Cut wages: PM's business adviser

The hand-picked head of Tony Abbott's business advisory group has urged cuts to Australia's minimum wages and demanded more power for corporate Australia at the expense of consumers.

Maurice Newman, a former chairman of the ABC and the Australian Securities Exchange, used a speech last night to also urge the Prime Minister to consider ditching some election promises to make the necessary changes to "save" the country.

Mr Abbott wants the business group to advise him and Cabinet on ways to "develop the economy".

In a speech to the Committee for the Economic Development of Australia, Mr Newman was critical of the former government, claiming it had engaged in reckless spending and class warfare to the detriment of the nation.

Australians had become too used to high wages and an industrial relations system that was too rigid. Changes in both were necessary.

"We have long since breached our salary cap, not just by the standards of our low-cost regional neighbours, but also our peers," he said. "In the end, regardless of union pressure and criticism from political progressives, relative international wage alignment will occur, either through exchange rate adjustment, unemployment, technology inflation or a combination."

While wanting lower wages, Mr Newman said corporate Australia was being held back by laws that gave too much power to consumers. He said an overhaul of competition laws, with an eye to enable firms to merge into bigger entities, had to be considered.

"If we are not ultimately to become a branch economy, the opportunity for Australian companies to become national champions at home must be considered by rebalancing the interests of consumers and businesses," he said. "To do otherwise is to encourage companies to shift to more friendly domiciles, sell to foreigners or, if all else fails, to close their doors."

Mr Newman has not been afraid to express strong views, previously attacking the CSIRO and the Bureau of Meteorology for their research into the "myth" of anthropological climate change.

The businessman said while government debt levels were too high and had to be wound back, more debt was needed to finance major infrastructure projects.

"Given that mining investment will be winding down and employment prospects may become challenging for displaced workers, early commencement on commercially sound infrastructure projects could be very well timed," he said.