He listed a litany of reasons for why the current budget projections for a return to surplus by early next decade are "delusional," including a slump in the terms of trade since May that is equal to what Treasury predicted for the entire four-year forward projections; slower-than expected immigration growth; weak wages growth that will reduce future revenue via bracket creep; and assumptions that more than $80 billion in health and education cuts to the states will pass a future Senate.

He also lashed out at middle-class welfare, especially to upper-income families including in the form of Commonwealth funding for private schools.

Most egregiously, he suggested, was an assumption that multi-factor productivity growth would rebound from an average of minus 0.9 per cent since 2010 to more than three times the OECD average in coming years.

"All of the delusional elements are in the direction of under stating the budget challenge," he said.

He added that the nation's fiscal problems are now so large they can only be met through a major national effort of leadership.

Calling on Australians to cut both Mr Turnbull and his Treasurer Scott Morrison "some slack," Professor Garnaut challenged big business to come up with solutions that suit the broader community and economy.

"Let's not be tempted by easy answers without rigorous analysis," he said.

After the comfortable quarter century of the past, Professor Garnaut said the instincts of big business were to "defend privilege...to push out innovation if it threatens the old ways things.


"That has to change, quickly and thoroughly, if the optimistic prospects of our new PM are to have a chance."

Professor Garnaut said he counts calls to cut the 30 per cent corporate tax rate as "one of the easy answers put forward without rigorous analysis."

He said the case for corporate tax cuts had not been made out in many sectors where large Australian corporations face little or nor competition, such as resources, retail, banks or utilities.

Groups such as the Business Council of Australia have long called for corporate tax cuts as a way of spurring investment and making Australian companies competitive with the rest of the world.