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Productivity Commission investigating NZ’s economic resilience to supply chain disruptions

Containers piled up at a port - economic resilience main image
8 November 2022

The Government has asked the Productivity Commission Te Kōmihana Whai Hua o Aotearoa to begin an inquiry into New Zealand’s economic resilience to persistent supply chain disruptions.

The inquiry will examine risks to New Zealand’s economy and communities. It will explore how New Zealand can build its economic resilience, with a particular focus on competition, diversification, substitution, innovation, and economic geography.

Commission Chair Ganesh Nana says the COVID-19 recovery provides a chance to explore how the Government’s vision for a high wage, low emissions economy might be achieved. The pandemic, and recent events overseas, raise questions about the role of security of supply and location of production in the face of uncertainty.

“As a relatively small player internationally, Aotearoa New Zealand relies on its connections to the rest of the world. If we want to increase the productivity of our businesses and the wellbeing of New Zealanders, we need to be aware of risks to trade and other activities critical to our economy.

“We also need to be able to adapt to a changing international environment and respond to new opportunities.

“The impact of the pandemic on the country’s access to global supply chains has changed the operating environment for many firms, and like an x-ray machine, has revealed hidden challenges under the surface. Geopolitical uncertainty, extreme weather events, and infrastructure bottlenecks challenge the integration of our firms, industries and communities into global supply chains,” Dr Nana says.

This inquiry will look to unmask some of these challenges, focusing on how the economy delivers wellbeing in good times and bad. It will explore how and where New Zealand might be particularly exposed to different sorts of disruption, and what may need to change to address underlying challenges.

It will complement other work underway to understand and shore-up economic resilience including industry plans and just transition. The review of the country’s long-term infrastructure needs, short-term emergency responses and national security risks will not be the focus of this inquiry.

“The Commission wants to understand how to enhance the resilience of our industries while balancing trade-offs that may exist. This requires attention to opportunities and competition, while investing in resilience,” Dr Nana says.

This inquiry builds on the Commission’s body of work over the last decade, investigating international connections, freight, services, regulation, frontier firms, immigration settings and other productivity research.

The Commission will release an issues paper in February 2023, outlining its initial analysis and seeking submissions on where it should focus, with the full inquiry expected to run through to February 2024.