The five-yearly report that provides a guide for Australia's outlook projected budget deficits, slower economic growth and a smaller population over the next four decades as a result of the pandemic.

An ageing population also means that for each person in retirement there will be fewer people working, and that productivity continues to flounder - a concern that was evident even before COVID-19 hit Australian shores.

In response, the Business Council has released a discussion paper, Living on borrowed time: Australia's economic future, on what is needed to lift the nation's outlook.

"Anyone who thinks we can now just stay where we are is incredibly naive," the council's chief executive Jennifer Westacott told reporters ahead of the launch of the report on Wednesday.

"What we are trying to build is a bit of consensus to what is the direction we want to head in and what the big shifts are needed to get there."

The aim is to raise the debate around issues like actively building a low carbon economy, lifting the skills of the workforce, and making sure Australia remains an open and competitive economy while diversifying its industrial base.

Ms Westacott is not expecting a "big bang" response to the Intergenerational Report, but believes even if there are a lot of small things done, it will have a big impact, and that there is a "low hanging fruit" when it comes to regulation.

"The alternative is that we end up having yet another election campaign that lists all the things we are not going to do - a race to the bottom," she said.

"It would be irresponsible to just sleep walk into the slow lane."

The paper notes that Australia now ranks 22nd in the world out of the 64 countries in the IMD World Competitiveness Index.

It also found students are falling behind on education and that one in 20 children experience poverty.

It highlights that it now takes an average worker seven years to increase their pay by $100 per fortnight, when in the past they were getting that size pay rise every year or two.

"We need to drive productivity harder and we're not doing enough on reform," Ms Westacott said.

"Achieving a one per cent increase in productivity growth a year by producing goods and services more efficiently and smarter would deliver an extra $10,000 in average incomes for Australians over a decade."

BUSINESS COUNCIL'S SIX BIG SHIFTS THAT NEED TO BE MADE:

- Move to a more diversified industrial base

- Actively build a low carbon economy

- Make sure Australia remains open to the world and competitive

- Lift the skills of the workplace

- Make sure no one gets left behind

- Rebuild public finances.

(Source: BCA's Living on borrowed time: Australia's economic future discussion paper)

Australian Associated Press