“There is a disconnect here. Productivity is going up but employment is not following to the degree that it should.” Automation of lower and middle-class jobs was the culprit, Mr Bowen suggested. “At the moment this is an American phenomenon, but it is something we have to be very alive to in Australian policymaking,” Mr Bowen said. “We are seeing more and more automation. What we are seeing at the moment is quite remarkable: it is a huge opportunity for Australia but also provides challenges.” According to a special report earlier this year in The Economist, the proportion of American adults participating in the labour force hit its lowest level since 1978, which was in part a result of advances in technology. Former American treasury secretary Larry Summers estimates that in 10 years, one in seven American men might not be working as technical change takes the form of “capital that effectively substitutes for labour”. The Economist report cited a 2013 paper by Carl Benedikt Frey and Michael Osborne of the University of Oxford which said jobs are at high risk of being automated in 47 per cent of occupational categories including accountancy, legal work, technical writing and a lot of other white-collar occupations.

Mr Bowen pointed to automated supermarket checkouts and online shopping as obvious examples of retail jobs disappearing and pointed to algorithms being used by the Associated Press in the US to produce newspaper articles, moves being considered by the Australian Associated Press. This made it important for Australia to ramp up skills training for as many as many people as possible, Mr Bowen said, because “if they are nor trained to the maximum potential, the jobs won’t be there for them. Less and less jobs will be there unless you are highly skilled.” “We will see rising income inequality unless we are getting these questions right. This is one of the greatest unspoken challenges in the Australian economy.” Mr Bowen also offered bipartisan support for the implementation of recommendations in the 2009 report by corporate adviser Mark Johnson – which was commissioned by Mr Bowen – to assist Sydney become a financial centre, including tax reform, to allow Australia to capitalise on the demand for financial services in Asia. “As China liberalises its capital markets over the coming years, competition will become even fiercer. As countries move up the value chain, the competition for sophisticated services will be intense, particularly as emerging economies like China start to compete in areas they previously weren’t engaged. Good work was done in this area when we were in office, based on the recommendations of the Johnson Review. But there is much left to do.”

On Wednesday, FSC chairman Greg Cooper called for a reduction of the managed investment trust withholding tax rate to allow Australia to compete against Singapore and Hong Kong, and also for the government to introduce an investment management regime to facilitate the use of Australian investment managers by foreign investors. Mr Bowen criticised the government’s approach to the Future of Financial Advice reforms as being “shambolic, secretive and dismissive of proper processes”. He also said it was too early to mass judgment on the financial system inquiry. Initially a critic of the inquiry for being unnecessary, Mr Bowen said much good work had gone into it but Labor wanted to wait until recommendations were made before engaging with it at a policy level.