“The whole developed world has a productivity problem, in the 21st century productivity growth everywhere in the developed world is well below last century,” he said.

Professor Garnaut said that Australia needs a “big change in political culture” to return to productivity growth.

“A lot of issues have been well defined, the problem is political culture, that’s hard,” he said.

On the topic of infrastructure, Professor Garnaut said development doesn’t require consensus between levels of government and the Commonwealth should not select or manage infrastructure projects as it’s a state constitutional responsibility.

“The simple thing I would do is establish infrastructure as a professional entity with real capacity and clout and independence,” he said.

“I’d let the Commonwealth or the State or private parties put projects for evaluation to that body.”

Also speaking at the event, Reserve Bank of Australia and CEDA Board member, Dr John Edwards, discussed infrastructure investment.

“My sense is funding infrastructure is not the big problem, that if you have a good vehicle, if you have a good means of returning the revenue, raising the funding is not the big issue we face,” he said.

Dr Edwards said the issues are deciding between public and private transport projects and land and planning approvals.

“All these issues are immense, not even taking into account differences between state and federal views,” he said.

On economic growth, Dr Edwards said there is an issue sustaining the rate of productivity growth.

“We have a problem of slow growth…it’s not fast enough to keep up with the growth of the workforce and that’s a real issue which we need to address,” he said.

“Otherwise there are many aspects of the Australian economy which are doing vastly better than we generally recognise, for example particularly exports.”

University of Tasmania Professor of Economics and Finance, Professor Mardi Dungey said Australia should be investing in infrastructure for future generations.

“We’re reaping the benefits of the infrastructure investment that was done in the last 25-30 years and that’s the horizon we need to be planning for,” she said.

“If we could convince people to think about things on a much longer horizon and convince politicians that actually voters…care about their short term actions to meeting their long term goals, we’d go a long way to solving some of their problems.”

Professor Dungey said the economy as a whole is in a very good situation compared with where it was 30 years ago but what we need is flexibility.

“Standards of living are relatively high, people do have options and we are also facing quite a lot of changes in terms of potential volatility in the exchange rate,” she said.

Market Economics Managing Director, Stephen Koukoulas said infrastructure especially better roads, rail, airports and power generators are important for improving the long term productivity and also the economy after projects are completed.

Mr Koukoulas said the issue is where to raise the funds for projects especially as governments don’t want to lose their credit rating.

“If any government, state, Federal wanted to raise money to spend on infrastructure, there’s a risk,” he said.

“We’ve got to move away from where’s the money coming from to where’s the debt or look at other means for how it’s going to be funding, either through the public tax system or…superannuation.”

Shell Australia Country Chair, Andrew Smith also addressed the CEDA audience and in the last 30 years Australia has become a wealthy country which has created new challenges.

“We’re not on top of all those challenges to dealing with that transition to become a high wage paying country…what we’ve got to do is get the productivity to match the wages that we pay,” he said. 

Mr Smith said that it is an important time for future generations as we deal with opportunities and issues such as climate change, which is going to take courage.

“It’s going to take courage from the political classes, it’s going to take courage from the business community and the social sector as well to stop some of the bickering and get on with mapping out a way to take us forward,” he said.

Click here for more coverage of CEDA's State of the Nation conference.