Pandemic 'reveals Australia's just-in-time weaknesses'

4 January 2021

The coronavirus pandemic has revealed vulnerabilities in Australia’s security and critical national systems due to just-in-time supply chains, according to a Parliamentary report.

The report from the Joint Standing Committee on Foreign Affairs, Defence and Trade said vulnerabilities were particularly acute “where companies are subject to extrajudicial and coercive direction from foreign governments”.

“Many of these vulnerabilities are caused by supply chains that rely on just-in-time supply from the global market,” said the report.

The committee recommended the government change procurement rules to partner with Australian industry sectors “which provide priority enablers to critical national systems”.

“This partnership should be through the use of procurement to build and sustain sovereign capability, not just by offering one-off grants,” it said.

The report said Australia’s assumptions about “the willingness of nations to support the global rules-based order” had been called into question by the pandemic.

Among the vulnerabilities indentified in the report was increased insularity in the US, a trend which had been exacerbated by the pandemic.

“The pandemic appears to have accelerated US tendencies towards isolationism and a more sceptical view of the value of long-standing allies, the existing strategic architecture and international organisations,” said the report.

Committee chairman Senator David Fawcett said assumptions about a global rules-based order had underpinned many aspects of Australia’s foreign affairs, defence and trade in recent decades.

The committee said because of the increased risks identified, Australia needs a timely and strategic, whole-of-government response and “returning to business as usual is not an option”.

Fawcett said evidence heard by the committee raised fears of “unexpected, sustained disruption due to another pandemic or grey-zone, coercive or military actions by state actors”.

These events could degrade if not disable one or more of Australia’s critical national systems, said the report.

The committee urged Australia to make diplomatic efforts to increase trusted and transparent partnerships with like-minded nations.

It said the most immediate effect of the pandemic on the global economy came from disruptions to the movement of people and goods, revealing the weakness of economies dependent on long global supply chains.

The Export Council of Australia told the committee: “The fall out of global supply chains has made visible the inherent weaknesses of the system, exposed a lack of resilience and brought into question the fundamentals and the integrity of global supply chains.”

Meanwhile the Lowy Institute, a think tank, advised the committee it was “more likely that the world economy will suffer a permanent shock” than a return to previous normality.

The institute said even if individual countries could return to normal domestically they will still have to keep their international borders closed.

“Global integration will suffer as businesses will rethink long and complex supply chains, governments will feel compelled to ensure domestic capacity … [and] protectionists will feel empowered,” the institute added.

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