"They are saying that a neutral cash rate would be 3.5 per cent," Mr Turnbull told the conference. Prime Minister Malcolm Turnbull Credit:Alex Ellinghausen "What they are not saying is they are going to increase the cash rate to 3.5 per cent next month." "Monetary policy remains accommodative and will stay that way for a while yet, but it means that rates are more likely to go up than down." When the increase came, heavily indebted borrowers would be hit the hardest.

"Asset prices can move in two directions - down as well as up," Mr Turnbull said. Optimistic about the economic outlook. Prime Minister Malcolm Turnbull. Credit:Andrew Meares "It going to be important to be prudent. The banks and the Prudential Regulation Authority are doing their best to make sure of that." "My sense is this risk is being well managed, but high levels of indebtedness with low levels of interest rates always pose a risk, particularly if there's an assumption of rising asset prices."

Tax Mr Turnbull said many Australians felt uncertain about their future. "They feel the threat of new competition weighing on their prospects for a new and better job, for more hours, for a rise in pay," he said. "This is a thoroughly natural human reaction. And yet in Australia we've seen real benefits of economic progress. Over the last 20 years, average living standards have increased by 40 per cent. We can't hide under the doona and hope big changes will stop or go away." "Last week I met leaders at the G20 from right across the political spectrum. On some issues, they had less in common, but one thing they shared was a plan to reduce company tax rates. From the United States President Donald Trump, who wants to bring down company tax to 15 per cent, to France's President Macron who plans to cut his company tax rates to 25 per cent, and of course in the UK where since the Conservatives were elected in 2010, the corporate tax rate has been cut from 28 to 19 per cent and will go to 17 per cent by 2020." Australia would not be successful if its company tax rate remained at 30 per cent.

"This used to be a point of political consensus. Everyone knows that the more you tax investment, the less investment you get. But now this basic economic premise is a point of contention. The Labor Party believes the government is entitled to every dollar of a business's profit. They do. They say that a tax cut is a handout, now that is absurd. It is denying enterprise, it is discouraging investment." Energy Referring to soaring electricity and gas prices Mr Turnbull said previous governments had made "a huge amount of mistakes". Some had been the result of politics. Others, such as the Gillard and Rudd government's decision not to restrict east coast gas exports, had been the result of "negligence or an absence of mind". "Step by step we are fixing these issues, and our approach is guided by engineering and economics, not ideology and politics," he said. Asked whether the government should fund new coal-fired power stations as suggested by the deputy prime minister Barnaby Joyce, Mr Turnbull said that while the government had an important role in setting policy, "obviously but the goal should always be for investment decisions to be made by the market by participants in the market on economic grounds".