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The Australian Government is manufacturing a new future for our nation through more resilient supply chains.

Manufacturing is critical to a modern Australian economy – a key part of almost every supply chain that adds significant value to all sectors.

The Australian Government’s Modern Manufacturing Strategy (MMS) is led by industry, for industry, to help our manufacturers scale up, become more competitive and build more resilient supply chains.

In October 2020, the Australian Government announced a $1.5 billion investment in the MMS. From this investment, the government has allocated $107.2 million to address vulnerabilities across supply chains for critical products, supporting the fourth pillar of the MMS.

The pillars are:

  • getting the economic conditions right for business
  • making science and technology work for industry
  • focusing on areas of advantage
  • building national resilience for a strong economy.

Supply Chain Resilience Initiative

The Supply Chain Resilience Initiative (SCRI) is one element of a broader suite of government actions currently underway to build resilience in Australia’s supply chains.

The SCRI aims to strengthen Australia’s ability to access critical necessities and position us to respond to future supply chain disruptions. This will make us stronger and more resilient.

The SCRI includes 2 components:

  • working with industry to build an understanding of supply chains for critical products, including identifying options to address vulnerabilities
  • making $100 million in grant funding available for businesses to establish or scale a capability that addresses an identified supply chain vulnerability.

The SCRI is being implemented in tranches.

Initial analysis was undertaken in December 2020 to identify supply chains for products critical to Australians’ health and wellbeing which may contain vulnerabilities. This analysis highlighted a number of sectors with potential vulnerabilities where further examination was warranted.

On the basis of this initial analysis, in-depth analysis has been undertaken in consultation with industry for three product categories:

  • medicines
  • agricultural production chemicals
  • personal protective equipment.

The analysis looked in detail across the supply chains for these critical products, including raw material, manufacturing process, freight, and storage of the end products. The findings were stress-tested against a range of scenarios.

This Sovereign Manufacturing Capability Plan (SMCP) outlines actions to address identified vulnerabilities across the supply chains, where domestic manufacturing capability has been assessed as appropriate.

The SMCP draws on broad engagement with Australian industry over 2 stages:

  • Initial analysis informed by a national public survey in December 2020 which received over 200 responses.
  • In-depth analysis of the initial three product categories with input from sector experts and Australian industry during April 2021. This included engagement with 45 companies and industry bodies, including 14 in medicines, 12 in agricultural production chemicals, 14 in personal protective equipment, and five cross-cutting.

This represents the first tranche of analysis for SCRI implementation. Detailed examination of additional product categories will follow in the coming months. Further SMCPs will be published later in 2021 to inform future rounds of the SCRI grants program.

Businesses should read the SMCP in combination with the grant program guidelines.

Supply Chain Resilience Initiative grants program

The SCRI grants program will address identified supply chain vulnerabilities for products critical to Australian’s health and wellbeing identified in this plan. It will allow Australian businesses to co-invest in manufacturing-related capabilities, equipment, technology, skills and processes.

The SCRI grants program aims to help:

  • improve Australia’s resilience to future supply chain shocks
  • facilitate diversification of supply options and increase investment in the economy
  • enable diversification into export markets and reduce reliance on domestic markets
  • improve collaboration between domestic and international manufacturers and suppliers
  • mitigate supply chain risks for critical products, and enhance visibility and transparency of the supply chain for identified critical products;
  • accelerate digitalisation and deeper integration of technology to optimise supply chain performance.

Businesses can apply for the grant program on business.gov.au.

Integrated approach to supply chains

Consideration of supply chain issues is broad ranging. The range of products considered ‘essential’ will differ depending on the lens applied (i.e.: essential to life, essential to the economy, or essential to our security). Further, the nature and duration of the crisis or disruption will also affect the impact on supply chain resilience and the assessment of subsequent actions.

The SCRI’s initial focus considers supply chains for products critical to Australians’ health and well-being. However, the Australian Government recognises that developing supply chain resilience is a long term endeavour, and that SCRI is a first step.

Beyond this initial grant support, the Australian Government is undertaking a broad range of work to increase long term supply chain resilience across the economy. A newly established Office of Supply Chain Resilience will provide ongoing capacity to monitor vulnerabilities and coordinate whole-of-government efforts to boost supply chain resilience.

Domestic manufacturing is just one option to help secure the domestic supply of critical products. Collaboration with other governments, sharing information, enabling private business investment and reducing trade barriers are other actions that aim to build resilience.

Australian Government investment in manufacturing capability is appropriate where the likelihood and consequence of a disruption poses substantial risks to the national interest despite wider government efforts and reasonable steps by businesses.

The government also recognises that competitive policy settings for Australian industry, open trade and open markets support our resilience. These settings provide options and harness the competitiveness and resilience of Australian industry. Further, industry generally has the clearest information and incentives to manage the risks of disruption.

For this reason, government is also committed to building business’ capacity to bolster their own resilience by:

  • improving the information industry can access
  • lowering the trade and regulatory barriers that can impede business led action.

Together these actions will improve Australia’s ongoing access to critical products.

Government and business need to work in close partnership to address the constantly evolving nature of supply chains. This will ensure that we have the right information when we need it most, and Australians and Australian businesses have ongoing access to critical products and markets. It will also enable Australia to contribute to the supply chain resilience of like-minded partners.

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