De-risking Our Economy
The expansion of global trade and supply chains has enabled the world economy to expand over many decades, improving living standards as more people have shared in the prosperity this growth has delivered.
However, this shift in trade has had a significant impact on Australian manufacturing.
It has struggled to remain globally competitive against manufacturing in lower-cost jurisdictions operating with economies of scale focused on supplying global markets. Importantly, chemistry and other value-chains are highly inter-connected and inter- dependent. Losing one component, ingredient or capability can curtail, stop or cease the supply of some finished goods.
At the same time, modern business structures and disciplines, aided by the growth of sophisticated enterprise resource planning (ERP) platforms, have focused on supply chain efficiency, resulting in a delicate balance between supply and demand across many sectors.
COVID-19 has demonstrated that existing global supply chains cannot cope with simultaneous increases in demand across all regions of the globe. It has also shown that critical parts of those supply chains are vulnerable to disruption as governments seek to ensure the availability of essential goods or the interruption of global transport infrastructure and networks.
No country would be able to supply all the goods and services needed to maintain a modern society or economy. Global trade will always be critical to the supply of goods and services. This is particularly true for Australia, which represents less than 1 per cent of international trade.
Nevertheless, Australia needs to strengthen its sovereign capability to maintain the supply of vital goods and services when global supply chains are interrupted.
Immediate
- Urgent action to remedy the current shipping and logistics crisis at Australian ports that is hampering the import and export of goods, rapidly escalating transport costs and impacting businesses and consumers across the economy;
- Recommencement of skilled migration to address skills shortages, particularly for engineering.
Medium-term
- A continuation of the current work on the following critical supply chain vulnerabilities to ensure that Australia is prepared for the inevitable future shocks or disruptive events like COVID-19;
– Water and sewerage treatment;
– Inputs to agriculture, including crop protection chemicals and fertilisers;
– Inputs to mining, including explosives and reagents;
– Food production, including packaging materials;
– Health and medical products, including medicines, medical gases and PPE;
– Emergency response. - Establishment of a national crisis management framework that incorporates a series of predictable and transparent phases to respond to any future crisis, reducing uncertainty for the community and business;
- Industry, manufacturing and taxation policies that support investment to diversify the economy and address the longer-term risks and declining economic complexity;
- Continued investment in the Northern Australia Infrastructure Fund to ensure that the commercially viable and sustainable business opportunities in Northern Australia are realised for the benefit of local communities, the nation and the Asia Pacific region;
- The strategic use of government procurement to underpin the maintenance and/or establishment of sovereign capability, including Australian manufacturing of and/or creation of strategic.
