THE FEDERAL government has requested the Productivity Commission undertake an independent review into supply-chain vulnerabilities and risks to help ensure the economy is prepared for possible supply-chain disruptions.

A statement from Treasurer Josh Frydenberg said Australia’s supply chains have proved resilient in response to the COVID-19 pandemic, but the experience with COVID-19 has also highlighted Australia’s potential vulnerability to global supply chain disruption.

“The Productivity Commission will look at Australia’s supply chains, as well as longer term trends in relation to Australia’s linkages and dependencies with respect to international trade and assess whether vulnerabilities or opportunities exist,” Mr Frydenberg said.

“The Productivity Commission will also examine the nature of the risks to the Australian economy as a result of global supply chain disruptions, identifying any significant vulnerabilities and possible approaches to managing them.

“The Australian economy greatly benefits from the international trade facilitated by global supply chains, through the provision of critical goods and our specialisation in export markets and it is timely to assess our role in and exposure to global supply chains.”

The Productivity Commission is to undertake consultation and provide a report on Australia’s role as an importer in March. A second and final report on Australia’s role as an exporter is due in May.

Mr Frydenberg said the Productivity Commission study would build on on a series of measures implemented by the government to ensure Australia’s supply chains remain functioning and resilient, including the announcement of a $107.2 million Supply Chain Resilience Initiative that businesses can access to support or establish a capability that addresses a supply chain vulnerability.

Peak body Ports Australia is urging the government to consult industry early and extensively during the review process.

Ports Australia said seeking the perspectives of industry will be integral to developing a productive and useful review.

Ports Australia CEO Mike Gallacher said he is encouraged by the intentions of the review but urged early engagement with industry.

“Ports Australia welcomes the recognition made by the federal government that our supply chain has proven itself resilient in the face of COVID, and it is the unstable global supply chain which is placing strain on Australian industries and economies,” he said.

“No one port around Australia is the same, which is why it’s imperative the Productivity Commission seeks input from industry to develop a holistically informed report which will identify future opportunities for the Australian freight network.”

Mr Gallacher said issues such as disruption, congestion and port productivity are all flow-on effects of a global supply chain under duress.

“Ports Australia welcomes the opportunity to analyse our relationship with that global market and how we can better fortify our operations against its volatility,” he said.

“It will be interesting to analyse the effect of global supply chain events such as the current situation in Los Angeles whereas of late January, more than 30 container ships were anchored off the coast waiting to berth, rendering inevitable delays around the globe.”

Mr Gallacher called for all submissions to the Productivity Commission to be made public, when appropriate, in the interests of productivity and transparency.

“Ports Australia welcomes the federal government’s interest in securing the stability of our supply chain and look forward to engaging early and providing our ports sector’s unique and essential input,” he said.