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Aust economy risks lagging behind: PM

AAP logoAAP 16/08/2016 By Rashida Yosufzai

Malcolm Turnbull was walking the tightrope of economic alarmism.

It was the prime minister's first major economic speech since the federal election and all ears were perked at the Melbourne gathering on Wednesday.

His essential message? Don't be too scared, but it's time to take off the rose-tinted glasses.

While it was almost lost as asylum seeker protesters interrupted his speech, Mr Turnbull was armed with advice from the International Monetary Fund and Moody's.

The ratings agency had just cautioned over abandoning budget repair measures risking the nation's AAA rating, while the IMF has urged governments to deliver on structural reforms, he said.

The prime minister warned that the nation risked falling to the back of the pack of leading economies if the new parliament failed to pass tough savings measures, adding it's a critical time for change.

"Nobody should underestimate the importance of this moment as a test of the capacity of our political system to make the right calls on the nation's behalf."

Taking up Labor's offer of a cooperative parliament, the government is set to introduce an omnibus bill amalgamating savings Labor was prepared to support.

"If we see this plan through over the next three years, I believe Australians will have every reason to approach the decades ahead as they do today - confident, outward-looking, secure and self-assured.

"If, on the other hand, we falter in our plan to transition the economy, there is a real risk of Australia falling off the back of the pack of leading economies."

Mr Turnbull also painted a bleak picture of the global economy, saying it's more fragile than at any other time since the 2007 global financial crisis.

Australia must now work even harder to maintain the momentum behind open markets and free trade.

Treasurer Scott Morrison, echoing the prime minister, said the Australian economy was resilient and strong.

But there was work to be done and upcoming challenges.

"We cannot take these things for granted going forward."

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