Paul Keating: Governments must put 'inclusive' growth at the centre of policy

"The productivity surges with losses in employment have to mean that management of the economy has to focus heavily on inclusion", Mr Keating said.

"Large bodies of people cannot be left out or be left behind".

The former prime minister said the "rarely, if ever acknowledged second strut of the 1980s and 90s reforms was the concomitant commitment by the government to equity and inclusion", and that this commitment had distinguished Australia from other major economies and also helped shield us from the political backlash now being seen in the United States and Britain.

"In the cooperative framework which the Accord process engendered, large slabs of the garnered productivity were allocated to new community social standards, in such things as Medicare, universal superannuation, a world leading system of minimum award rates of pay and strong real wages growth", he said.

"The twenty six years of our current expansion was designed so that all Australians had a share in the national action."

"We can see in America today what the loss of these balances means, watching the extremes of income and wealth rip at the fabric of American society", he said.

The question of inclusive growth remains a large one "and will loom larger because of the continuing impacts of globalisation and technological disruption", amplifying as a result of artificial intelligence.

"In the cascading digital age, where self-learning algorithms and computational processing eke away at today's jobs before it is clear where tomorrow's jobs are coming from, comprehensive inclusionary programs must become central to our economic progress and with that, our social bindings", he said.

Mr Keating said he believed 2016 was "the tip over year when developments in artificial intelligence made clear that this was a primary and new technological pathway".

The challenge for Australia now, he said, "is in human capital, as the knowledge economy, the network economy, tears away at an exponential speed".

Mr Keating said "nostalgia for the reform politics of the eighties and nineties is not going to advance us mightily".

"Today the Business Council of Australia tells us we need to go back to the Keating reform era. When we were actually in the Keating reform era, the Business Council was of no help".

He said during his time in government he had great difficulty reforming the non-traded economy, which was largely under the control of state authorities in areas like transport, health and education.

The economy "is still crying out for liberating forces".

The forces that could now be used in this way are not company tax cuts, he said, but "are staring you in the face – globalisation and galloping international digitisation".

"These dual forces are all about competition: competition and complementarity in the provision of goods and services through globalisation – and with digitisation, competition in all fields of products and services with the accelerating ubiquity of the global digital economy, with telecommunications and the smart phone facilitating much of it".

These forces are reshaping industries, "bringing down monopolies, smashing market barriers, while lifting the utilisation of otherwise static and underperforming assets".

"The wider phase, the grander phase, where even larger gains are to be had, is in the heavily government influenced areas of health, aged care, education and human services", he said.

"With the use of big data it is possible to make the delivery of these services smarter, less costly, more tactile and more friendly to the consumer".