Australian supply chains are vulnerable to 'the next shock'

Australia’s supply chains are increasingly vulnerable in an era of global uncertainty, and governments at all levels must coordinate now to safeguard the flow of goods, information and infrastructure Australians rely on for security and prosperity, according to a panel of experts.

At a recent roundtable event convened by UNSW Canberra as part of the university’s World in Transition initiative, a group of senior leaders from across academia, defence, government and industry met to discuss supply chain issues and developed five key recommendations for government.

UNSW Canberra Professor Douglas Guilfoyle, who chaired the roundtable, said Australia must act now to secure its supply chains and critical infrastructure or it risks being caught out by “the next shock”.

“One of the clear lessons of the COVID-19 pandemic was how susceptible Australia is to supply chain disruption and those effects are far-reaching,” Professor Guilfoyle said.

“The current queues at fuel stations around the country highlight how fragile public confidence can be in Australia’s ability to maintain the flow of essential goods during crises.

“As a country, we are reliant on international suppliers for critical goods, such as fuel and pharmaceuticals. This makes us potentially vulnerable to disruptions of supply chains, either at the hands of foreign powers or market forces during times of uncertainty, ultimately limiting Australia’s capacity for strategic autonomy.

“Failing to address current strategic vulnerabilities in supply chain and logistics risks locking Australia into a more brittle strategic position, restricting our options and constraining our ability for nimble decision-making in the future.”

Professor Guilfoyle said Australia has repeatedly demonstrated extraordinary agility to react to global events, notably the COVID pandemic. However, “this nimbleness has not translated into sustained preparedness,” he said.

“Future crises will not resemble past ones, and the country cannot continue to rely solely on reactive capability.”

Roundtable attendees developed five key recommendations which they believe could begin to strengthen Australia’s resilience to global pressures and major crises such as wars, pandemics or natural disasters.

1. Establish a National Supply Chain Risk and Resilience Assessment, updated annually.
2. Create a permanent national supply chain coordination mechanism linking government, industry, and regulators.
3. Develop a targeted industrial strategy for critical capabilities, including digital infrastructure, pharmaceuticals, energy, and defence inputs.
4. Strengthen the “missing middle” – Small and Medium-sized Enterprise (SME) – through better integration, and long-term procurement signals.
5. Build an effective national resilience narrative and leadership culture that supports bottom-up innovation and shared responsibility.

Government systems remain siloed, reactive, and susceptible to the short-term priorities reinforced by political cycles. While there is entrepreneurial enthusiasm to develop greater sovereign capability in Australia, it is primarily stymied by structural inertia.

The experts agreed the public narrative about issues of national resilience does not adequately emphasise the very real threats to national security. This impacts the public understanding and political will to bear the costs of adequate preparedness other than during times of crisis.

“Australian governments need to move past short-termism and be able to effectively bring the public on this journey with them, making it clear why sometimes costly changes are necessary,” Professor Guilfoyle said.

“Only then will we generate meaningful motivation for change. Australia’s future prosperity and security depend on it.”

The World in Transition initiative is a flagship UNSW Canberra program exploring how geopolitical, strategic and technological shifts are reshaping Australia’s external environment and the practice of statecraft in a competitive age. Through public and closed-door conversations that engage leading relevant Australian and international expertise, the World in Transition initiative will drive new thinking about the major forces reshaping Australia’s external environment and pragmatic recommendations on how Australia should respond.

The report covering key discussion points and recommendations from the first roundtable event is available online