, or forced to work for low wages in construction, sweatshops or food supply chains.

They can be forced to work through threat of violence, bullying, or in more extreme cases they can be literally sold and bought, or have their movements restricted.

In Australia, it manifests more commonly in the horticulture sector, particularly with backpackers who are underpaid, denied visa extension by their employers or forced to live in squalid accommodation.

Mark Lamb, from the global peak body for procurement, the Chartered Institute of Procurement and Supply (CIPS), said the laws showed Australia wass serious about addressing modern slavery locally and overseas.

"I think this is an excellent first step for Australia because we have already seen it implemented in other countries, and for Australia to implement this it is a great step forward," he said.

"Understanding what goes on in the international supply chain is absolutely paramount and this really brings the issue under focus.

"Do businesses actually know what's happening in their supply chain," he said

Survey showed a lot to learn

In May CIPS released the results of its slavery survey, which found most procurement managers were ill-prepared for the new government requirements.

In the survey, 45 per cent of procurement managers agreed the legislation was needed, but a quarter of all respondents were concerned it would ultimately have little impact.

At the time of the survey, 20 per cent of organisations had not taken any measures to ensure a slavery-free supply chain, but 80 per cent said they were motivated to address the issue due to the reputation risk of ignoring it.

Mr Lamb said these news laws would change that.

"When we have done research at CIPS, only 11 per cent of organisations have total transparency across their entire supply chains, whether its food or otherwise," he said.

"They often know who their tier one supplier is, but beyond that it is not well understood.

"This act forces them to dig deeper and understand what is happening in their supply chain."

The Government said the legislation was not a response to recommendations by a 2017 parliamentary inquiry into modern slavery, whose recommendations were still being considered.