There are challenges ahead, but we are a great nation with a great future
Economics is often said to be the dismal science. Well, there should be nothing dismal about today's discussions. And that's not just because we are in Marvellous Melbourne - somewhat damply glowing with joy and pride at the way in which Michelle Payne gloriously dispatched first another glass ceiling and then her detractors with a pithy candour politicians can only envy.
We are living in the most exciting times in human history. Free markets, globalisation, long periods of peace and above all the acceleration of technological change have produced economic and political transformations at a speed never seen before.
In just a generation we've seen the internet and the smartphone connect most people in the developed world and before long most people in the entire world to each other and potentially to all the knowledge mankind has accumulated. The first iPhone was released only eight years ago; Google was founded 17 years ago; Facebook with 1.5 billion active users - and YouTube with one billion users - are 10 years old, Twitter is nine years old and Airbnb and Uber are seven and six years old respectively. 
Most of the companies re--inventing our world would still be at school if they were humans. And the venerable elder statesmen of the digital age - Microsoft and Apple - are 40 and 39 years old respectively. Think about it.
The opportunities for Australians have never been greater or the horizons wider. But how do we seize those opportunities, how do we ensure that in the midst of this dynamic region, in the midst of so much growth and change, we are able successfully to transition our economy to one that wins and keeps on winning.
Surely we should continue to be a high wage, generous social welfare safety net, First World economy, a nation that is as fair as it is open to opportunity. And how do we do that? Clearly as an open market economy in a much larger, more competitive world, we must be more productive, more innovative, more competitive. We must acquire not just the skills but the culture of agility that enables us to make volatility our friend, bearing fresh opportunities, not simply a foe brandishing threats.
So reform should not be seen as a once in a decade or two convulsion, accompanied by a hyperbolic scare campaign. It requires us to be open and honest, understanding and explaining both the challenges and the opportunities.
Over the years I've noticed the public, on whose goodwill all hope of reform depends, is impatient with the blame game. The first step in persuasion is to understand and respect the intelligence of your audience - in this case the Australian people. Good open discussion and consultation aids the task of reform. Because it is not enough to persuade the public that your motives are good - you also have to demonstrate that you've taken decisions in a thoughtful, open, consultative way. And that is why we are not trying to reduce complex issues to slogans, why we are not playing the rule in, rule out game, that's why we welcome every contribution to this debate.
We need to have a grown-up discussion that first clarifies the policy goals and then identifies and removes any obstacles that may be hampering our capacity to generate growth, productivity, investment and jobs.
If a particular policy approach doesn't deliver as required or anticipated, we have to be ready to reappraise it, reset as and when needed so objectives can still be met. If a policy doesn't work, chuck it out; if you see somebody is achieving your objective in a better way remember the sincerest form of flattery is plagiarism, copy them, take it over. Adjust, tweak, agility is the key, the objective is what we're all about. What we are seeking to do is to talk about policy in the same way practical men and women in the business world have been doing forever. What we need to do is embrace change, be adaptable, flexible, innovative.
Structural shifts in today's global economy are not dissimilar in scale and scope to the transition from the agrarian to an industrial society, but it is the velocity of change that is unprecedented. The changes that used to take centuries are now taking years, maybe a decade.
Right now there is also the challenge of making the transition to the post-mining-boom era. We've seen a sharp fall in our terms of trade. This was always going to happen. We can't rely on rapid growth in commodity prices to fuel future income growth.
But there are enormous opportunities available to us and, to his great and enduring credit, Andrew Robb has opened up the doors to these markets and in particular the China market with the free-trade agreement. For the first time in 300 years, if you believe Angus Maddison's work, which of course we must, the number of Asian middle-class consumers equals the number in Europe and North America combined.
We will deliver next month an innovation statement, a set of policies that will focus on how we attract and retain talent, how we support and encourage start-ups. How we encourage a culture of innovation, ensure our children are acquiring the STEM skills that they need, that they have the understanding or familiarity with machine languages they will need.
Let me say a little about tax. The object of the taxation system is plainly to raise the revenue the government needs for the services it provides. But it must do so in a manner that backs Australians to work, save and invest, that backs them in rather than holds them back. That has, in the language of the Melbourne Institute, the -minimum dead weight loss, the minimum handbrake on economic activity.
Now of course any set of tax reforms â€¦ I am waiting to see one that hasn't been around for a decade or so. We need a new idea here. I am looking at Chris Richardson, in particular. Surely there must be one! They have been kicking around for a while and there is no harm in that. That is why picking off one of these by now venerable proposals in isolation to others is always going to be misleading. I think you understand the point I am making there.
A reform package must, at the very least, raise the revenue we need, share the burden fairly across the community and do so in a way that incentivises employment, investment and innovation. Any package of reforms that is not and is not seen as fair will not and cannot achieve the public support without which it simply will not succeed.
There are many other elements of reform and I'll just touch on one of them: the Ian Harper report - that will not gather dust. It poses important challenges for all government, especially, or including if not especially state governments. There are very big - still very big structural breaks on growth. I heard the chairman of the Productivity Commission talking on the radio about the supply side constraints on development and planning. The federal government's arms are a long way from those levers. Nonetheless, it is something we have to recognise.
It is one of the reasons why we have a Minister for Cities and the Built Environment, why we are engaging with cities, with states on matters of infrastructure in a thoroughly non-ideological manner. Why we will support and indeed invest in infrastructure based on what it delivers, analysed in a rigorous, cost-benefit manner and without discriminating between one type of infrastructure or another.
The challenge is to do everything we can, with your help, with all of the ideas and the advice, with all of the consideration and thought that you and so many other Australians can muster, to do all we can to ensure that we enable Australians to do their best, enable them to realise those opportunities, seize that future, confident, optimistic, proud and strong. This is a great era of opportunity. We are a great nation with a great future.This is an edited extract from the Prime Minister's speech yesterday to the Economic and Social Outlook Conference.