“Unless we lift our long-term growth we’ll be unable to make these trade-offs, without difficult decisions around raising taxes or cutting spending.”

Commonwealth Bank of Australia chief executive Matt Comyn said the sharp increase in interest rates meant Australia was facing slower economic growth after “a period of record prosperity” and governments would have to make “tough choices” to rebuild their budget buffers.

“It’s been a relatively good time geopolitically, obviously that’s changed a bit,” he said. “We’ve got to deal with all of that.”

Former federal treasurer turned Future Fund chairman Peter Costello was relatively upbeat about the local economy, saying record commodity export prices for iron ore, coal and gas was boosting the federal budget to deliver the greatest conditions since the “gold rush”.

“Yes, we have defence and security issues,” Mr Costello said. “But we also have enormous advantages that a lot of other countries don’t have.

“That is underpinning and cushioning the Australian economy.”

RBA behind US Fed

Mr Costello said the RBA remained a “long way” behind the US Federal Reserve in lifting interest rates to tame inflation, and Australia had a “few more” rate increases to come.

“Having started on this course, slowly, the RBA still has to convince the public that it will see out the course because there’s no point in starting if we can’t finish.

“That would be the worst position of all to find ourselves in … because then we will take the rate rises without getting the benefit.”

The chairman of the $200 billion Future Fund also said investment returns would be harder to deliver for superannuation funds and other investors due to the cost of deglobalisation, decarbonisation and US laws limiting the export of technology to China.

“That’s why it’s going to be harder to maintain returns,” Mr Costello said.

Mr Costello is also chairman of Nine, owner of The Australian Financial Review.

Bank of America chairman and CEO Brian Moynihan said US consumers were still spending freely after the Fed had lifted its policy rate to the current range of 4.5 to 4.75 per cent, so at least another 0.75 of a percentage point in US rate rises would be needed.

“I don’t think we are going to see a deep recession,” he said of the world’s largest economy. “There will be a slowdown that people are not going to see much of. It will be more of a technical recession.”

Mr Cormann disagreed with global economist Nouriel Roubini, who warned central banks would “wimp out” on raising rates high enough to get inflation back to target.

Mr Cormann said central bankers would not “blink”.

Smarter tax ‘debates’ required

Mr Cormann, the former Coalition federal finance minister, lamented the debate about the stage three personal income tax cuts, arguing they were really just returning bracket creep to prevent negative incentives to work.

“Tax cuts in Australia are not really tax cuts,” he said.

“We have a lot of debates in Australia about what are fundamentally some corrections, some adjustments to income tax brackets to take into account the impact of inflation on income.”

While overall Australia is a relatively low-taxing country, the OECD finds that Australia is one of only three major economies to raise more than 50 per cent of its total revenue from taxes on personal and corporate income combined.

Mr Cormann hinted Australia needed to look at other more economically friendly taxes such as the 10 per cent goods and services tax, but ultimately it was a decision for government, he said.

BHP’s Mr Henry said Australia needed more competitive tax and regulatory regimes to keep up with the “race” led by the United States and Canada to attract capital to develop the minerals required for the clean energy transition, such as copper for renewable energy, nickel for electric vehicles and lithium for batteries.

“We don’t have the advantage that we have in these other commodities [iron ore, coal and gas] and so this focus on competitiveness, productivity, the policy settings to attract capital, I think are going to be even more important in the future,” Mr Henry said.

He dismissed calls by the Greens and some teal independents for higher taxes on mining profits.

BHP is a sponsor of the Summit.

Prime Minister Anthony Albanese gave the opening keynote address to the Summit and told business leaders the Labor government wanted to work closely with business on improving the economy in areas including decarbonisation, skills, supply chains, sovereign manufacturing capacity, digitisation and cybersecurity.

Asked about business angst about the government’s planned “same job, same pay” workplace changes expected later this year, Mr Albanese said he wanted to increase job security for working people but would consult closely with business.