In a wide-ranging speech on the economy, Prime Minister Kevin Rudd has hinted that the Government may boost support for the unemployed and has seized on Queensland's rising jobless rate to warn against the federal Coalition's economic plan to "slash and burn".

Mr Rudd used his first major speech since seizing back the leadership to defend the Labor Government's handling of the economy and to accuse the Opposition of making exaggerated claims about the nation's levels of debt and deficit.

He also issued a call to business and unions to join forces in a new "national productivity pact" dedicated to keeping Australia's growth rate at 2 per cent or better.

Key points: Kevin Rudd accuses Opposition of making exaggerated claims about Australia's debt and deficit levels

Kevin Rudd accuses Opposition of making exaggerated claims about Australia's debt and deficit levels The PM says the Coalition is planning to implement a 'slash and burn austerity drive' if elected

The PM says the Coalition is planning to implement a 'slash and burn austerity drive' if elected Rudd calls for a new productivity agreement to boost Australia's competitiveness

Rudd calls for a new productivity agreement to boost Australia's competitiveness Tony Abbott says the productivity announcement was hollow, and says Mr Rudd has failed to deal with key policies like asylum seekers and the carbon price

He said Cabinet ministers would sit down with business and union representatives next week to thrash out details of the pact.

But a large part of his speech was dedicated to criticising the Opposition's economic plans.

Mr Rudd had challenged Opposition Leader Tony Abbott to a face-to-face debate on the economy today at the National Press Club but Mr Abbott declined, saying he would only agree to a debate either if Parliament sits again or during the election campaign.

Mr Rudd called him the "nation's most formidable exponent of negative politics".

"He and the Liberal party have concluded that fear is a far better political bet than engaging on a debate on the facts," Mr Rudd told the NPC.

He went on to accuse Mr Abbott of planning to "implement a slash and burn austerity drive across the nation".

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"Well, we can see how that works - go to my home state of Queensland under Campbell Newman where business and consumer confidence has been shaken by the sacking of thousands of people, and the shrinking of critical government services," the Prime Minister said.

"And I note for a fact today that the unemployment rate in Queensland has gone up to 6.4 per cent.

"In fact it is now the highest rate in mainland Australia, and it has gone up from something in the order of 5.4 or 5.5 per cent when Mr Newman first became Premier."

Support for the unemployed

Mr Rudd also said the question of an increase to unemployment benefits would be considered by Cabinet.

"That question together with others that have been floated with me, including supporting parents payments, will be the subject of further discussion by the Cabinet," he said.

"I don't want to make false promises and create expectations which can't be realised but obviously we as a government are concerned about these genuine social challenges and we will be doing what we can in these areas."

Several Labor MPs have been agitating for a reversal of a decision that set new limits on single parenting payment and for more money for the unemployed.

Mr Abbott says the Prime Minister has failed to deal with any of the key policies that matter to the electorate, such as Labor's policy to tackle boat arrivals and the carbon price.

And he has described Mr Rudd's productivity announcement as hollow.

"What tax cut has he announced? What tax cut, workplace relations change has he announced? What changes to the Government's fiscal targets has he announced? There's none of that," Mr Abbott said.

And Opposition treasury spokesman Joe Hockey dismissed Mr Rudd's call for a a meeting of business and unions to consider how to lift national productivity to 2 per cent.

"[Mr Rudd] says he wants a productivity group hug - this is not the way to run a country, you actually need detailed policies," he said.

Business, unions welcome productivity focus

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The Business Council of Australia and the peak union body have welcomed Mr Rudd's call.

The Business Council says there needs to be action taken in the areas of tax, regulation, infrastructure and energy policy.

ACTU national secretary Dave Oliver says he wants the focus to be on investing in skills and infrastructure.

"We're more than happy to engage constructively with the business community, with the BCA, as long as we're focusing on the high road and not trying to go down the low road, which is essentially a race to the bottom and is certainly not a race we're going to win," he said.