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Vulnerable Supply Chains

Terms of reference

Australia’s resilience to global supply chain disruptions

I, the Hon Josh Frydenberg MP, pursuant to Parts 2 and 4 of the Productivity Commission Act 1998, hereby request that the Productivity Commission undertake a study into Australia's resilience to global supply chain disruptions.

Background

Australia’s experience with the COVID-19 pandemic has highlighted Australia’s potential vulnerability to global supply chain disruptions. While Australia’s supply chains have held up relatively well during the COVID-19 pandemic, future shocks to supply chains will likely be different in nature.

Scope

The purpose of the study is to examine the nature and source of risks to the effective functioning of the Australian economy and Australians’ wellbeing associated with disruptions to global supply chains, identifying any significant vulnerabilities and possible approaches to managing them.

In undertaking the study, the Commission should consider Australia’s part in global supply chains as an importer and exporter, and:

  • consider the factors that make supply chains vulnerable
  • develop a framework for identifying supply chains that are vulnerable to the risk of disruption and also critical to the effective functioning of the economy, national security and Australians’ wellbeing
  • use trade and other relevant data to identify supply chain vulnerabilities
  • explore risk management strategies, including the roles of, and options for, government and businesses to manage supply chain risks.

Process

The Productivity Commission should undertake appropriate consultation, and provide an interim report focusing on Australia's role as an importer in March 2021; and a final report including Australia's role as an exporter in late May 2021.

The Hon Josh Frydenberg MP
Treasurer

[Received 19 February 2021]

The timeline for this study has been extended to July 2021 to allow more time for consultation.