The inquiry will hear from different stakeholders on the issue between now and May and decide whether regulations need to be redrawn.
Labor Senator Lisa Singh, who is co-chairing the inquiry, told SBS News there is “clearly a gap in the laws”.
“It seems to me there isn’t enough compliance and regulation currently in Australia,” she said.
“The real question of this inquiry is whether or not Australia is inadvertently contributing to the ongoing poaching of this incredible species.”
How many elephants are being killed?
Driven by the ivory trade, elephant poaching is at crisis levels. It is estimated around 30,000 African elephants are killed by poachers each year.
Rebecca Keeble, regional director for the International Fund for Animal Welfare (IFAW), told SBS News: “What we have is a situation at the moment where populations are so under threat that we have an elephant being killed every 26 minutes for its tusks.”
“You cannot remove the tusks any other way than to kill the animal.”
Rhino poaching has also dramatically increased over the past decade.
The last male northern white rhino died in March. The species was destroyed by poaching for their horn.
Where does Australia stand on trading ivory?
While Australia already has legislation to restrict the trade internationally, there is very little regulation domestically.
Once ivory arrives in Australia, buyers and sellers can freely trade their items going for up to $300,000 per artefact.
IFAW's Ms Keeble told SBS News that Australia’s laws have made it a transit country for ivory trade.
“Australia is not immune to the trade. We stop hundreds of items every year being imported into the country illegally. But we can’t stop all of them, and once those items are here, they can be legally traded,” she said.
In the past decade there were 322 imported ivory items confiscated by customs, as well as 24 rhino products. But Ms Keeble said for every piece confiscated, hundreds make it through Australian borders and move off the black market and into the legal market.
Who is buying this stuff?
There are many avenues for purchasing ivory artefacts in Australia, from brick and mortar auction houses, to online global marketplaces.
At invaluable.com, customers can buy ivory products from all over the world, with 68 of those currently listed as Australian products.
Auction houses like Lawsons and Leonard Joel in Australia boast large ranges of ivory products including carvings and figures, jewellery, raw and carved tusks.
But one of the major concerns is the lack of documentation needed to certify the items as genuine antique.
“Compliance with the rules is very low, and in our research we’ve found that even today there is not only a supply, but there is also a demand, meaning many newly poached items are being bought and sold.”
In a report released by IFAW in 2016, aptly named “under the hammer,” it was found that of the thousands of ivory products sold at bricks and mortar auction houses in Australia over a nine-month period, only eight per cent had documentation that would prove the authenticity and age of those items.
What can be done about it?
Ms Keeble advocates the only way to stop illegal trading and poaching is for a full ban on ivory trade in Australia.
“Any legal market for ivory means illegal trade and the deaths of elephants,” she said.
Ivory is still seen as a status symbol in many communities, but Ms Keeble insisted “the only true value of ivory should be on a living elephant in the wild.”
Which other countries have banned it?
The launch of the inquiry came just days after Britain announced the introduction of “one of the world’s toughest” bans on ivory sales in a bid to protect the world's elephant population.
According to the new legislation, all ivory trading in the UK is banned, with only a few exemptions for rare and important items more than 100 years old, and for items with a small amount of ivory in them.
It will also impose a maximum five-year sentence for offenders.
China, the US and France have also implemented tough laws to restrict the trade of ivory within their countries.
Ms Singh said Australia needs to ensure it is doing the same.
“As long there is monetary value placed on these items in Australia, the poachers continue to have an active business model.”
“We do not want to be contributing to that kind of practice, it’s abhorrent,” she said.