In a wide-ranging address at the Association of Mining and Exploration Companies convention in Perth this morning, David Murray, who now works as a senior adviser for Credit Suisse in Sydney, said the issue of productivity in the country was one of concern.

“We have a moment in time now to lift productivity for a great future before it gets too difficult,” he said.

“Whoever is the government, we will have to wait and see how effective they are at gradually reforming the economy and getting productivity on the agenda without doing damage to the economy.

“But the longer it is left, the harder it gets.”

Murray, who spoke on the topic of Australia’s place in the global economy and the trade boom, presented a frank picture of our economy. While our developed nation had benefited from Asia’s rapid growth, Australia’s debt position has catapulted significantly, spending in recent years had become out of control and the government was handing out money to borrowers as opposed to savers.

While our economy had mostly emerged unscathed from the 2008 global financial crisis, Murray said we risked copying the things we had seen create structural difficulties in Europe if we failed to lift productivity.

“We see the boost to the domestic economy from the mining sector naturally coming off, the currency has fallen and in my view, will continue to be weaker, and we will see the consequences of the new production and exports from the mining sector,” he said.

“That’s all fine, but it’s not the easy path that we have.

“Now the issue for us is to simply lift productivity.

“That is quite an urgent agenda … because we’ve slipped back to the same bad behaviours that we have seen in Europe and the US, and it’s simply complacency that’s got us there.”

Murray called for the government to introduce any policies that would provide a “major lift in productivity” and ones that could deal with a lacklustre global economy and a change in emphasis on China.

According to Murray, this would require far less government spending, a change in the ways in which we spend, an enhanced focus on dealing with competition to get more productive, and dealing with an industrial law system that is well out of date.

“We are dealing with an out-dated system of industrial law that was built for a closed, protected economy,” he said.

“We need the most flexible systems and we have one of the least flexible systems in the world.”

Murray pointed out that at 36% of GDP, Australia’s debt position was at least six points too high at $90 billion a year.

“That has to be reduced because it’s getting to a point where it’s strangling the system,” he said.

The government needed to target a more sustainable spend of 30% of GDP and suggested Australia take a leaf out of Norway’s book.

“Norway got to the point where the marginal rate of tax on business was at 100%,’ he said.

“We have to reduce government expenditure overall, but shift from consumption-related government expenditure to investment-related government expenditure.”

Murray questioned the “irresponsible” spending the Labor government had been undertaking and urged the public to hold the political process accountable for this.

In addition, Murray expressed his concern over Australia’s net foreign liabilities.

“Our net foreign liabilities to GDP are very, very high and present serious vulnerability to our economy if not managed well,” he said.

Murray cited analysis by IMF that put us on par with debt-ridden countries such as Portugal, Ireland, Greece and Spain.

Portugal’s debt stands at about 123% relative to GDP, while Greece’s debt is at about 157% to GDP.

“We’re not in as bad of a position [as these countries] because we have high net wealth per capita,” he said.

“Are we vulnerable as a result, most definitely.”

Echoing the mining industry’s concerns on dwindling exploration expenditure, Murray pointed out what most certainly already know.

“In mining exploration we have halved, in a very short time, our share of the global exploration expenditure,” he said.

Murray said the best incentives the government could provide to lift the amount of spend on exploration were ones where it didn’t have to distort tax systems.