"There will still be a business cycle and I think it is a mistake to keep telling this story of 23 years with no recession," he said.

"But for the vagaries of quarterly national accounting we might well have called the end of 2000 a recession and we would have called 2008 one. In fact I would call it that."

Despite not meeting the technical definition of a recession - two consecutive quarters of negative growth - he said Australia did have a brief recession in late 2008.

"It wasn't terribly deep, and we got out of it quickly," he said.

Mr Stevens said we're bound to have another downturn at some point and it's worth having a conversation about the pre-conditions for managing that situation.

"I don't know when or exactly why, but it's very likely that at some stage that will occur and we will need to think sensibly and in a mature fashion about that when it comes," he said.

In the medium term, Mr Stevens said Australia needs to complete its transitional period in the economy over the next two to three years as mining capital spending comes off, which still has a long way to go, and we need more balanced growth in the economy.

"Other sources of demand in the economy need to play a stronger role in driving growth," he said.

"After several years of quite subdued growth, we estimate that non-mining activity has picked up some speed over the past year. But it would be good to see some further strength here, as the decline in mining sector capital spending continues."

In his speech, Economic Possibilities, Mr Stevens also discussed:

• Australia's terms of trade and the AUD exchange rate;
• Mining investment;
• Sector growth;
• Construction activity and household debt, savings and income;
• Labour productivity;
• Australia's G20 presidency;
• Financial lending standards.