Anthony Albanese says the government "need sharper elbows" to mark out Australia's national interest and says the country must offer new products and services to different markets.
The Prime Minister set the tone of his speech by revisiting backlash he received from the Opposition when he announced a rejig of stage three tax cuts.
"But as I explained at the time, when economic circumstances change, the responsible thing for governments to do is change their economic policy," he told Queensland Media Club.
Turning to building the future economy, he said the government needs to have "this same capacity to respond and adapt, to anticipate change".
"We need to be clear-eyed about the economic realities of this decade, recognising that the game has changed, and the role of government needs to evolve," the Prime Minister said.
"Government needs to be more strategic, more sophisticated and a more constructive contributor. We need sharper elbows when it comes to marking out our national interest.
"And we need to be willing to break with old orthodoxies and pull new levers to advance the national interest.
"We have to think differently about what government can, and must, do to work alongside the private sector to grow the economy, to boost productivity, improve competition and secure our future prosperity.
He said the government needed to combine market tools with government action to create wealth and opportunity.
"Not just playing to our traditional strengths with our traditional partners but offering new products and services to new markets," Mr Albanese said.
The Prime Minister said this decade marked a "fundamental shift" in how nations are structuring their economies and pointed to the US Inflation Reduction Act, Japan's Economic Security Promotion Act, as well as Korea and Canada's own initiatives.
"All these countries are investing in their industrial base, their manufacturing capability and their economic sovereignty," he said.
"These nations are not withdrawing from global trade or walking away from world markets or the rules based order, and let me be clear, nor should Australia.
"We will continue to champion global markets and free trade, to build bilateral and multilateral co-operation and forge agreements. Equally, we must recognise that the partners we seek are moving to the beat of a new economic reality.
He spoke of the countries' investment in clean energy, upgrading their infrastructure and energy grids and adapting with digital technology like AI.
"Securing jobs, attracting investment and building prosperity has never been a polite and gentle process where every nation gets a turn, it’s always a contest, a race," Mr Albanese said.
"Being in the race does not guarantee our success, but sitting it out guarantees failure as the world just moves past us."
Read the speech in full here
